The Seafarer and the Taxman
A campaign to raise awareness about tax issues for professional Canadian seafarers
Authored by: Martin Leduc
Brought to you by www.dieselduck.net, comments to firstname.lastname@example.org
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I believe that Canadian seafarers working on internationally flagged ships are at severe competitive disadvantage due to our Government's Income Tax scheme for seafarers. On this page, you will find material which elaborates my position.
I have sent many letters to Members of Parliament, Ministers and committees, highlighting our dilemmas and requesting their input and action. You will find such a letter and a timeline of developments below. I have also included a question and answer that I feel people not entirely aware of the situation might find helpful.
I hope you will provide me with input, good or bad, and completely anonymous, so as action can best be directed to benefit our Canadian seafarers. There is no union for us. There is no one group that can speak for us (if you know one, let me know). This is it.
So if you have an opinion, this is where we can discuss it and make something happen to improve our lives. ...and if you think that it doesn't affect you because you work on a Home Trade vessel, I submit that better wages and condition affect everyone. Home Trade Vessels are always so close to being replaced by cheaper foreign flagged vessels, that is just a world economic reality, and we must realized that we are part of this world.
Whoever commands the sea, commands the trade, whoever commands the trade of the world, commands the riches of the world, and consequently the world itself.
- Sir Walter Raleigh
The Seafarer and the Taxman
Martin Leduc, Martin's Marine Engineering Page - www.dieselduck.net
It’s ten in the evening; the control room is now quiet after a busy day of maintenance and repairs. The 80,000 tons ship gently rocks reminding you that you’re at sea. Alone in the control room, overseeing four people on watch, and the five massive diesels generating 51,000 kW. They reverberate at your feet as it carries 4000 souls through the night. With this great responsibility, an engineer may feel a deserved sense of pride and accomplishment.
After all it wasn’t an easy “road to travel” to get to this point, or easy being here! The long contract away from your family, the nomadic lifestyle, the never-ending learning curve, being a cadet; it is no wonder that reports after report predicts worldwide shortages of shipboard officers. Nowhere is that more so, than in Canada, by all accounts, already short of trained experienced officers.
In this age of skill shortage, it is indeed an accomplishment for Canadian officers to compete in the global marketplace, where our skills as professional seafarers are honed alongside our international peers. Many countries have long realized the benefits of having an international pool of seafarers to draw from for their vital national trade interests. And many of those countries, from Asia to Europe, have adopted comprehensive policies protecting the human resources needed for their nation’s survival in the global market.
When that officer in the control room of the ship gets relieved at midnight, it will most likely not be another Canadian officer. It could be a Swede, Phillipino, English, Ukrainian, Italian, or Argentinean – multinational crews are the reality in this world, where the “Standards of Training, Certification, and Watchkeeping for Seafarers” (STCW) have come into play. The idea is that no matter where officers are licensed they should all be able to equally perform their duties on a ship.
And generally speaking, the wages have begun to reflect unified certification standards. The expected competency for ship’s officer and their remuneration is generally the same for a particular rank, regardless of the seafarer’s nationality. And those wages are dictated by the global supply of professional seafarers.
This wage scale has taken into consideration that the majority of international professional seafarers do not pay income taxes in their home countries. Because of the low numbers of Canadian seafarers working internationally, we cannot really influence the market rate for wages, and therefore we must conform to the set wage scale.
As a licensed Marine Engineering Officer, working and living on a ship outside Canada, my income is subject to income taxes at the same level as if I was working and living in Canada, which means that my “take home” pay is at least 30% lower than most of my international counterparts. This creates a serious competitive disadvantage for Canadians, resulting in undue hardship on our seafaring professionals and their families.
Imagine performing your job alongside your peers yet taking home 30% less wages. Why would you? The realities are, that when my wife and I sit down and talk about finances and plans for a house or family; the bottom-line is depressing. At tax time, it is even more depressing. Financially, I would be better off being a fast food restaurant manager, than working as a certified Marine Engineering Officer, with years of training and experience. Doing so, I could take advantage of all the benefits of working within Canada: social programs, higher occupational standards, extended benefits, employment insurance, etc.
I believe that this obstacle is harmful to Canada’s future and that it is important to institute a tax scheme for Canadian seafarer that is inline with the majority of other nations. For example, seafarers from the United Kingdom who work on ships outside of their nation’s territory, for more than six month in a year, do not have to pay income tax on their wages earned aboard a ship.
Canada currently has a “similar” program and it is called the Overseas Employment Tax Credit. Although a few seafarers are currently taking advantage of the credit, the majority cannot meet the narrow criteria of the program. An adjustment of this tax credit program, or better yet, the creation of a new program similar to the UK’s, would go a long way in helping Canadian seafarers compete in a global marketplace, and assure our nation has a pool of trained, experienced seafarers to draw from.
Most people’s reaction to this idea is supportive, but overshadowed by apathy. After all, “death and taxes” are the only guarantees in life. In the absence of a united voice for professional Canadian seafarers working internationally, I have submitted my observations to Members of Parliament, and to the Finance Minister.
Questions and Answers on a
Proposal to reduce the income tax burden
on Canadian Seafarers
Income tax and professional seafaring
Why do seafarers need special income tax considerations?
An elimination, or reduction, of income taxes for seafarers would allow Canadian seafarers, already respected in the seafaring community, to continue to work abroad without undue financial hardship to their families. No income taxes for professional seafarer’s wages earned outside Canada’s territorial water would bring Canadian Seafarers policy inline with many other nation’s policies, such as the United Kingdom, Italy, Croatia, France, South Africa, Philippines and many more. This allowance would level the playing field for Canadian Seafarers, currently at a serious competitive disadvantage due to our heavy tax burden.
On the cruise ship I work on, I, and fellow Canadians, was working alongside other licensed staff from across the world. As officers, we are all license under the same guidelines set by international standards (the United Nations’ International Maritime Organization sets these standards). All officers are qualified to perform their duties regardless of the nationality. In fact the only difference at the end of the day, was our individual spending power. As Canadian, my income earned outside Canada was taxed at the same level as if I was in Canada. This is much difference than my peers, who pay no taxes on their income earned as seafarers outside their nation’s territory for a given period of time.
What’s in it for Canadians?
Canada will gain on many fronts. For the future, Canada will have a vibrant, experienced and professional workforce to draw from for its own maritime needs, crucial to our economic well-being. Lower taxes will make it more attractive for seafarers to work abroad on a consistent basis and bring the financial results into our economy. The financial attractiveness of a career at sea would increase the efficiency of, and interest in our existing maritime education institutions. Making these institutions financially self reliant, relieving the Canadian taxpayer.
Seafarers already receive many benefits from being on a ship?
Seafarers perform their work on a ship away from their families and homes. They are provided with room and board, and limited recreation facilities. Due to the nature of a ship (size of cabins), seafarers usually don’t have many personal effects aboard and that is one of the many reasons for the need to maintain a residence, or “home port”.
Working on ships is like a holiday, why should they need a tax break?
Working on a ship is not a holiday; time away from the ship is not a vacation either. These are misconception often associated with seafaring. For example, take twenty employees at random from your work place. Confine yourselves to a 3000 square foot of living area for three months without ever being more than 150’ apart. Using this analogy, one begins to understand that life on ship presents many challenges before a single ounce of energy has been spent towards actual work. The work hours themselves are no picnic; 10-14 hour days often split into two or three blocks, without days off, for the length of the contract. That is why working on a ship is not a vacation, and time off the ship is spent much like a weekend or evenings.
Why shouldn’t seafarers pay their “fair share”?
It is completely reasonable to expect to pay our fair share, which is exactly what were after. Firstly, consider that seafarers spend more than half of the year physically outside our borders, yet that outside income flows into our economy through property taxes, GST, sales tax etc and general spending adding to our nation’s GDP. Also consider that maritime law requires employers to provide healthcare for seafarers and therefore healthcare is not a burden to Canadian taxpayers. Even with that in mind, citizens of BC must pay full healthcare premiums regardless of being out of the country for extended time periods. Seafarer working for foreign companies are also disqualified from social programs such has Employment Insurance.
You are asking for special treatment?
We are asking the people of Canada and the federal government to recognize the importance of the professional maritime community to Canada and its future. Canada relies heavily on the world trade made possible by shipping; and shipping is made possible by professional seafarers. Seafarers make many great and real sacrifices in carrying out their duties. Seafarers from Canada will make decisions, which put the interest of Canada first, reducing our need to rely on foreign assets. And not just for commerce, but for our national defense and our Canadian sovereignty.
Remember the GTS Katie; in the mid Atlantic, August 2000, Canadian forces commandeered the ship in order to free up its cargo of Canadian military vehicle worth over CDN$223 million. The equipment was “held hostage” because of payment issues between the charterer, crew and owners. The GTS Katie was a multipurpose Ro/Ro (Roll on Roll off – like a ferry) built for the Soviet Navy, the owner off the ship were located in Maryland, USA, the ship was registered in St Vincent and the crew was Croatian, Ukrainian and Russian.
A proposed course of action
How do Canadian seafarers deal with taxes now?
- One option for seafarers is to move to a foreign country and sever all ties to Canada. This is a popular option for Canada’s youngest professionals who are “mobile” and welcome worldwide. The process of severing all ties to your home is quite extensive and long. Forcing professional mariners outside Canada would certainly put a strain on our future supply of seafarers. Current research predicts a worldwide shortage of maritime officers, and Canada already is facing that crisis.
- Another option for seafarers is to create an offshore corporation much like shipping companies already do. This option although complicated for the average sailor, is not uncommon. The taxation system in place is structured in a manner that results in no or much lower overall income taxes.
- One other option is to not declare your earned income. This option is unethical, and contravenes Canadian laws, but outside of Canada, Revenue Canada has little jurisdiction to collect data and therefore would be unable to exert effective sanctions.
Isn’t there any tax scheme that already applies to seafarers?
Yes. There are many countries with income tax regime specifically tailored for seafarers. Most are identical in purpose and plainly stated: If a seafarer works outside their home country’s territorial waters, earning wages on a ship, for more than half of the year, that income is not taxable by that country. Canada has no such regime. Some Canadian sailors, working in the oil and gas sectors (supply ships, tankers, support ships, etc.), do get relief from income taxes by taking advantage of Revenue Canada’s Overseas Employment Tax Credit (OETC).
Click here to see the UK's Inland Revenue service help sheet on calculating the tax exemption for sailors.
What is the Overseas Employment Tax Credit (OETC)?
The technical interpretation of the OETC is best described by Canada Custom and Revenue Agency’s (CCRA) own publication – IT 497 R4. This publication basically states that if, in one tax year, you work in a certain field (i.e. Engineering), for a “Canadian” company, involved in certain industries (i.e. Oil Exploration), outside Canadian territory for more than six consecutive months, then you can have $80,000 of your $100,000 income not subjected to income taxes.
Click here to see the latest CCRA's Information Bulletin on the OETC, dated May 2004. Click here to find the previous version dated Feb 1996.
A marine engineering officer working for a Canadian placement agency on a foreign flagged ship supplying an oil-producing platform could, by definition, be entitled to the OETC.
Why not alter the OETC to include seafarers?
An alteration to the existing OETC may in fact the simplest to implement. A slight “tweaking” of the already existing program would most likely not require any parliamentary involvement. But, it is this author’s belief that the OETC program was designed for “white collar" and some construction workers and alterations may create more confusion than necessary.
What alteration to the OETC is needed to accommodate tax concessions for Professional seafarers?
According to CCRA’s guide, one of the qualifying occupations for the OETC is “Engineer”, therefore on a ship; only marine engineering officers should technically qualify for the credit. As explained further on this document, engineering officers make up only part of the ship’s complement; there is also deck officer, cooks, deckhands, oilers etc.
- The definition of employer will have to be expanded to include ship owners/ manager/ crewing agent of non-Canadian origin.
- The length of time away from Canadian territory should be changed from six months consecutive, to total time. Most seafarers spent more than six months, in a year, physically away from their home, but rarely do they do it in one consecutive period.
Should there be a similar program to the OETC, but for professional seafarers?
Yes. The require changes to the OETC really are the core of the program, and doing so may not include all professional seafarers and may create more confusion. A purpose designed program, similar to the OETC, but specifically tailored for professional seafarers is the clearest way to achieve this goal.
What is a professional seafarer?
A professional seafarer is licensed or unlicensed person who earns wages while carrying out their responsibilities as part of a ship’s crew.
What is meant by licensed and un-licensed?
The operation of a ship requires various skilled people who fall into two general categories: licensed, also know as Ship’s Officers, and un-licensed, known as ratings. Officers are held responsible for the safe operation of the machinery and manpower assigned to them. Ratings perform various shipboard tasks such as painting, cargo handling, cooking, cleaning, repairs and more. Officers and Ratings are further categorized into two departments on the ship, Deck and Engineering.
What is the Deck Department?
The deck department of a ship is responsible for the safe navigation, cargo (or mission) operations and general upkeep of the exterior structure of the ship. Ratings are known as seaman, or deckhands and work under the guidance of the Deck officers who navigate the ship and answer to the Master – the senior deck officer also known as the Captain.
A typical cargo ship as seen in the port of Vancouver might have a crew of 17 or so. The Master or Captain is in charge of the ship at all times and in the deck department, there will be the a Chief Officer (head of navigation), a First and Second Mate. The Bosun answers to the deck officers and is the leader of the three seamen.
In the engine room, the Third, Second and First Engineers answer to the Chief Engineer. The Chief mechanic, the lead hand, and 2 wipers answer to the Engineering officers.
The Chief Cook reports to the Chief Officer, and usually has a steward answering to them.
What is the Engineering department?
The engineering department of a ship is responsible for the safe and efficient operation and repair of the onboard machinery used for propulsion, hotel and cargo operations - basically anything that has bolts or uses electricity. Ratings in this department are known as wipers, oilers, mechanics etc. they work under the supervision of the Engineering Officers who answer to the chief engineer who answers to the Master.
