Taxes in Canada for Mariner

[Mike_88]

Hello there,
I was just wondering if anyone knew how to deal with taxes as a Sea farer working out of the country. I have read through some of the information on the taxes page, but most, if not all of it is based off of old information. I am currently working for Princess Cruises on a 4 months on, 2 months off schedule. I will be leaving again at the end of the month and just wanted to do my taxes before it was too late. I am really confused as to how someone like me should approach doing their taxes. I just finished up my schooling in North Vancouver last year so this will be my first year of working this schedule and I am in need of advice in how to deal with this situation. Would it be a good idea to go to H&R block, do they charge a lot of money for someone like me, or is there a better solution. Last year I didn’t work more than 4 months for Princess, but this year will be around 8 months, so for next year, the taxes I might pay should change considerably due to this fact. That and I am no longer a student. Please, if anyone has any idea of where I can go to do my taxes, or anyone who could help, thanks.

[JollyJack]

The tax system for seafarers in Canada is quite simple, if you are resident in Canada, you pay full Canadian tax on your world-wide income. The only exeption to that, as far as I know, is if you are engaged on oil exploration or exploitation, in which case the tax payable is 80% of the full tax rate. This reduction in payable tax is taken by companies like Seabase in St Johns, who take the full reduction. You will not see an increase in wages, your net income will be the same. The reduction is based on 6 months plus a day out of the country, working in "oil exploration or exploitation". If, for some reason you do not complete 6 months plus a day (whistling in the galley with a Newfie crew aboard, for example), you will pay tax at the full rate on the reduced wage you have been paid.

eg, tax is (say) 30%, so for every $1000 the full rate is $300, you get $700, Seabase holds $300 to send to the Government as PAYE. With the reduction rate, you still get $700, Seabase takes the 80% reduction and holds 20% of the $300, ie $60 as a tax hold-back for the Gov. Complete 6 months plus a day within the tax year, you have no problem, you're working cheap, but that's the going rate.

So you wear grey mittens, own a rabbit's foot for luck and whistle, (all VERY bad luck tokens!) some of the Newfie crew are pissed, so you're fired without completing the 6 months plus a day. You've been paid $700 for every month you've been aboard, so you owe the Taxman 30% of $700 a month, or $210. Seabase has $60 of that in tax holdback, so you have to pay the Taxman $150. You lose in two ways, you get a reduced salary and that salary is taxed at the full rate!

The only way around it is to establish a residence in UK (any relatives there? use their address) and get a letter from the UK tax man that you are liable for British tax. Under the Merchant Shipping (Seafarer's Tax) system, if you are on a ship, a bona fide seafarer working outside British Home Trade waters, you don't pay tax!