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Working Holiday Visa and Tax Implications

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  • Working Holiday Visa and Tax Implications

    I was wondering if anyone had gone on a Working Holiday in Japan and what the tax implications were when they returned to their home country? I'm from Canada, so I guess the most helpful information would be from Canadians living there or such. I have heard a lot of people apply for non-resident citizenship, but I am not sure I want to do this. Is the income I earn in Japan going to be taxed once again when I return home to Canada?

  • #2
    Re: Working Holiday Visa and Tax Implications

    Yes. The Federal tax will be taken as will the provincial tax. For WORKING HOLIDAY visa there is no point in declaring non-resident status from Canada as you will still be taxed 20% by the Japanese government because you are a non-resident of Japan. What you do is check the tax treaty with Japan; last time I checked (3 years ago) you could claim that you already paid taxes to Japan and that you could either get it back or claim it as credit against the Canadian Federal tax.

    You really have to check with Revenue Canada site:

    http://www.ccra-adrc.gc.ca/tax/nonresidents/menu-e.html

    Your tax obligations
    For the tax year you leave Canada and for each year you're a factual resident while living outside Canada, your income is taxed as if you never left Canada. You'll continue to:

    report "world income" (income from all sources, both inside and outside Canada) for the entire tax year
    claim all deductions, non-refundable tax credits, and refundable federal, provincial, or territorial credits that apply to you
    pay federal tax and provincial or territorial tax for the province or territory where you keep residential ties
    be eligible to apply for the GST/HST credit (goods and services tax/harmonized sales tax) and the Canada Child Tax Benefit.

    Because you are only a temporary non resident you are probably not entitled to any benifit that comes from being a non-resident.

    Questions to ask yourself:
    1. How long will I be outside Canada. You can stay in Japan only 12 months on a working holiday visa, Do you have a degree and will you get a full working visa? Or will you try working holiday in another country?
    2. If you are not staying outside Canada over 1 year are you willing to loose your health insurance? As a non-resident you must stay in Canada for 6 months straight before you get your health insurance back (Ontario) It might depend on your province.
    3. How much money will you really be making in japan? Are you going to make over your personal exemption? If so how much? and what tax bracket would you fall into?

    To conclude. In my opinion only do it if you are staying in Japan on a working visa (I have stayed 3 years I no longer file tax returns in Canada and I am a non-resident, I pay federal taxes in Japan at about 7% I think now and residence tax)

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    • #3
      Re: Working Holiday Visa and Tax Implications

      Thanks WBW, that clears up a lot of things. In my case because of the WHV, it would make no sense to be a non-resident. I'm not planning on living in Japan after the year ends and I don't get double-taxed which was my only fear.

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