Engineers are a cross between Professional Engineers and heavy duty mechanic and are responsible for the operation and maintenance of the ship’s mechanical, electrical, and electronic systems. Engineers, and seafarers in general, must do their work in a physically demanding, sometimes violently changing environment, and at any time will be called in an emergency such as fighting an onboard fire or search and rescue operations.
Who oversees the licensing and certification of Canadian seafarers?
In Canada, professional seafarers are licensed by Transport Canada – Marine Safety, which is guided by international agreements reached under the International Maritime Organization, a division of the United Nations. As such, our licenses are recognized worldwide, and enable us to staff licensed positions on commercial vessels of any Nationality. Likewise, licensed seafarers from various nationalities have the same opportunities to compete for those positions. All ships are required by international law to be manned by a number of officers and crew who have proven their competence before a regulatory board.
Why do they need to go out of the country to work?
In order to achieve certain certifications, seafarers are required by Transport Canada, to complete a period of time performing specific tasks. These tasks can only be performed on ships trading internationally or on larger ships. Because Canada has very few deep-sea ships, time spent aboard Canadian Registered vessel usually involves coastal trading on smaller vessels with limited equipment, a valuable experience, but not one that conforms to international certification requirements. In some cases, a person must work on a foreign going vessel to advance their license, such as a Master Mariner (Captain). A person cannot command a Canadian Registered vessel unless they hold a Canadian Master Mariner License.
Report - Canadian ship’s crew shortage – Submission of the Canadian Merchant Guild to the International Commission on Shipping (ICONS)
Report – International ship’s crew shortage – OECD Maritime Transport Committee’s Availability and Training of Seafarers
Information Bulletin – UK’s Foreign Earning Deduction (FED) for Seafarer – Inland Revenue Help Sheet IR205
Information Bulletin – Canada’s Overseas Employment Tax Credit (OETC) – CCRA IT-497R4
Research Paper – Statistic Canada report on the Evolution of the deep sea fleet that supports Canada’s trade - # 54F002XIE
You can also visit another blog site on this topic, from a fellow Canadian seafarer.
More UK position papers, this one from NUMAST on a Tonnage Tax Scheme to stimulate seafarers to join the Merchant Marine Service
What I have done, and what you can do...
This section updated Dec. 2006
According to my new Member of Parliament, the best course of action is to gather as much support, obviously, and to focus that support toward the government. This is where you come in. You as an individual can send a letter to your MP, you can cut and paste the one below if you wish or make your own up. You can find out who your Member of Parliament by clicking here. Please send me a copy in what ever format you wish, just as long I can keep track of the variety of support and the number of MPs notified, this will help support our case.
If you are aware of a professional organization that might be interested in supporting this initiative, I can provide them whatever I have gathered to inform them. If you are part of an organization, contact me to learn more about this issue.
You can download a complete PDF document with all the relevant pieces on this web page and more, including: articles, questions, comments and supportive documents including letters received regarding the OETC and information on the Quebec tax break. Its roughly a 100 page document, about 1.3mb in size, click here to download Version 1.
Below is the letter I wrote to my Member of Parliament, the Honorable David Anderson, the Minister of Environment and a long time Liberal Party politician from Oak Bay, BC. I also sent similar letters to neighbouring district's MPs, Dr. Keith Martin (Esquimalt Juan de Fuca - Liberal Party) and also Mr. Gary Lunn (Conservative - Saanich-Gulf Islands). You can do the same, using the template below.
Dr. Martin and Mr. Lunn both responded quickly, with interest, and forwarded my information to the Finance Minister, the Hon. Ralph Goodale. Additionally, they, as well, forwarded copies of my letter and papers to the Hon. David Anderson, several times. David Anderson finally forwarded my letter to the Finance Minister in March 2005, and his office has acknowledge receiving it in April 2005. In 2007 I once again more letters to the Finance Minister, the Hon. James Flaherty, his office finally replied by email in August 2007. Wow, three and half years for a response, this might be one hell of an achievement I we can ever get any action this century. You can read the response from the Finance Minister of Canada just below.
In mid 2006 I moved to Nanaimo BC and sent a similar letter to Jean Crowder, an NDP politician twice elected to represent Nanaimo Cowichan Valley. I met up with her a few months later and discussed the issue of Taxes and Canadian Seafarers. She was supportive and inquisitive about the idea and encouraged us to send our MP this concern. She will on her side bring it up again and ask for a follow up to our previous letters to the Minister of Finance.
January 23, 2004
Honorable David Anderson
970 Blanshard Street
Victoria, British Columbia, Canada
Dear Minister Anderson,
I am writing to you to seek your advice and help in a matter important to many professional Canadian seafarers, my family, and me. It is my objective to change the Canadian taxation scheme for professional seafarers to reflect the current global standard.
As a licensed Marine Engineering Officer, working and living on a ship outside Canada, my income is subject to income taxes at the same level as if I was working and living in Canada. This is much different than my peers, who pay no taxes on their income earned as seafarers outside their nation’s territory. With a lightened tax burden, seafarers from nations other than Canada can compete for positions worldwide at a lower rate of pay. This creates a serious competitive disadvantage, resulting in undue hardship on our seafaring professionals and their families.
I believe that this competitive disadvantage is harmful to Canada’s future and that it is important to institute a tax scheme for Canadian seafarer that is inline with other nations. For example, seafarers from the United Kingdom who work on ships outside of their nation’s territory, for more than six month in a year, do not have to pay income tax on their wages earned aboard a ship.
Canada currently has a “similar” program and it is called the Overseas Employment Tax Credit. Although a few seafarers are currently taking advantage of the credit, the majority cannot meet the narrow criteria of the program. An adjustment of this tax credit program, or better yet, the creation of a new program like the UK’s, would go a long way in helping Canadian seafarers compete in a global marketplace.
Seafarers working and training internationally will ensure that the Canadian fleet has enough well trained, experienced officers for the future. I have little idea on the procedure to follow for this grand undertaking; therefore your valuable insight would go a long way in achieving this goal for all Canadian seafarers. I realize that you are very busy, but I would like to meet with you, in person, to discuss this topic.
Included with this letter, are some questions and answer which I anticipate you might ask, should you have others, please feel free to contact me by mail, email or telephone. I have also included some informative bulletins from the CCRA, and the UK’s Inland Revenue service describing the UK’s approach to seafarer income. I anxiously await your reply.
In August 2007, after yet another written request, I received the following email from the Finance Minister regarding this file...
"Dear Mr. Leduc:
Thank you for your correspondence and attached material of June 12, 2007, in which you request that the Income Tax Act (Act) be amended to provide special tax provisions in support of Canadian seafarers. You advise that many countries offer special tax situations for seafarers and that this helps support those countries’ domestic merchant marine service. You acknowledge that some Canadian seafarers are eligible for the Overseas Employment Tax Credit (OETC), but in your view this is insufficient and a new program targeted specifically for seafarers should be created.
