Have you ever thought about studying overseas? Do you take many work trips? Are you considering a global adventure? Are you a snowbird? Do you spend more than half the year outside the country? This article is for you. Before you board a plane or drive to the sunny shores, it’s essential to do some planning to help prevent financial surprises.
Cashflow Planning
Create a budget. Include things like transportation, visa costs, accommodations, meals out, visiting local attractions and entertainment, etc. You’ll also want to build in an amount for unforeseen expenses or emergencies. Then, be sure to set aside the necessary funds. If you’re planning to take a loan out, add your expected repayment plan to your regular cashflow to test if the expected payments fit comfortably.
If it’s a work trip, check with your employer. Some employers provide a spending allowance beforehand to cover expenses, while others reimburse expenses upon your return – either way, confirm what amount they’ll cover and any restrictions. Then collect all your receipts. Anything your employer does not cover may be claimable on your taxes – Check CRA for current rules and requirements.
Travel insurance
Travel insurance is a much ignored but necessary part of travelling. The last thing you want to worry about on your trip is costs due to unexpected medical emergencies, cancellations, lost bags, etc. Start with discovering what you already have in place, look at:
- The credit card you used to pay for the trip
- Your health plan – some include travel insurance
- The company you used to book the trip
If your current coverages aren’t enough, investigate a standalone policy.
Taxes
Long stays outside of Canada can also have tax consequences. What those consequences are depends on how many days you're outside the country, the reason you’re gone and if you are earning an income while away.
As far as Canada is concerned:
- Your tax obligations depend on your residency status set by CRA
- This includes what income you must declare - Canada does have tax treaties with some countries to prevent double taxation
- Your tax deadline is the same, regardless of your location
If you are planning to spend a significant amount of time outside the country, consult your accountant and Service Canada to determine your obligations.
As for the country(ies) you are staying in, it depends. Each country has their own tax rules. For instance, the USA requires anyone who is in the country for more than 183 days in a calendar year to file a US tax return, which snowbirds and cross-border employees should consider.
It is wise to visit the consulate or embassy of the country you are planning to visit well in advance of your trip. Investigate the key regulations for working or visiting their country, focusing on visa requirements and any applicable tax obligations.
You want to enjoy your trip, not encounter unwelcome surprises. To incorporate extended foreign travel into your overall planning, contact KLT Wealth Management.
Courtney Beach, QAFP
