Living in Brazil: Canadian in Brazil. Income taxes?!

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Canadian in Brazil. Income taxes?!

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Category: Brazil
Forum Name: Living in Brazil
Forum Discription: Surviving in Brazil
URL: http://www.gringoes.com/forum/forum_posts.asp?TID=15545
Printed Date: 19 June 2013 at 13:11
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Topic: Canadian in Brazil. Income taxes?!

Posted By: shinrai
Subject: Canadian in Brazil. Income taxes?!
Date Posted: 30 May 2012 at 18:55

Hi all,

The search bar didn't get me any definite answers :(

I'm currently negotiating a new salary proposal with my company in SP.
I've been living here for a while and have been getting paid in Canada. As I understand I now have to receive a salary here in Brazil but it's getting complicated.

Simple questions from a simple mind about a topic (tax) that I have little experience with:

- There is a tax treaty between Brazil and Canada I imagine. How does this work? I will not surrender my Canadian ties so I believe I will have to pay my current income taxes in Canada minus what I pay in Brazil. Correct? Should I contact an advisor?

-INSS. RPP Pension program or something else? Obviously I cannot take this back to Canada when I return in a planned 2 yrs.

-FGST. Similar to an RSP (retirement savings plan) back home? Can I take this with me when I leave? If so what am I taxed?

-Cost of living index? All the free ones I've found online say that Toronto is comparable to Sao Paulo. This has to be incorrect. Everything here is unbelievably expensive. Any good links to work in my favor?

Anything else to be aware of?

Many many thanks in advance.

Replies:

Posted By: sven
Date Posted: 30 May 2012 at 21:14

Cost of living in Toronto similar to Sao Paulo...

Did you read that in a comic book?

Posted By: freeek
Date Posted: 31 May 2012 at 01:53

Hi Shin .. i work with Canadians in offshore sector.They claimed their tax break at the start of this year.They actually filled all that online and had the full refund in about 1 month time.The company is based in St.Johns.I dont know if same will work in your case.

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Tenho promoção

Posted By: shinrai
Date Posted: 31 May 2012 at 04:11

Sven: No comic book. That's what some of the online things say. Seriously. I don't know where they get the information from. Maybe I'll purchase from a third party report.

Freeek: Thanks bud. I'll look into it.

Posted By: shinrai
Date Posted: 31 May 2012 at 10:35

Oh, and somebody stole my car last night.
Wtf.

Posted By: Dave
Date Posted: 04 June 2012 at 23:34

If you don't surrender your residencial ties in Canada then I think it's pretty simple. Claim all your Brazilian income on your Canadian tax form and claim a foreign tax credit on what you paid in Brazil against what you owe in Canadian tax (which will probably be more). There is a tax treaty between Canada and Brazil.

INSS - This is social security and (I think) covers both employment insurance and your contributions to the government pension plan. It is capped at about R$430/month. You will probably never have the right to collect a centavo from this fund but you have to pay into it.

FGTS - This is a "guarantee fund" paid by the employer. I think the contribution is 8% of your salary. I believe it can be used by a (Brazilian) worker if he loses his job, or when he retires, but I have no idea how this works. I assume that I can't take it with me when I leave Brazil but I hope I'm wrong!

There is no way to accurate capture the diferences in costs of living using a single index. Most Paulistanos live on much less than your average Torontonian. If you like to spend your money on new cars and consumer goods then São Paulo is twice as expensive as Toronto. The cost of food is similar. Rent in the good areas of São Paulo is similar or a little higher. The cost per m2 of real estate (apartments) is probably similar to Toronto, but most Canadians finance a large portion of their purchase and to do the same in SP you would end up paying 3x or 4x what you would pay in Canada.

The mercer reports express cost of living in USD, so the cost of living in Brazil in terms of USD varies with the exchange rates. When the BRL was very strong SP went way up on the list, but today with the weakened BRL São Paulo is 25% cheaper than it was last year.

Posted By: shinrai
Date Posted: 07 June 2012 at 19:02

Perfect. Thanks Dave....that's what I was looking for.

Posted By: sheenaSP
Date Posted: 11 July 2012 at 18:33

Hi Dave,

Maybe you can help me out on this. I haven't lived in Canada for 5 years (not all of that time spent in Brazil), and I have permanent residency here in Brazil.

I paid my 2011 income tax here, and I pay taxes on a monthly basis since the beginning of 2012. I got here in February 2011.

I am self-employeed. I'll probably stay in Brazil for a while, but one day I'd like to go back to Canada.

What do I have to do in terms of Canadian tax now that I'm a permanent resident here in Brazil? Do I have to file that every April?

Any advice would be much appreciated!

Thanks!

Posted By: sheenaSP
Date Posted: 11 July 2012 at 18:34

Posted By: Dave
Date Posted: 11 July 2012 at 22:28

If you are considered to be a non-resident (for tax purposes) by Revenue Canada, and if you didn't earn any income from Canadian sources in a given year, then my understanding is that you don't need to file in Canada.

However, simply not living in Canada and permanent residency in Brazil doesn't necessarily mean that Revenue Canada will consider you to be a non-resident. Look at RC's guide for explanations on which significant ties may make you liable to pay tax in Canada. If you own real estate in Canada, for example, you will probably be considered a resident.

Posted By: sheenaSP
Date Posted: 11 July 2012 at 23:14

Thanks Dave! That helps a lot.