Generally, the Act tries to treat certain types of income earned by individuals in the same manner. To create a special exemption for seafarers would result in this type of employment income receiving better tax treatment than employment income earned in other industries. It is not the role of the Act to reward or value one type of employment income over another. For this reason there are few tax exemptions based on type of employment, and for those that do exist the exemption is narrow and specifically defined to meet a particular policy goal. Based on this reasoning, it is unlikely that there would be created a new tax exemption for Canadian seafarers.
The policy intent of the OETC, which was introduced in 1980, was to redress in some measure disadvantages that Canadian companies faced, relative to their foreign competitors, when they undertook work outside Canada on certain activities, specifically, construction, installation, engineering, agriculture and other resource exploration and development projects. These were areas of activity in which Canadian firms were considered to be at a competitive disadvantage rather than industries seen to be deserving of a competitive benefit.
While the OETC is delivered by way of a personal credit, it is not necessarily intended to reward or encourage particular types of overseas employment activities, such as seafarers who are working or training overseas. Rather, the OETC is primarily intended to benefit Canadian employers competing for certain types of business contracts abroad. Where available, the OETC enables these employers to lower their labour costs in bidding for foreign contracts, and thus assists them in competing for such contracts. The focus of the OETC is therefore not on whether certain types of employment duties are fulfilled abroad but whether, as a factual matter, the contract is one under which the employer carries on certain business activities outside Canada. As a result, it may very well be that some employees may be denied the OETC despite having performed work in similar circumstances or in close proximity to those who were eligible for the credit. This would be the case if their duties related to a contract under which their employer did not carry on one of the eligible business activities (mainly, construction, installation, engineering, agriculture, and resource exploration and development).
For these reasons, the Government does not foresee extending the current tax exemption to seafarers.
Although I appreciate that this is not the response you were looking for, I hope that this assists you in understanding the policies of the OETC and tax policy in general.
Thank you for communicating your concerns.
James M. Flaherty
(Minister of Finance, Government of Canada) "
There you have it, straight from the "horse's mouth". The government position appears to be that our work is no more special then a plumber or the FedEx delivery guy; seafarers working internationally will not be getting any tax break in the foreseeable future. Obviously despite my best efforts to educate the Minister with the informational material here and in the .pdf package, the government of Canada remains clueless as to what other nations are doing and much less interested in doing anything about it.
But then again it is not surprising for this nation's government to take that position. A nation bordered by three oceans and filled with natural resources which are mostly exported, generally by sea, yet has a negligible foreign going fleet. The government's attitude towards the marine industry is best illustrated by the home water fleet, a collection of rejects, rust buckets and other antiquated crafts held together by a thick layer of shiny paint. From shipbuilding, to manning, to infrastructure; sadly, I feel that the general attitude of those in the Industry and that of the Government providing the regulatory framework, is a "laisse faire" attitude stuck in the 1960's and 1970's.
With the very recent coming into force of the Canada Shipping Act, perhaps there is a glimmer of hope that someone still cares about this industry. It just amazes me how we can take the industry as a whole with such contempt, yet it affects all of us very deeply because of what Canada offers the world, vast natural resources. Whether its oil and gas in the east Coast, steel, ore and grains in the central Canada; lumber and fishing in the west or mining in the North, Canada has a heavy reliance on shipping that makes our lifestyle in Canada much more accessible.
I have not given up and at least we now know where we are with this file.
- Martin, August 20, 2007
Seafarers: Almost Tax Free income in Quebec
I was visiting with a Chief Engineer I had once worked under and he dropped a comment about a special tax situation for sailors filing income taxes in the
. So I started digging and yes, there is such thing. After many calls to the Revenue Ministry and Transportation Ministry, I found out, that since 1986, a sailor working on a “international” voyage can claim a special tax status. Below you can read the Ministry’s own press release on the 2003-2004 Quebec Budget. provinceof Quebec
“Tax holiday for sailors engaged in international freight transportation.
Individuals may deduct, in the calculation of their taxable income, an amount equal to 75% of their remuneration from an eligible ship owner. For 2003, this 25% reduction in assistance applies to the remuneration of individuals that is attributable to the period, following June 12, 2003, during which the individuals are engaged in international freight transportation and carry out their duties on a ship operated by an eligible ship owner.”
As progressive as it seems for sailors in
, this tax relief is actually a step backwards from previous years, where all the international income earned as a sailor was 100% tax exempt. I was not able to find out much more about this particular piece of tax law, such as who promoted it or the likes, but regardless, it sets a precedent for other provinces, and especially for the federal government, that recognizing the special situation that sailors deserve, is not a solely foreign concept. Quebec
Below is the actual text from the Quebec Taxation Law as found through www.canlii.org.
DEDUCTION TO SEAMEN ENGAGED IN THE INTERNATIONAL TRANSPORTATION OF FREIGHT
737.27. In this Title,
"eligible seaman" for a taxation year means a seaman in respect of whom a certificate was issued by the Minister of Transport certifying that the seaman was, in the year, employed by an eligible shipowner for the year, that the seaman carried out, in that year, substantially all the duties relating to the seaman’s employment on a vessel engaged in international freight transportation and that the seaman was assigned to such a vessel for a period of at least 10 consecutive days beginning in the year or in a preceding taxation year;
"eligible shipowner" for a taxation year means a shipowner who, in the year, is a person resident in Canada, a corporation that is a foreign affiliate of such a person or a partnership whose members, resident in Canada, including a corporation controlled by persons resident in Canada, are the owners of interests in that partnership having a fair market value in excess of 10% of the fair market value of all interests in the partnership;
“"salaries or wages"”;
"salaries or wages" means the income computed under Chapters I and II of Title II of Book III.
1997, c. 14, s. 108;2001, c. 51, s. 44.
737.28. An individual resident in Québec in a taxation year who encloses, with the fiscal return the individual is required to file under this Part for the year, a copy of the certificate issued by the Minister of Transport certifying that the individual was an eligible seaman for that taxation year may deduct, in computing the individual’s taxable income for the year, the aggregate of all amounts each of which is the amount of salaries or wages received by the individual in the year, in respect of a period determined in the certificate, from an eligible shipowner whose name appears on the certificate.
1997, c. 14, s. 108;2001, c. 51, s. 45.
737.28.1. For the purpose of computing the taxable income of an individual to whom section 737.28 applies, for a taxation year, the following rules apply:
(a) for the purpose of computing the deduction under section 725.2, the amount of the benefit that the individual is deemed to receive in the year, under any of sections 49 and 50 to 52.1, in respect of a security, or the transfer or any other disposition of the rights under the agreement referred to in section 48, and that was included by the individual in computing the individual’s income for the year, does not include the part of such an amount included in the amount determined in respect of the individual for the year under section 737.28;
(b) for the purpose of computing the deduction under section 725.3, the amount of the benefit that the individual is deemed to receive under section 49, by virtue of section 49.2, in respect of a share acquired by the individual after 22 May 1985 and that was included by the individual in computing the individual’s income for the year, does not include the part of such an amount included in the amount determined in respect of the individual for the year under section 737.28.
