Taxman clamps down on snowbirds heading south, hopes to save millions

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Taxman clamps down on snowbirds heading south, hopes to save millions

Post by kenwood » 27 Oct 2015 16:23

I was reading this article, but am having trouble understanding why this is labeled as a 'crack down'. My understanding is that pension/senior benefits are to reward those Canadian who has made contribution to the Canadian economy in the past. Where do these retirees spend these benefits, should be up to them to decide. I am interpreting this article as forcing people to stay and spend in Canada if they wish to receive full pension/senior's benefits.

http://www.cbc.ca/news/politics/canada- ... -1.3290299

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by Spudd » 27 Oct 2015 16:36

I also don't understand. OAS is a worldwide benefit, you don't need to have Canadian residency to collect it, only to qualify for it. So why would you being down south for 6 months of the year save the government money on OAS? Similarly for the other 2 benefits mentioned. However, I can see the government saving money on health care if they are able to catch some people being out of country for longer than the allowed 183 days.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by CROCKD » 27 Oct 2015 16:44

As far as I am aware OAS and CPP once a person is qualified to receive them are payable anywhere in the world. A Canadian citizen is a resident for tax purposes unless they apply for non residency status so would file with these pensions as part of their income.
If you are away more than 183 days it brings its own problems if you are in the US. Also you lose your rights to provincial health benefits.
Edit: Was typing my response when Spudd posted. Anyone with any other thoughts?
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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by Insomniac » 27 Oct 2015 16:55

It estimates savings over five years of:
$48 million by Employment and Social Development Canada for the old age security program;
$21 million by Employment and Social Development Canada for the employment insurance program;
$125 million to $250 million by the Canada Revenue Agency for the child tax benefit program.
http://www.thestar.com/news/canada/2015 ... fraud.html

I suspect that by "old age security" they mean GIS, not OAS. I am not sure, but I assume that to get GIS, you need to satisfy residency requirements.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by Insomniac » 27 Oct 2015 17:08

Found it:
Yes, your Guaranteed Income Supplement payment will stop if:
...
you leave Canada for more than six consecutive months;
...
http://www.servicecanada.gc.ca/eng/serv ... ndex.shtml

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by brucecohen » 27 Oct 2015 17:14

CPP is unconditionally payable worldwide. OAS is payable outside Canada if you've had at least 20 years of Canadian residence since turning 18. That might catch some snowbirds. The GIS web page does not explicitly say that it's payable outside Canada so I suspect it's not. The page says only that GIS "provides a monthly non-taxable benefit to Old Age Security (OAS) recipients who have a low income and are living in Canada." So that might be the target for the OAS component.

The story seems weird to me. If they deem you to be non-resident during a snowbird hiatus, that should logically affect your tax return which is based on your residence as at Dec 31. Also, there's the issue of what defines "payable outside Canada." I suspect that means "deposited into a foreign bank." Surely snowbirds don't change their direct deposit instructions before heading south, do they?

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by kcowan » 27 Oct 2015 18:06

I think they are going after people who may have ignored the rules. We Canucks are allowed 122 days in the US unless we fill out closer relationship paperwork. Then we are allowed 212 days (ON and BC) for medicare coverage. I believe it is 183 days before the need to file with the IRS. The 183 days includes day trips to Buffalo/Seattle et al. I think the bureaucrats are smoking dope with their estimates. Even a stay-over on a flight to the Caribbean/SA qualifies if overnight.

There is also the US estate taxes that apply to Resident Aliens. These vary by year.

I went through all this when we decided to Invest in Mexico back in 2005. We decided that the IRS is too complicated. And Congress does not care about Resident Aliens so there is no voice. Thanks to Westjet direct flights, we have not been in the US since 2007.

We expect Mexico will get worse but we will probably be dead before that becomes a factor. Tax evasion is a national sport there for locals.
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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by bcjmmac » 28 Oct 2015 05:10

Perhaps they mean that there are significant #s of people not yet drawing OAS that are spending 183 days outside Canada, which might disqualify those years as being applicable for inclusion in the OAS formula? In other words, OAS for those people would be reduced.

