Canada–India DTAA explained: is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: relief is claimed by establishing residence with a certificate from the home authority, identifying the article that covers the income, and computing the credit in the country that taxes second.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Do I pay Canadian tax on rent from Indian property?
If you are resident in Canada, Canada taxes your worldwide income, so the rent belongs on your Canadian return in Canadian dollars. India also taxes rent from property situated there. The agreement does not usually stop either country; it decides which one taxes first and requires the other to give credit. In practice India taxes at source, Canada taxes the same rent again on the return, and the Indian tax paid is claimed against the Canadian liability on that income. The credit is capped by the Canadian tax on that income, so the two computations have to be prepared together rather than in separate years by separate people.
How do I prove I am a Canadian resident to an Indian payer?
With a residence certificate issued by the Canadian authority for the period the income relates to, and India then asks for its own declaration alongside it. The payer needs both on file before it can apply a treaty rate instead of the domestic one. Two things go wrong repeatedly. The certificate is requested for the wrong period, so it does not cover the year the payment falls in; and it is requested a fortnight before payment is due, when lead times run in weeks. Ask early, and check that the period printed on the certificate matches the dates on the invoices.
Is my Indian pension taxable in Canada or in India?
It depends on what kind of payment it is and which article covers it, and pensions are one of the three places this agreement does real work. Government service pensions are usually dealt with separately from private and retirement-fund payments, so the first task is to identify the article that applies to your payment rather than assuming all retirement income is treated alike. Once the article is settled, the residence position and the credit computation follow from it. Bring the award letter and the payment advices, because the description on them usually decides which article you are in.
What withholding applies to fees I bill an Indian company?
The domestic rate applies unless the payer holds the treaty documents, in which case the rate in the relevant article of the agreement applies instead. Which article that is depends on what you actually supply: a royalty for the use of something, a fee for services of a technical character, or ordinary business profits. Contracts frequently describe one and invoice another. Settle the characterisation before the first invoice goes out, because correcting the rate afterwards means recovering tax from an authority rather than asking the payer for the balance, and that is a slower and more expensive road.
Which country gives the credit when both tax the same income?
The country that taxes second. Work out which country has the primary right under the article covering that income, allow it to tax, then claim relief in the other country against its tax on the same income. The order matters more than people expect, because relief is capped by what the second country charges on that income and not by what the first country collected. Where the first country's rate is the higher of the two, some tax is simply not recoverable, and the answer is to reduce the withholding at source with the right documents rather than to claim a larger credit later.
I sold property in India, so which country taxes the gain?
Gains on immovable property are one of the three areas this agreement is used for most, and property situated in India is generally taxable there. If you are resident in Canada the same gain is reported here as well, computed under Canadian rules, which means a cost base in Canadian dollars, a different set of adjustments and often a different figure from the Indian computation. The Indian tax paid is then claimed as a credit. Keep the purchase deed, the improvement receipts and the exchange rates, because rebuilding a cost base for property held for decades is the slow part of the work.
How does an NRI prove residence to get the treaty rate?
With a tax residency certificate issued by the country you are resident in, plus Form 10F giving the details the certificate does not carry, plus a PAN in the payer's records. The certificate has to cover the period of the payment, and the payer needs it before paying, not afterwards. Missing any of the three and the deductor is obliged to withhold at the domestic rate, which turns a rate reduction into a refund claim. See TRC against Form 10F.
Can I move my 401(k) or IRA into an RRSP?
In limited circumstances, and rarely without cost. Canada allows a transfer of certain US plan proceeds into an RRSP with additional room for that purpose, but the withdrawal is a taxable distribution on the US side first, with withholding and potentially an additional charge for taking it early. Whether the Canadian credit fully absorbs that US tax is the calculation that decides it. Often leaving the plan where it is and drawing later is the better answer. See RRSP against 401(k) and IRA.