2002, c. 40, s. 66.
In April 2005, I reached the administrator of the program in the Quebec Ministry of Transport, from my conversation, I gather that he is really the sole person responsible for the decision of “who” is eligible and then issues a “visa”. He was very informative and below is my summary of the program.
The individual person doesn’t really have much footwork to do to claim this credit. The whole thing revolves around the issuance of a “seafarer’s visa” which you allows the person to claim the tax credit on their Quebec Provincial Income Taxes. In
the majority of taxes are paid at the provincial level, not federal, as it would be in, say BC. Quebec
The mechanics of the issuance of the visa goes like this. The Union (the Guild in
) approaches the ship owner to request the Visa. The ship owner files paperwork about the ship, crew and the voyage to the Quebec Ministry of Transport (QMOT). QMOT then reviews the paperwork and issues a Visa to the company, to the ship, and to the individual seafarers. All the paperwork comes back to the company, and is distributed by the company to the seafarers. Quebec
The company can be any Canadian company or Agency. The ship must be register in any
The ship must do a 10 day voyage and the seafaring wages for international part of the voyage is then subject to the tax credit. The seafarer must be a Canadian citizen residing in the Quebec Port. . Provinceof Quebec
Obviously it’s not a major tax breaks, applicable to the majority of seafarers but it is
’s version of recognizing the importance of the Maritime Trade. In 2004, six ships were issued visas. Total sea time of 600 days was eligible. This means 2,110 days of “tax reduced income” for seafarers on those six ships. Quebec
The above information is my own opinion and should not be taken as law. I you feel you could be eligible for the above tax credit you can contact your Union rep (Guild), if you have one, or the administrator of the program at the Quebec Ministry of Transport, his name and number I can provide.
May 10th, 2005
Martin’s Marine Engineering Page – www.dieselduck.net
I've started my career as deck officer in 2001 for Desgagnes Marine.
But the supposed tax exemptions we were allowed, were in fact a credit
to help the company, not the seafarers. When the vessel sailed for
international voyage and we were allowed tax credit, the salary would
changes and we'd be paid less per hour for international voyages than
for coastal trade. I guess it helps the company to be more competitive
for international trade, but it doesn't change a dime for us. In fact,
international voyage are often longer and requires less overtime,
reducing considerably your wages compared to the coastal trade. Of
course, this was in the contract between Canadian Merchant Marine Guild
and Desgagnes, but again, isn't it an hidden company tax credit? I don't
know if other company do the same. I am now working outside for deep
sea sea time, but salary drop is unbelievable... I like working on
ocean going vessel, but wages won't allow me to do it for very long,
it's sad to say but that's the truth.
Using the OETC but not involved in the Oil & Gas industry
I was reviewing the Interpretation Bulletin (IT) for the OETC when I was struck by some optimisms. I had always though that the credit was strictly for persons involved in the oil and gas business, but here on the IT, was written the oil and gas exploitation or engineering activity (among other qualifying activity). As a licensed engineer, I sure as heck am involved in engineering activity so why haven't heard about it earlier?
When I got off the ship early in 2005 I called the International Tax Office in Ottawa and basically got a verbal agreement of my hunch. After all my peers doing the exact same job on a different ship gets the OETC, why shouldn't I? In late March 2005, I formulated a letter requesting a written response from the Tax Office focusing on four points, I felt are not clearly explained on the IT. After getting my MP to fax a request for an answer, I finally received a response at the end of September.
The short story goes like this: The onus lies with your employer and their activity, which must be exploitation of oil and gas, or engineering activity not just a placement agency. So in effect it is the CCRA's position that in my particular situation, as many of us are in (if you are on this website) we are not able to receive the OETC.
I found the wording a bit loose and I feel that it is not a definitive answer to my liking. I believe it could be argued by a competent expert on the OETC - if I could find one. You be the judge, below is my letter and the CCRA's response...
International Tax Services Office
Canada Revenue Agency
2204 Walkley Road
Ottawa, ON, K1A 1A8
Dear Sir / Madam,
The purpose of this letter is to request a written clarification of some queries I have concerning entitlement to the Overseas Employment Tax Credit and to see if I qualify for the credit. I have contacted the International Tax Office on March 30, 2005 and spoke with Ms. Janice, and this letter is to follow up on our conversation.
This is my situation: I am a licensed marine engineer. I work for a Canadian company, which provides marine engineers and expertise to ship owners; the company sends me to work in the technical department of a ship in the capacity of engineer. All my wages as an engineer are earned outside Canadian territory. I work for the same company all year, but may work on different ships or projects on a rotational basis, ie.14 weeks on 14 weeks off. My time away from the ship is spent at home in
where I am a permanent resident. Based on this information I believe, and confirmed to be correct by my phone conversation with your office, that I qualify for the OETC. Canada
Your Interpretation Bulletin, IT-497R4 dated May 2004, is a great source of information, but I would like clarification / confirmation of my views on the questions below:
- In paragraph 6 of the bulletin’s “Discussion and Interpretation” section the Qualifying activity refers to “ b) a construction, installation, agricultural or engineering activity”. I believe, as a licensed marine engineer working in that capacity on a ship, I clearly qualified – is this the case?
- Some companies provide technical personnel / expertise to projects and/or companies exclusively involved in the “Oil and Gas sector”, which satisfies other requirements of the “Qualifying Activity”. But would a Canadian company, not entirely involved in the “Oil and Gas Sector”, but still providing Marine Engineers and expertise to a ship owner, be considered as engineering activity?
- In regards to Qualifying Period; I was not able to determine from my discussion with your staff, what the policy is regarding “reasonable periods of vacations or consultation”, as found in Paragraph 11. In my case I am away, physically, for a minimum of half the year (it is an industry standard to work one day on the ship, have one day off), my rest period is spent in
the remainder of the time. Canada
While on the ship, I am required to work a yearly minimum of 1780 hrs (10hrs/day, no time off while onboard), or roughly the equivalent of a person working on shore, for one full year, i.e. full time permanent position within the public service. Although periods of work onboard a ship vary in frequency and length, I believe that one period, up to four months, spent as time off in Canada would be reasonable, and should not jeopardize an individual’s entitlement to the OETC.
- At the end of paragraph 20, there is a statement regarding the Department’s granting a blanket waiver for companies that have numerous employees who qualify for the OETC. In our phone conversation it is my understanding that no list of waivers exist. The reason I ask, I have been informed that some companies claim to have met the criteria, but in fact did not, leaving workers like me in a difficult position years later. Is there a list of employers that have a blanket waiver?
You can reach me for further information until early June by email at email@example.com. I look forward to your reply, advice and comments.
Here is the response I received from the CCRA's Victoria Audit Division, almost six months later - in .pdf format. Also read the Finance minister's response above...
October 20th, 2005
Martin’s Marine Engineering Page – www.dieselduck.net
Here are some comments received from readers...
"I moved offshore (Uk) 8 years ago, precisely for that reason. Still there is no real reason for me to move back, due to my cutting my pay by 38%. Yes there are some new business in the offshore, which demand professional seafarers, but until there is some consideration made for our situation, sorry I'm not interested. Work offshore and visit Canada (in season) and pay no tax, or live there (freeze for 4 months+ apart from Vancouver), get benefits and lose almost 1/2 my salary is a no-brainer.
If the gov. of Canada realized there was a hidden brain drain of professionals, they may make some changes. Unfortunately it's not until some noise is made in Ottawa, or we just leave for greener pasture, that anything will happen.
Imagine all those potential professionals working offshore and all that potential income they make offshore which could be infused into our economy. Is that not enough of a driving factor?? No... of course not were expected to pay full tax, working for foreign companies, with no E.I. compensation etc, but yes you can get free health-care if your particular ailment is covered, and you don't mind the wait.
Don't mean to sound jaded, as I loved Canada as much as the next person, but enough is enough when trying to squeeze the offshore people."
November 19, 2004
"The only way to allow Canadian seafarers to compete on international job market is to give them tax brake, like other countries do (best example - UK). Otherwise we are simply being put out of business. I have worked overseas for a few years, and have no doubt that globalization took place in marine industry in full force. Wages are based on assumption that you DO NOT have to pay tax. If you do, there goes big part of your income. I fail to understand the position of the Canadian Government regarding this issue. There are jobs out there, but we have to be able to compete."
October 10, 2004
" My advice to any Canadian with the capacity to earn any significant money is move. There are many ways out and you will always be a citizen of Canada in the way that counts. Start with getting an MCA equivalency on your licenses and find a way into a different country. Brazil is a good option Costa Rico is another.
-having traveled the world I will never go back (to Canada)"
December 12, 2004
" I hold the equivalent of 1st Engineer on Navy Ships, and hold a 2nd Class Power Engineering Civilian Certification. I have spent 31 years in the Navy. To take my certification and experiences to sea as a Professional Seafarer would be a cut in pay. I would prefer to land a position in some heating plant on shore, than spend more time in sub-standard living conditions for the same take home pay as someone home with the family every night at 5PM.
I think your web page conveys the need and the experiences that all Canadians, including the Government, know so little about. I know people who believe exactly what you were saying about Vacations at Sea, and nothing but recreational time. Well, if they believe that, why is there not a line-up to fill the positions at sea? Because its not a great environment, long high-stress hours away from home, separation from Family and Friends, the inability to socialize outside the company of shipmates. The lack of privacy, information (I read 3 month old newspapers when I was deployed away from Canada), freedom to take a break from the work, etc.
Under the present taxation conditions you describe, I would rather take a job ashore and be treated the same with the benefits, than go to sea, and be paying taxes on a home and property I never see, and yet, still continue to pay the same taxes as the rest of Canadians, home with their families."
Tom in the Maritimes
December 14, 2004
" I currently still hold a non resident status, and a seasonal home. But that will all change within the next 12 ~ 18 months, with me applying for Landed Immigrant Status (LIS) and obtaining a BC Drivers License. I must admit the prospect of continuing to work Offshore worries me somewhat, its bad enough now, with my salary in US $, but to then cough up a big lump for
, makes it down right scary !! Ottawa
Is there a higher level to which we can go to, to try and change the tax regs, or even generate a new one ??
I have a wife, and 3 kids all born here. I pay all their medical benefits, but take non my self, having to pay for a private plan which costs an arm and a leg. I have just had a medical and chest X ray, all as a private patient here in Parksville. I pay full property taxes (no BC Homeowners grant for me), spend my hard earned dollars in all the local stores, and claim nothing back from Customs when I take new clothes etc out of the country.
I can see me having to pack in a job that earns me good money, that is all spent in
Canada, to attempt to find one with a similar take home here in , which will generate no new influx to the BC economy. Its not going to be easy. Canada
I am sure I am not the only one in my position, and the $60 or 70K / annum that we bring in will, eventually, disappear. I may even consider taking my family away from
completely. The numbers all add up, and in this province alone a hundred guys like me adds up to a good chunk of cash flow, ………… all coming in. Canada
I have been at sea all my life, to end that way of life, all because of a tax law, seems an awful waste of time and effort. Nearly 30 years down the pan."
DC, Chief Engineer
" As of right now I am in South Korea currently working for a Canadian Shipping company that has its fingers in International Shipping. I am the only Canadian on the International payroll and it is really disturbing to know that all the Indian's, South Africans, Brits and Filipino's I sail with making more money than me because they were out of their country for 143 days that year.
I am struggling badly, and I am away from my family and friends, we work very hard and demand very little. We are Canadian; it's in our blood to be passive.
It disturbs me to hear people say that seafaring is easy work, and that we're all on holidays touring around seeing the world. I can't say I have ever seen the world while up to my elbows in sludge filled purifier bowls, or troubleshooting leaks in a SEWAGE vacuum pump, maybe they are referring to the time I got to see the Aleutian Islands, while repairing the auto tension on our mooring winches in –15 degree weather. Or did they mean the times when our ship was actually along side, and we were all chasing girls in the port like they see in the movies. Was that the easy life they were referring to?
Well I am sorry to inform them that these ships are propelled by extremely large heavy fuel burning engines, which cannot be maintained during our 3 week voyage across the pacific to bring them their mp3 players, and other useless gadgets. These engines have anywhere between 8 – 12 cylinders, and they all demand service. When can we do this? Once we make it to port naturally. But how long could pulling 1 piston out take? Well, if you have a team of about 4 men or women, about 6-8 hours should be sufficient.
Then we can go to shore and phone our loved ones right? Wrong. With the aid of modern cranes and high tech port facilities, we are usually in port for about 10 – 12 hours. Not a very long holiday is it, 2 – 3 hours to "see the world." But wait, there's more. You cant just come back to a ship 2 seconds before it sails, you are the engineer, or you are the navigator. Its not as if it's a car and you just turn the key, select drive and your off. We need an hour to prepare just the engines alone! Not only that, but all the auxiliary equipment associated with ships. Like steering gears for example. (Another Item we have to service and repair during our 8-hour stay in the lovely port of "not home with our wife.")
So in actual fact, we don't see the world, and we don't have an easy job, and lest you forget, after we finish our 10 - 12 hours work, we are still trapped on a steel ship in the middle of the ocean. Oh, and just one more thing about my case in particular. I am the only one on board speaking English when the work is over. I may as well be in solitary
Perhaps now you may have some idea as to the life we lead, and the things we deal with on even the calmest of calm days. And perhaps maybe you might understand that we are a little frustrated with the Canadian governments look at seafaring. I really hope they recognize that if this continues, there will be nobody left to do these jobs. And that this is a powerful enough problem to put an end to the BC ferry service and other east coast marine transport counterparts.
Funny, I think maybe they do already, because it seems to me the government is now privatizing the ferry corps. But they'll eventually be in a world of hurt as they have no staff, and I'll laugh that day, I really will. While I am working for Earls Restaurant, or Milestones, with my 4 year education in marine engineering, and my 4 years deep sea sailing experience."
"I think what you doing are very important for all Canadian seafarer community. Full Ahead mate!!
I myself work on foreign flag ship, six weeks on six weeks off; and I get my wage only for time working on ship, so I have only half year income and I still have to pay taxes. Its pretty upsetting because together with me on the ship work people from all around the world (UK, New Zeeland, Philippines, et) and they all have a tax break from their governments.
I hope our government will hear from you and do something about it."
The wonder is always new that any sane man can be a sailor.
- Ralph Waldo Emerson
"...So instead of spending $30 mil on catching these “ criminals “ put it back towards the Country coffers, and give us foreign workers the incentive to WILLINGLY BRING ALL OUR MONEY INTO THE COUNTRY. I would be quite happy to pay income tax, based purely on the days I am in the Country; about 183 a year; get the full benefits of Medicare, a home owners grant and so on and so forth. A few years ago I recall the changes on declaring foreign income. This was particularly aimed at the Asian business community coming from HK. I think it would be fair to assume, that once this huge influx of capital was penalized (yes penalized for bringing money into the Country), it all dried up. Is it any wonder that HK business men invested their money else where. Why come to
, the tax people are bigger crooks that the gangs are !!" Canada
"As Systems Engineers, I operate and maintain the ROVs, and also do the Cable Engineering such as Repair Operations, Installations etc.
As I am a Canadian resident, and my wife does not wish to leave her Research Scientist job with the BC gov't, I find myself in the unenviable position of paying Canadian taxes, whilst my British colleagues get all of theirs back, if they are out of the UK for 6 months total.
Have any of the politicians you have contacted expressed any support or understanding of our situation, or is the best answer still to go non-resident?
It seems unfair that the Oil patch engineers can get reduced taxes when we cannot."
Editor Note : My MP, David Anderson, has not expressed any interest - see above - as a matter of fact I had to pull teeth just to get a response. In my immediate area, Gary Lunn (PC), and Keith Martin (Lib) both have expressed support and interest, but their brief inquiries to the Finance Minister yielded no results.
"I think what you doing are very important for all Canadian seafarer community. Full Ahead mate!!
I myself work on foreign flag ship, six weeks on six weeks off; and I get my wage only for time working on ship, so I have only half year income and I still have to pay taxes. Its pretty upsetting because together with me on the ship work people from all around the world (UK, New Zeeland, Philippines, et) and they all have a tax break from their governments.
I hope our government will hear from you and do something about it."
Best Regards, Val, C/E
"Hello Martin, the web site is really good. I read the article about "the seafarer and the tax man" and I am going to send a letter to my MP and hopefully the ball gets rolling. I do not have the Canadian Licence (Mexican Certificate of Competency) but I get pay the same as every body else and when tax period comes is a killer and because I don't have an employer with address in Canada I can not apply for a loan to buy a house."
Regards, Francisco, MarE
"I completely appreciate your efforts in bringing this
injustice to light. I work on a cruise ship, and it's not all glamour, it's
hard work! I will send a letter, as you suggested, and hopefully many
others will too. Thank you!"
"Site still looks great. I have shifted to a semi-sub offshore Brasil.. I can't believe we (seafarers) haven't banded together...rattled some sabers and approached Ottawa as a group to get something done. How about forming a society??
Lobbying is the only way....Since my world-wide adventures, and there was a few, but mostly work, I have had the opportunity to meet 100's of ex-pats living new lives abroad. It's a crying shame our Gov't can't make up some legislation from it's debt free pocket to give us a break, like virtually every other country in the world.
It's a real shame we all couldn't become Prime Minister, leave our son the largest shipping company on the great lakes, to get around that nasty "conflict of interest" potential. Then put a shipyard in Ontario back in service, build two new ships, keep a Canadian flag on their sterns for 6 months, before flagging them offshore, hiring foreign crew, and mothballing the shipyard. LEAD BY EXAMPLE.!!!..CANADIAN GOV'T. Too much back-scratching and back-handers in Ottawa. No wonder all the "floaters" feel justified in keeping their stash from deviant hands.
LETS GET SOME LEGISLATION IN OTTAWA!!! Lets get some grease in those wheels of legislation and get something going. I URGE ALL OF YOU WHO CAN TO MOVE AWAY AND VISIT THIS FINE COUNTRY WITH ALL YOUR TAX SAVINGS AS A SEASONAL TOURIST. IT IS THE ONLY WAY TO ACHIEVE ANY SAVING...DON'T WAIT ACT NOW. THE ONLY WAY THE GOVERNMENT WILL TAKE NOTICE IS WITH NUMBERS LEAVING OR MAKING NOISE...YOUR CHOICE!!!"
Brgds, Bob R.
Hello again Bob,
Yes indeed it is an uphill battle, its a real shame that most people are driven to move away as it is easier than facing an up hill battle to trying to promote a vital part of our future to the general public.
I find that seafarers in general will just deal with what they have in front of them. The "greater good" concepts are not always easy one to champion and creating a society is a great idea, but participation and/or funding is always an issue. I was hoping that the Canadian Institute of Marine Engineering would provide a good vehicle for promotion of a more political agenda, but like I said before it is sometimes difficult for many people to prioritize one topic when so many need reform.
In any case, we keep the word going around and hopefully over time a concerted effort will develop.
All the best to you in Brazil, be safe. - Martin Leduc
"Hi Martin I am ex Navy and now work offshore as a rig mechanic for a UK company and all my co workers (UK, South African, Philipinos, and Indians) get the tax break and I don't I didn't know that there were people fighting the evil tax man but i'll drop a note to my member of parliament and see if it helps as I live on the east coast and don't want to leave the country just yet but the Gov't makes it hard for us to stay when almost any country will take us in just for the money we bring into the country. all the best in this endeavour and maybe the people in Ottawa will listen someday."
"I am Happy Paul Martin is no longer Prime Minister, however I am still repulsed at the way our present Government is treating Canadian Merchant Mariners. We are being robbed of our local jobs, and while we are away at sea the government is dipping into our bank accounts, robbing us again. The laws that make this possible are obviously flawed, and by not taking immediate action, the government is robbing us one more time-of our human rights. This behavior is corrupt and is probably not legal after all. Please continue to do the work you are doing for the future of the industry. I will support your cause in any way I can."
Sincerely, Tracy F. Second Officer-Foreign Going
Tracy recommends Googling out "CSL ship fires Canadians, hires cheaper Ukrainian crew" by Rheal Seguin of the Canadian National newspaper Globe and Mail, April 2004. Thanks Tracy, indeed a good article - Martin Leduc
"I did send in a letter to the Finance Minister and also the CBC asking the Finance Minister on the show, why Canada does not have any tax incentives for foreign going seafarers, but no reply. I think our numbers are small and we have no organization which can take up for us, so we are left to fend for ourselves."
Capt H. S., Toronto
"How can the unions and gov help in Canada when the companies only want to create a shortage of highly skilled Canadian workers and bring in someone they can pay 1/12 the wage. If my living expense was the same as F.O.C sailors then I would work for the same wage but when a Fed Ex driver is getting 27$ an hour I think an engineer is worth double."