EI is straight forward.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by SQRT » 28 Oct 2015 11:24

kcowan wrote:I think they are going after people who may have ignored the rules. We Canucks are allowed 122 days in the US unless we fill out closer relationship paperwork. Then we are allowed 212 days (ON and BC) for medicare coverage. I believe it is 183 days before the need to file with the IRS. The 183 days includes day trips to Buffalo/Seattle et al. I think the bureaucrats are smoking dope with their estimates. Even a stay-over on a flight to the Caribbean/SA qualifies if overnight.

There is also the US estate taxes that apply to Resident Aliens. These vary by year.

I went through all this when we decided to Invest in Mexico back in 2005. We decided that the IRS is too complicated. And Congress does not care about Resident Aliens so there is no voice. Thanks to Westjet direct flights, we have not been in the US since 2007.

We expect Mexico will get worse but we will probably be dead before that becomes a factor. Tax evasion is a national sport there for locals.
Right. But these US rules are designed to collect US income taxes not Canadian. Becoming a U.S. resident alien would cost Canada taxes?

Edit to add. The article in the G&M this am said it was to prevent eligibility abuse for OAS, child tax benefit, and employment insurance. Seems much more likely that any of these potential abuses would not involve spending more than 183 days in the US. Would someone risk having to file US tax returns to rip off these relatively insignificant Cdn tax benefit programs? Highly doubtful.
Last edited by SQRT on 28 Oct 2015 13:25, edited 2 times in total.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by ockham » 28 Oct 2015 12:43

All in all, a terrible article. The reader is left with no idea how/why tracking entry-exit will save the taxpayer anything, never mind the millions referenced in the headline.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by SQRT » 29 Oct 2015 11:51

So another article along these lines in the G&M this am. A little more detail but still very poor. Again, the real issue isn't US/Canada but more likely Can and rest of the world. Not sure how the new system will help Canada collect more taxes from snow birds?

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by izzy » 29 Oct 2015 12:42

Maybe they are talking about becoming a deemed non-resident if you are out of the country long enough to be deemed resident by another country resulting in an assessment for "departure tax"?
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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by AltaRed » 29 Oct 2015 13:34

izzy wrote:Maybe they are talking about becoming a deemed non-resident if you are out of the country long enough to be deemed resident by another country resulting in an assessment for "departure tax"?
I doubt it. The G&M noted:
– $48-million by Employment and Social Development Canada for the old age security program; – $21-million by Employment and Social Development Canada for the employment insurance program; – $125-million to $250-million by the Canada Revenue Agency for the child tax benefit program.
Think one has to dig into each of those programs to see eligibility requirements. EI is an obvious 'no brainer'. How can one be looking for work in their area if they are 'snowbirding'? Clear abuse there.

I also know GIS depends on being resident in Canada and it is administered by the same outfit as OAS.

The child tax benefit is the biggie here and I know nothing about it.

Added: Link this morning from BNN http://www.bnn.ca/News/2015/10/29/Five- ... ogram.aspx The issues seem to be related to downright crooks in the system rather than snowbirds per se.
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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by OhGreatGuru » 29 Oct 2015 20:35

The article is not at all clear how they expect to make these savings.

Yes, GIS comes to mind. But how many snowbirds would actually qualify for GIS? Secondly, I found a web site that says GIS is payable for temporary absences from Canada, up to six months in duration.

Anything over 6 months is going to affect your whole tax status as "resident or non-resident", which raises all kinds of issues. True, OAS is payable outside the country, but if you are a non-resident it would be subject to 25% Part 13 tax.

