Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Path: utzoo!utgpu!utcsri!elf
From: elf@utcsri.UUCP
Newsgroups: can.general
Subject: Canada/Switzerland Taxation
Message-ID: <5584@utcsri.UUCP>
Date: Wed, 28-Oct-87 09:31:20 EST
Article-I.D.: utcsri.5584
Posted: Wed Oct 28 09:31:20 1987
Date-Received: Fri, 30-Oct-87 19:42:08 EST
Distribution: can
Organization: CSRI, University of Toronto
Lines: 49

I'm sure a subset of this set of questions has come up before, but I've just
recently plugged myself back into the net.

I have this friend (really!) who is currently a nonresident Canadian, 
living in Switzerland.  She/He has a number of tax questions which the Revenue
Canada people there are extremely cagey about answering.  (You might wonder 
what they've done to earn a nice foreign assignment but refuse to answer
straightforward questions, but I don't.)  I will frame the questions in a
more abstract situation.

Suppose an individual earns $X from Canadian sources, but NOT taxed at the
source, and also suppose this individual, a nonresident Canadian living in
Switzerland, earns Y SFr, which is taxed at the (Swiss) source (just try
to avoid paying taxes at the source in Switzerland!).  A simple situation.

Now, tax time comes along.  In Switzerland, you don't fill out tax forms
if you're not Swiss--you just have the right to appeal if you feel too
much has been deducted.

Here are the questions:
(1) Should the $X income be declared in Switzerland?  If so, what exchange
    rate should be used?
(2) Should the Y SFr income be declared in Canada?  If so, what exchange
    rate should be used?
(3) Suppose X tends to zero (i.e., Canadian income drops off), what should
    be reported on the Canadian tax form?
(4) What mechanisms do the Canadian authorities have to verify your Swiss
    income?

I should put my $0.02 (0.021SFr) worth to say that the SFr is highly
overvalued relative to the $CDN (an accurate indicator: a Big Mac, large fries,
and small coke costs 8SFr in Switzerland compared to less than $4, whereas the
exchange rate puts 1SFr = $0.89).  This is the setting for my last question:

(5) Suppose one declares his/her Swiss income on a Canadian tax form, and
    that the Swiss income was taxed at 15%, say, at the source.  Suppose
    that when converted to Canadian dollars, the Swiss income combined with
    Canadian income puts one in a 30% tax bracket, say.  Does that mean that
    the Swiss income is taxed an additional 15% payable to Canada?

I'd appreciate informed responses to any of these questions.  It's probably
best to mail them to me.  I'll summarise to the net if interest is expressed.

Thanks in advance.
-- 
Eugene Fiume, University of Toronto
elf@csri.utoronto (bitnet)
elf@csri.toronto.edu (csnet)
...!utcsri!elf (uucp)