A decade ago, the majority of out-of-country clients of Toronto-based accounting firm Trowbridge needed help with U.S. tax issues, serving Canadians who had moved south of the border for economic opportunities.
But as Trowbridge partner Arun Nagratha notes, in the past 10 years, “it’s amazing how our practice has grown so much with the trend of Canadians moving further afield to Europe and Asia.”
Canadians tend to operate under-the-radar abroad, but it’s hard to think of a work force in a major world capital that does not have significant representation. “We tend to be well-educated and to get along well with other cultures, so it’s not a surprise that Canadians fit in,” Mr. Nagratha says.
Of the 1,200 expats who regularly use his company’s services, around 200 are small-business owners. About 100 are in China and Hong Kong, and 50 or so in Singapore.
“Canada taxes on worldwide income,” Mr. Nagratha points out. While people used to just “pick up and leave,” Canadian tax authorities appear to be more vigilant about collection and more inclined to impose fines. Mr. Nagratha, in his experience, finds “people are more scared than before and more compliant.”
For small-business owners operating broad, a major issue with Canada’s higher taxes is structuring their enterprises in ways that maximize non-residency status. Hong Kong and Singapore, for example, have very low income taxes. China’s taxes are comparable to Canada’s, and income reporting is required on a monthly basis.
Real estate in Canada is another top concern, Mr. Nagratha says. For individuals who purchase residences, non-resident status can be maintained for tax purposes by renting out the property to a non-related party. But with the relative strength of the Canadian economy, Mr. Nagratha notes that in the past two years he’s noticed a higher number of people returning or actively planning to return.
For those close to or above traditional retirement age, he counsels on eligibility for pensions. Canadians who have spent much of their careers abroad are still entitled to benefits. “People tend to forget that they are able to draw upon Canadian pensions. If you worked in the past and contributed to a pension, you can contact Service Canada and they can send you a summary of what you are entitled to,” Mr. Nagratha says.
One curious development he’s noticed is the increasing number of Canadians seeking to retire in Malaysia. Property prices and cost of living is fairly affordable in Kuala Lumpur. It’s a cosmopolitan capital that offers good health-care services. Plus, Mr. Nagratha says, “Malaysia taxes on Malaysian-source income, so it can be beneficial for Canadians.”
Mr. Nagratha, a chartered accountant who operates out of Toronto, travels regularly to Asia to do rounds of presentations for existing and potential clients. Trowbridge has 32 staff members in Toronto, five in Vancouver and two in Britain.
Mr. Nagratha was recently invited to speak before audiences in Hong Kong that were assembled by organizations such as commercial property investment firm Redev, the Canadian Chamber of Commerce, and the Canadian International School.
Special to the Globe and Mail
Alexandra A. Seno has written about economics and business trends in Asia since 1994. She is a regular contributor to Newsweek, the International Herald Tribune and The Wall Street Journal Asia. She lives in Hong Kong.
Join The Globe’s Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzTReport Typo/Error
Follow us on Twitter: