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Context: I'm an Indian working in Canada on work permit. I have also been working as a freelancer and my freelancing income is deposited in my Indian account but my client.
Questions:
1) Do I need to file my income tax return in both the countries?
2) Do I need to report my Indian income in Canada?
3) If yes, how much income should I report here in Canada? Let's say I earn 100,000 INR annually in India where I'm spending (50%) 50,000 on expenses. Should I report 100,000 or 50,000?
4) Based on Indian tax brackets, if my taxable income is 100,000 but my total income in India is more, should report total income in Canada or just the taxable income(based on Indian tax brackets)
Hi Ram,
If you moved to Canada with the intention to live in Canada permanently, and you have a permanent residence (either rented or owned in Canada), then you are likely a tax resident of Canada pursuant to the Canada-Indian tax treaty. Having said that, I need a list of all of your ties to India and Canada to make a property determination of your residency status.
Residents of Canada are taxable on their global income, including income earned in India. To avoid double taxation, claim a foreign tax credit for the Indian taxes paid; this will reduce your Canadian tax liability.
In regards to freelance work, the profit (revenue minus expenses) is taxable in the country where you have a permanent establishment. For most freelancers, their permanent establishment is their home office.
Non-residents of India are taxable on Indian source income.