Financial Planning Tip - April 9,2016 -001 Tax - Residency 101

April 2016 would be the month, all things being equal when you can pay the final 20% on your income tax for the year of Income 2015. In keeping with the thinking of having my taxes as materially correct as possible, I will review concepts which impact on Income and the related tax. Here is my assessment #1 which is based on residency. I am using the Canadian model because of the following reasons:

1. Trinidad and Tobago has a treaty with Canada which was set out to reduce the occurrence of double taxation. See the link which would allow you to view a copy of the treaty. http://www.ird.gov.tt/double_taxation_treaties
2. The concept of residency and income impacts upon a person in a basic way on several areas:

•  The rate of tax on which you are assessed will differ because there are different rates of tax for Income Tax and for withholding Tax
• There is a (TTDollar sixty thousand) TT$60,000 personal allowance which is available to residents of Trinidad and Tobago. This allowance reduces the Income Tax which is liable on the Income earned in Trinidad and Tobago. Most persons would have elected to have  Pay as you earn (PAYE) deducted from their income as employees. This PAYE is remitted to the Board of Inland Revenue on your behalf, monthly. At the end of the calendar year, the information is provided to you in an annual TD4 certificate,  and a copy is provided to the Board of Inland Revenue. 

However in keeping with the concept of reviewing income, I will leave you with an extract from the Certificate in Financial Planning Education Programme which covers residency and income source.
According to Jamison Aldcorn, author of Contemporary Practices in Financial Planning (CCH/Advocis Education Programm) "Canada imposes tax on the twin basis of residency and income source. For example, Canada taxes its residents on their world wide income. It taxes non - residents on income earned in Canada"
The question therefore arises "Where do I fit in relation to income which is generated in Canada? Think: dividend income from companies which are traded on the T&T Stock Exchange whose parent company is registered in Canada; bank accounts which hold Canadian dollars, rental income from properties located in Canada.... Was tax deducted at source on the funds (income) earned over the year?
© Jennifer Bailey jennifernbailey24d@gmail.com