Seafarers and taxes, regarding the OECD

[bugsbunny86]

Hi,

I was hoping for some clarification on the issues raised about the Income taxes payable by Canadian seafarer.
I am a UK citizen, so for now I take full advantage of the generous allowances the government give me. Something which I should be grateful for, if the talk through the union rag is anything to go by.
However I'm curious after reading the article regarding the above, as I am looking to take the plunge into immigrating to Canada. Now as a UK seafarer, if I am working on a ship outside of UK territorial waters for 6 or more months throughout a year, I am exempt from paying tax, right?

Now I visited the H&R Block during one of my stays in Canmore AB, and the gentleman there assured me that yes, if I was outside Canadian territorial waters for 6 months of the year I would be exempt as I am in the UK.
Now is that 6 months in one go, or cumulatively throughout the year?
Is it only applicable to those in the Oil & Gas sector?
Does it depend on Flag registry?
I work in the yachting sector, as there was more money to be had than slogging in the North Sea for months on end. I get 4 months at home, which I am not so overjoyed with, but considering the time it affords me at home with loved ones, is something I can live with.
I am not applying for residency just yet, as currently I'm not paying tax to the UK. I don't want to make a decision to move to Canada only to find that I'm going to be screwed for tax for the rest of my working career.

I've read through the comments on the website, and through many other topics on The Monitor, and I know you guys, and girls, are full of helpful advice, so any would be greatly appreciated.

Mercy buckets!

bugsbunny86

[JK]

Welcome to the Forum.
I'm not up on the tax issues because I am desk-bound, but I know Martin has a good handle on this very topic.

[The Dieselduck]

Huuuh, Whats up doc?

In my humble opinion, the H&R Block guy is not quite right. I think the angle he might be advising you on is that you would remain a UK national, and not taking the OECD route. Which is what I would ultimately suggest.

All the answer to your questions are answered on the Seafarer Tax Page as found on the main site, although granted, sometime it seems to be buried in there. But to cover your particular questions here, I answer your queries in Italics...

Now is that 6 months in one go, or cumulatively throughout the year? - Not necessarily, there is a tremendous leeway by CRA, as far as I can tell, for break and time off periods. Time inside the country or not may not be voiding your claim.

Is it only applicable to those in the Oil & Gas sector? - For all intent and purposes, the answer is yes to this questions, as it regards us seafarers. Farming, construction and engineering are also included in the scope of application, but basically its a very narrow criteria for say a few big O&G companies and constructions types like SNC Lavalin and such.

Does it depend on Flag registry? Not really, the onus is on the company that issues you the paycheck, and where they are based and what type of work they generally do (O&G, Farming, Engineering etc.).

I work in the yachting sector, as there was more money to be had than slogging in the North Sea for months on end. I get 4 months at home, which I am not so overjoyed with, but considering the time it affords me at home with loved ones, is something I can live with. The brits still cant shake those shitty contracts !

I am not applying for residency just yet, as currently I'm not paying tax to the UK. I don't want to make a decision to move to Canada only to find that I'm going to be screwed for tax for the rest of my working career.

I think your strategy should be to reside in Canada but not be a resident of Canada, I am not sure exactly what visas you need for this, while remaining a UK citizen. I believe this is possible for you at least in the short term, 3-5 years, you would just be a frequent visitors, once or twice a year.

There is no tax breaks for Canadian seafarers (citizen and resident) working internationally, that's the bottom line. But that's not to say that there isn't legal way around, that would fit your wishes to reside in Canada. Unfortunately, to date, no expert in this field has been identified in this field.

I'm sorry this situation in Canada sucks. But our government leaders just can't seem to get their heads out of their asses when it comes to maritime matters.

[bugsbunny86]

Hi,

Firstly thanks JK, and thank you Martin!

It's a great relief to get some "lay-mans" explanation on these issues. Our own HMRC have a beautiful way of making the simplest things indecipherable, so it's good to know we're not the only ones!
The information is incredibly helpful to have, so it means I can direct my searching in the right directions.
Just have to go about looking into visas!

Thanks again for your help, and for such a warm welcome to the forum!

brgds

bugsbunny86

[seagull]

Gid-day:
Having worked outside the country, and obtained the tax credit.. I can shed some "users" light on the topic.
If you work in the oil and gas exploration sector, internationally, and your employer is recognzied by the Canadian Gov`t as such (ie, C-Mar, Maersk-Seabase).. you qualify for the tax break. It used to be be such that if you worked outside of the coutry for 180 days in a calender year, you would pay about 8 % federal tax.

However, most Canadian outfits, cut the Pre tax income to a level where with this tax break in mind, you take home the same net as you would working in Canada at the full rate. Ie, Seabase Maersk: in Canada 120 grand, outside, 48 grand.

Also, for some reason, if you end up working for a Canadian outfit such as Desgagnes, and work outside of Canada, you don`t qualify for a tax break.... and they will reduce the pre tax income by 10$. Go figure that one out.

So, most Canadians working internationally usually end up playing a game where they declare some income, and stash/spend the rest. Not a wise move if caught.

Good Luck. Might be your best bet will be to live in Alberta which has the lowest tax rate, and declare/pay the tax on earned income. And welcome to Canada.

brgds

[JK]

I'm sorry this situation in Canada sucks. But our government leaders just can't seem to get their heads out of their asses when it comes to maritime matters.

Now this made me laugh first thing in the morning!

[Mike_88]

Why does the Canadian government not support us? Wouldn’t it stimulate our industry and create more jobs for us? I think tax breaks would be especially beneficial if you work for long periods of time out of Canada on foreign vessels. I wonder what we would have to do to get tax breaks?

Also, I have been wondering, is there any Canadian organization of mariners (or engineers) that is there to help the individuals to have bigger role in relations with companies. Not exactly sure how to put it, but when I have talked to some mariners from England, they seem to have a union that help them to negotiate with shipping companies to adjust how much pay raise they get and help them with taxes. Anyways, I am not exactly sure if we have something like this, but if anyone has an idea, I would appreciate it!

[bugsbunny86]

"Also, I have been wondering, is there any Canadian organization of mariners (or engineers) that is there to help the individuals to have bigger role in relations with companies. Not exactly sure how to put it, but when I have talked to some mariners from England, they seem to have a union that help them to negotiate with shipping companies to adjust how much pay raise they get and help them with taxes. Anyways, I am not exactly sure if we have something like this, but if anyone has an idea, I would appreciate it!"

The organization you speak of is Nautilus, formerly Numast which arose from the RMT Union. It now covers UK and Irish seafarers, and then has developed into Nautilus UK and Nautilus NL to help the Dutch with their relatively poor conditions and company relations.
I think that the Dutch amalgamated with us after pressure from the professionals within their country serving on Dutch flagged and foreign flagged vessels alike. And as I understand it, they get taxed even more heavily than you Canadians!

If there was anywhere to start a process of developing these relations with Canadian companies, and for Canadian seafarers, or to gain advice about this, I would suggest contacting Nautilus' head office in London, UK. The website is www.nautliusint.org

Hope this is of some help!

[JollyJack]

As a citizen of both UK and Canada, I found that the only way to avoid paying tax in Canada is to establish residence outside Canada and to have official recognition of that. (I had a letter from the UK taxman saying I was liable for UK tax) As a "landed immigrant", as it was previously, ("Permanent Resident" now) you must establish residence in Canada, so that negates that option.

The other option, under which I laboured for a while, does not exempt you from tax in any way. The only difference is that you will pay it to your employer, not to the Government. The salary offered by Seabase, for example, reflects this, the base salary is the industry standard less the tax you would pay as a single person with no deductions. You are, in effect, cheap labour. Only certain "approved" employers, "approved" by our oil-industry friendly Government, are eligible for this "cheap labour" option. If, for some reason, (you're not part of the Newfie clique, for example) and don't complete 6 months within a year with the "approved employer", you will be liable for income tax on the (reduced) salary you have been paid during the year, so your reduced salary will be reduced even further. Definitely NOT the recommended route, unless you are bottom-of-the-barrel begging for a job, any job.

There's no real option available to avoid paying taxes in Canada, unless you are a millionaire, in which case, if you pay taxes, it's your own fault!