Q&A: Pension Puzzle
A reader is unsure how to deal with money from a U.K. pension. Here, Gordon Pape gives his answer.
Q – I am an ex-pat from the U.K. living in Canada for the past 35 years, approaching retirement at the age of 65. I have been fully employed as a teacher for more than thirty years, thereby qualifying for a teachers’ pension and the OAS (suitably harmonized) upon my next birthday in May.
I have also been paying into my pension plan in the U.K. and will qualify for that full allowance at the age of 65. I have maintained a British bank account which has recently been “swollen” by a legacy from my late mother; I also have been receiving a very small monthly teachers’ pension for the last few years and paid British tax on that. I have never touched my “British” money here in Canada, only dipping into it when I visit the U.K. or Europe.
As I shall ask for my British pension to be deposited in my British account and will never transfer or use that money in Canada. I was wondering what the tax implications will be if I continue to live in Canada.
A – You are legally required to declare all your world-wide income when you file your Canadian tax return. The fact the money is not brought into the country is immaterial as far as the Canada Revenue Agency is concerned.
I do not understand why you are paying taxes in the U.K. if you are not a resident there. In any event, you should be able to claim a foreign tax credit for that on your Canadian return. – G.P.
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