Taxation and divorce when you work in UK and pay support over to Canada.

bigmondy

My best friend has been divorced in Canada for 2 years now and is paying maintenance on his 3 kids with a parental agreement in place for a year now.

He is also paying his ex wife maintenance at a proportion of his salary which was also agreed 2 years ago (it was a 5 year agreement and is an annually reducing proportion % of his earnings ending in 3 years) - he didn't say what he is paying at the minute. The thing is that he and his ex both pay the tax on the proportion of his earnings that they both are left with - in Canada.

The problem is - he has started a job in the UK (he had to grab the opportunity a couple of months back - beggars cannot be choosers and all that) and in the confusion of relocating not one person was able to give him the definitive low down on what the tax implications are.

Is there a reciprocal agreement of some sort between UK and Canada. Is his ex still liable for the Canadian tax element and will he get relief on that amount?

What Tax responsibilities do they both retain or loose? Are there ways they can both benefit from the situation?

Any advice appreciated folks.

EDIT: forgot to say - he is British but with Canadian - is it "landed status" they call it?

bigmondy

I realise this is a complex one - is there a forum where I might get advice for him?

He is far too busy to even think of the tax implications right now and I feel for him.

Thanks guys.

Gas_Powered_Toothbrush

Unless he or his ex were born prior to 6th April 1935, he will get no relief for the maintenance payments in the UK.

I have no idea on the Canadian position.

bigmondy

Nope both in their 30's GPT.

Savvy_Sue

I just did a google for 'Canadian expats' and there are a couple of forums which crop up there, including some details of the tax situation.

This may be a situation where you need to pay for advice.

bigmondy

Yes I fear you may be correct Sue - he actually said the same.

But what a good idea - Canadian expats in the UK will know where to get that advice I suppose. I suppose because he is British and back in the UK - we just never thought of him as that.

I will email him with your inspirational advice. A Eureka moment indeed.

Thanks.

sv650s

Make sure your mate picks the best rate possible. My auzzie friend had this situation - they were going to charge him Auzzie childcare rates (which are criminal) and instead he opted for canada rates, which are lower. Can't help on the tax thing though!!

bigmondy

Not sure what you mean SV650s?

Savvy_Sue

Maybe he means Child Support rates in an Aussie / Canadian divorce?

bigmondy

Ah. I see now. Thanks SS.