I suspect the issue may be people who are claiming to be residents, but in fact are not. And that it may be the pre-65 age group they are targeting. Non-residence would affect eligibility for EI; and non-resident years would be discounted in calculating how much OAS one is eventually entitled to. There may an interesting argument going on between CRA and HRSDC. CRA is probably happy to have people claiming to be residents who in fact are not, because they are continuing to tax them. But the social benefits people are not happy about such subterfuge, because they are having to pay out more in benefits than people are entitled to.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by AltaRed » 29 Oct 2015 20:56

Think the link I added from BNN clarifies it a bit. The fact that most of the leakage seems to be child tax benefit means it has nothing to do with snowbirds at all. It has to do with families who are NOT disclosing non-residency on a longer term basis and continuing to collect child tax benefits and likely counting on Canadian health insurance. The headline is more likely what is f**ked up.
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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by cardhu » 30 Oct 2015 12:46

Much ado about nothing ... according to this article, they’re talking about the 40 year residency period to qualify for OAS in the first place ... its got nothing to do with what one chooses to do, or where one chooses to go, in their retirement, once they are collecting it.

It’s a valid target ... if people have misrepresented their residency in order to “qualify” for OAS benefits (as they allege), and such misrepresentation can be verified, then they should have their benefits reduced.

There are several words/expressions that have different meanings in different contexts, and perhaps “residency” is one of them. The Income Tax Act defines residency for income tax purposes only. That definition only applies to OAS if the Old Age Security Act, or its regulations, say it applies.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by Little Al » 06 Oct 2016 01:16

AltaRed wrote:The fact that most of the leakage seems to be child tax benefit means it has nothing to do with snowbirds at all. It has to do with families who are NOT disclosing non-residency on a longer term basis and continuing to collect child tax benefits and likely counting on Canadian health insurance.
It has a lot to do with Canadian snowbirds.
A non-resident retiree collecting GIS draws 10K a year while Child Tax Benefit is how much - 3K?
EI pays mere 6 months, this is peanuts compared to GIS.

Besides, CTB doesn't even require you to reside in Canada for a substantial part of the year. It requires you to be "resident for tax purposes" (plus of course to have custody of a child).

OTH, medical plan clearly states that you must be physically present 6 months in a calendar year. I doubt any "long-term snowbirds" are taking chances going to hospital, facing potentially HUGE bills if they get caught.

Funny thing is that our govt i.diots stand more to lose if they forcefully tie retirees to Canada by threatening to take their GIS away: the repatriate will collect 10K of GIS annually, plus (many of them) will get extra 5-6K a year in form of subsidized housing, plus, out of boredom, they will start going to doctors with every minor illness. Social pension should be paid as a pension, like in the US - not like a welfare tied to residency.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by newguy » 06 Oct 2016 10:39

Little Al wrote:Funny thing is that our govt i.diots stand more to lose if they forcefully tie retirees to Canada by threatening to take their GIS away: the repatriate will collect 10K of GIS annually, plus (many of them) will get extra 5-6K a year in form of subsidized housing, plus, out of boredom, they will start going to doctors with every minor illness. Social pension should be paid as a pension, like in the US - not like a welfare tied to residency.
I agree. In laws have left and lost ~20k GIS but will save the govt maybe a million or so in health care. They should make a policy that you can leave Canada and lose health care forever but still collect GIS. In many countries health care is very cheap. My daughter went to a doctor in Vietnam for $20, drugs included. If a significant number of people do this, it will save health care resources and dollars which are already becoming problematic.

The minimal OAS and CPP is actually more in purchasing power in the Philippines than that plus GIS is in Canada so it's a win win (as long as you're not a drug dealer!).

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by SQRT » 06 Oct 2016 10:49

Doubt issues relating to GIS have anything to do with snowbirds who would generally have sufficient income that would disqualify them from GIS.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by newguy » 06 Oct 2016 11:00

SQRT wrote:Doubt issues relating to GIS have anything to do with snowbirds who would generally have sufficient income that would disqualify them from GIS.
Up until last year my in laws spent around 182 in the Philippines every other year or so on annual incomes of about $12k. You can 'snowbird' to many cheaper places and actually save money. Ask KCowan!

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by SQRT » 06 Oct 2016 11:11

newguy wrote:
SQRT wrote:Doubt issues relating to GIS have anything to do with snowbirds who would generally have sufficient income that would disqualify them from GIS.
Up until last year my in laws spent around 182 in the Philippines every other year or so on annual incomes of about $12k. You can 'snowbird' to many cheaper places and actually save money. Ask KCowan!

newguy
Good point. I always thought about snowbirds as the US variety, but agree there would be other less expensive destinations that would qualify as snowbirds.

