Canadian in Japan on Canadian payroll

[Agnew]

If anyone could give me some advice it would be greatly appreciated. I am a Canadian, working for an American company. I am being paid through our Canadian payroll here while on a Humanities visa.

I was thinking to ask them to pay me in yen, as the Canadian dollar is dropping too low. Right now the tax situation in Canada (income tax, pension employment insurance etc.) takes about 25% of my pay.

If I were to switch to making yen, what % is usually deducted from one's salary ( I guess depending on what you earn).

Also, if I stay longer and continue to be paid via teh Canadian payroll could that cause problems wit the government wondering why I apparently have no income?

Any help would be great.

[hachiroku]

Agnew,

I am stumped...you are working for a US company in Japan on the Canadian payroll....shouldn't you be paying tax to all countries just for being silly?

Seriously though it matters not whether you get paid in US$, CDN$ or YEN. What matters is whether or not the CDN Gov considers you a resident or non-resident of Canada. If you are considered a resident then you need to pay CDN taxes. If you are non-resident than you don't pay CDN taxes but more liekly US or JPN taxes or maybe both.

Check here for more info: http://www.cra-arc.gc.ca/tx/nnrsdnts.../nnrs-eng.html

While I was living in Japan I was considered a non-resident in Canada so I paid only Japanese tax (since I worked for a Japanese company).

[Super Grover]

If you could be paid in yen, then POSSIBLY you might end up saving more in CAD terms, but how would they set the salary? Today's date? The day you'd agree? No offense, but you signed up for Canuck bucks, so shouldn't you get what you get? Not that I don't feel for you, your income steadily dropping. But your employer would seem to have to pay more than what was agreed upon, right? Earlier in the year you would have been making a lot more in CAD than if you had been paid in yen. Such is the craziness of exchange rates. It seems likely, at least to me, that the yen is going to be strong for a while.

25%? For Canada, that is not so bad.

[Majestic]

I'm also going to stand in the "stumped" line behind Hachiroku. And I'll second the comment that the important thing is to establish where your residency is for tax purposes. The Japanese criteria for establishing residency is at the following link:

http://www.nta.go.jp/taxanswer/english/12001.htm

I'm stumped because if you are here on a work visa (Humanities), it would seem to imply you are a resident of Japan for tax purposes. If you are living here I would assume you have a gaijin card, and so yes I think at some point either the national tax agency or the local tax authorities are going to say, "who is this Agnew character and why isn't he paying taxes?".

Typically, wage earners here in Japan will have national tax, local tax, social insurance, health insurance, and unemployment insurance deducted from their pay. It probably works out to about 25% (maybe less) of your pay. If you are a high-wage earner it work out to a bit more.

[Agnew]

Thanks for the replies so far. To clear up anyone still stumped. I have been working for a Canadian branch of a US based company. Therefore our payroll is done through Canada. While taking I break in Japan, I was asked to transfer to their Japan office. They helped me get my visa and said it was easier to just keep me on the same payroll. I guess the North American branches already had my salary in that budget so they prefered to pay me that way.

I am still I resident of Canada as I am still getting all the regualar Canadian tax deductions etc. So yes I did agree to stay here making Canadian dollars, but wasn't aware that such a drop would happen. Perhaps it was good a feew months back when I was getting a better deal on the exchange rate. Oh well that's my little dilema in a nutshell.

It seems deductions (taxes etc.) work out pretty even so yen might be better as I would also not have to incur such high ATM fees and currency exchange rates.

[Majestic]

G'day Agnew
I'm slightly less stumped, thanks to the info you provided. I think you still have a Japan residence issue. How your company funds or facilitates your pay isn't relevant to the Japanese tax authorities. If you are a resident here and work here, you will incur a tax liability here regardless of how you get paid, and regardless of any tax you are paying to another system. If you go to that link I provided it has more info. A crucial line to note regarding the source of your income is: "INCOME FROM SOURCES IN JAPAN" is stipulated in the Japanese Income Tax Law. For example, salaries, wages or other compensation for personal services performed in Japan are treated as "INCOME FROM SOURCES IN JAPAN" whether they are paid in Japan or abroad. (See code no.12006 for details."

The good news is that any tax you pay to Canada can be offset against your Japanese tax liability.

International tax can get very complicated very quickly. I'd suggest a trip to a tax advisor so you can get more qualified info.

[Agnew]

Thank you. So are you saying that I would be able to show tax paid in Canada to get a reduction on what I have to pay here? Would my taxes (residence) be sent to me by mail sometime?

Thanks

[Majestic]

In essence, yes. You show the taxes paid in Canada, and you will receive a credit for those taxes paid against any similar taxes owed to Japan. (Basically your Canadian taxes offset any Japanese taxes). I would have a professional do it, cause its kind of messy.

I don't know if you will get sent a notice to your residence. I don't know how far under the radar you are flying. If you have a gaijin card and a work visa, and are expecting to have to renew those at some point, I would be proactive in getting the tax situation sorted out.

[Super Grover]

I think, too, that once you are here for over X number of total days (not necessarily continuous), then you are required to pay taxes. I am certain it is under a year and this law is designed to prevent high income earning executive expats from avoiding taxation by going in and out.
Seems like you're getting a bit of a raw deal. Hope that your company can sort things out for you.

[sunao]

Sorry for the thread hijack. It's only a temporary blip.

Congrats on the name change!