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by AltaRed » 06 Oct 2016 11:42

Little Al wrote:
AltaRed wrote:The fact that most of the leakage seems to be child tax benefit means it has nothing to do with snowbirds at all. It has to do with families who are NOT disclosing non-residency on a longer term basis and continuing to collect child tax benefits and likely counting on Canadian health insurance.
It has a lot to do with Canadian snowbirds.
A non-resident retiree collecting GIS draws 10K a year while Child Tax Benefit is how much - 3K?
EI pays mere 6 months, this is peanuts compared to GIS
Unless you have inside information, the estimates appear to come from the gov't itself per the link provided by the OP.
It estimates savings over five years of:

$48 million by Employment and Social Development Canada for the old age security program.
$21 million by Employment and Social Development Canada for the employment insurance program.
$125 million to $250 million by the Canada Revenue Agency for the child tax benefit program.
Whether GIS falls into one of those categories or not, I do not know, but I'd think the first one. Few low income seniors have the resources to snowbird, although I personally know a senior couple that lives 6 months in the Phillipines and 6 months in Canada, partly because of family but primarily due to inexpensive living. If you follow International Living at all, one can see a number of inexpensive places to live, including Ecuador et al....on air fares that are considerably less than to the Philliipines, Indonesia, Thailand et al.
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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by adrian2 » 06 Oct 2016 13:11

Little Al wrote: Social pension should be paid as a pension, like in the US - not like a welfare tied to residency.
You're using US terminology, where social security is an equivalent combination of CPP + OAS/GIS.

CPP is a pension, is "earned" like a pension during one's career, and is payable for life anywhere in the world.

OAS/GIS are not pensions, they are not "earned" through contributions, and have different rules, which are good enough for my taste.
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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by Little Al » 06 Oct 2016 14:47

AltaRed wrote: Unless you have inside information, the estimates appear to come from the gov't itself per the link provided by the OP.
These are official rates by CRA, not estimates. Max GIS is ~$800 per single person, this year new govt increased it to (I think) $900. CTB is ~$300 per child.
AltaRed wrote:Few low income seniors have the resources to snowbird, although I personally know a senior couple that lives 6 months in the Phillipines and 6 months in Canada, partly because of family but primarily due to inexpensive living. If you follow International Living at all, one can see a number of inexpensive places to live, including Ecuador et al
Snowbird is somebody heading South, not necessarily to the US. In places South of the US border and South-East Asia $1,500 of combined OAS+GIS goes a long way, even if you don't have much CPP. These people are (probably) not in big numbers yet because of the language barrier with "Canadian Canadians", so this could've contributed to "snowbird" becoming a synonym of "Canadian in the US". Give it some time, more Canadians will stay in countries other than US.

Like somebody noted, if such a low income person - living almost entire year abroad and coming to Canada for short periods only - would have to return to Canada in order to keep his GIS, his losses would almost negate his gains. Rental housing, car, internet, cable, expensive food to name a few. The govt would lose as well - hey, wouldn't be the first time :)

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Re: Taxman clamps down on snowbirds heading south, hopes to save millions

Post by Little Al » 06 Oct 2016 15:02

newguy wrote: They should make a policy that you can leave Canada and lose health care forever but still collect GIS.
For starters, they could make it similar to the US Medicare - they allow you to keep it after 6 months absence, no 3-months waiting required if you suddenly return. This still results in substantial savings for Medicare because Americans, even those living in Mexico close to US border, don't usually travel to the US for annual physical, or to see a specialist or do some tests - it's not worth it. It's easy enough to pay $50-60 and do this locally. Not to mention Canadian plan where it takes 5-6 days to get Physician's appointment and 5-6 months for Cardio.

Btw, what happened to that year-old draft regarding tracking? I saw a recent US-CAN agreement on tracking 3-rd country citizens (including those with PR status in CAN or US), but nothing on US-CAN citizens.

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