Dave T. Ontario
"I just had a quick peak around your web site. I can't agree more with you. I am a single 25 year old, a First Officer on a private UK registered yacht. I am holding UK licenses as they are recognized in the yachting industry. I am only beginning my investigation into possible solutions. So far I am looking into becoming a UK resident then applying for the Seafarers Tax. I of course don't want to distance myself from Canada. If you have any suggestions, advice or if I could send an email to help you with your cause, please let me know."
"As yourself I am also a qualified seaman working abroad as an electrical engineer. I live in Nova Scotia Canada and think that seaman in Canada should either be tax exempt or at least given a better tax bracket. We bring in foreign money which helps the economy grow as our incomes allow for new money to be circulated within the country. When we are home many of us have a tendency to spend allot of our foreign money on renovations, investments etc.. which employee people in our country allowing those people to earn better wages, ultimately increasing their life styles as well.
Many of us work 6 months a year on a rotational schedule away from our families and friends which time off wise is a benefit we could not get in a job ashore. However, what gets over looked many times is that during the six months that we work our hours are normally comparable to that of working 12 months ashore if not more as weekends are a treat.
I don’t mind tax in some ways as it supplies the roads, medical benefits etc..that we have in Canada. What does bother me is the waste of the tax money all over the country and the poor paying jobs ashore. We all made a choice to come into the maritime industry for hopes of better lives and financial well being. It’s a shame that we work as hard as we do, make good money to prosper ourselves and others we employ while we are ashore to only have it taken away by government and wasted where no one benefits."
" I am a canadian certified marine engineer such as yourself. I have sailed many years on forgeign going vessels with foreign crew. I know taxes are an issue while working abroad but you are a Canadian citizen living in Canada on your time off right? You send your kids to school? Your family goes to the doctor for free? This is all paid for with tax dollars and i feel that everyone else should not have to pay for this so you can have a few extra bucks. I personally have gotten out of the foreign trade and am now working in shipping in Canada. The pay is at least triple of what i've been told you make on cruise ships I'd advise you to encourage others to do the same and support Canadian seafaring in Canada. There is a major shortage worldwide including our home country. Foreign nationals will soon have to come in to fill in for the fast depleting pool of qualified seafarers due to retirement and i'm sure you'll have articles complainin about that soon too. "
I understand and appreciate your point of view regarding taxes and our campaign to have Canadian income tax policy for professional seafarers reflects those of many countries. As I have stated in my position paper on the website, I think not being "tax free" like most other countries is entirely fair. But we should also consider the situation seafarers are in, when working overseas, we are not taking advantages of the services that taxes pay for all the time like other Canadian citizens, due to physical absence from the country.
You brought up several point in your email which I would like to respond to...
"You send your kids to school?" Martin Says - Well actually not yet, but in about 5 yrs. Apart from federal income tax, to which I have issues with, I currently pay...
yearly Property Tax on my residence to the provincial government, which kicks a portion to my Regional District to supply our roads and education
quarterly, a Parcel Tax to the district, I am not sure what this one is for but I believe its for fire protection and public safety.
yearly, we also pay a Garbage Fee, along with our quarterly Water Bill. Not to mention the usual taxes on products on services aquired.
"Your family goes to the doctor for free?" Martin Says - I am very lucky to be in excellent health so the last time I required to visit a doctor was in my late teens for a broken arm. At that time and ever since, I have being paying the monthly Medical Services Plan of BC fee, as did my wife, as we are required to do. Except that I have been out of the country for more than half the year on several occasion, and at least half of the year on many others, and during that time, my health coverage was provide by my employer as mandated by international law.
"The pay is at least triple of what I've been told you make on cruise ships" Martin says - Depending on which company perhaps, and pay may not always be a priority. In the offshore oil world, many of our peers make a comparatively good wage than in Canada, sometimes even better, even without the receiving a income tax break like their peers. But then again working on a bulker, I am pretty sure you would make less than working at McDonalds. Personally, I was not making allot of money when I worked on the cruise liners, 37k to 55k per year, but I personally quite enjoyed working at the level I was trained and licensed, on equipment that was built in the last decade. All the training I wanted was provided at world leading and modern institutions across the globe at company's expense; when was the last time your Canadian company bought you a textbook? All this leads me to your other question / comment....
"I'd advise you to encourage others to do the same and support Canadian seafaring in Canada. There is a major shortage worldwide including our home country." One of the major reasons why I discovered this inequality of tax load on seafarers, was because I love what I do, I was licensed, young, eager and ready to do most anything to get working on a decent size boat. Unfortunately all the bigger, local companies like Seaspan, Rivtow, BC Ferries never bothered to return my phone calls until 2007 about 8 years after I sent them my first applications. I ended up working for Coast Guard but it took me two years after holding my license that I actually worked a licensed position on a 60 foot boat. I was not impressed with the attitude in this country towards young engineers and it took much will and stubbornness to stay in the industry. If I was to advance in this field I had to work deep sea and looking back I don't regret doing so, but not having that opportunity would mean that I would have starved at home waiting for table scraps of work from local companies. Instead, now I am confident in my craft and have experience rarely seen on this coast (or in Canada for that matter) due to the lack of equipment or the will of the companies here.
I live in blue collar neighbourhood right now. I have a small 1700 square foot rancher on a average house lot, I don't have a garage and I have never bought a new car, but we have very few debts. Allot of my neighbours are tradesman; plumbers, electricians and mechanics; the service trucks are parked next to the new Diesel F350XLT, 3 door garage, and 22 foot sport fishing boats, all next to the recent 2500-3000 square foot house on one to half acres lots. Now I am not a clairvoyant and perhaps all these guys are heavily in debt but I have to wonder whether or not I chose the right profession. After all I was well on my way to becoming a heavy duty mechanic, but chose to go down a long path of training and licensing to become a Marine Engineer, perhaps I should have stayed a heavy duty mechanic and now I could enjoy the bigger house and the RV. Granted I have much more opportunities worldwide, so if there is ever an economic downturn I have options that they may not have, but still, I kind of feel like an ass sometimes and I believe its only natural to feel like that.
With this website I had the pleasure to reach and network with many people, in particular the younger set and I can assure you that my feelings and experiences in the marine industry are not isolated occurrences. Its no wonder that out of 16 apprentices that signed up for the marine engineering program at PMTI in September 1996, only 6 finished four years later and as far as I know only two are using their license to earn a living, myself being one of them. So I am not surprise to hear of the Canadian companies lamenting the lack of seafarers (which I cover extensively in other areas of the site - see The Monitor blog, The Galley Wireless forum and check out the Ship's Library for some comments on that topic). All this leads to your final comment...
"Foreign nationals will soon have to come in to fill in for the fast depleting pool of qualified seafarers due to retirement and I'm sure you'll have articles complaining about that soon too." Martin says - I hope that you get a sense that I feel a bit jaded about the Marine Industry, perhaps I complain too much as well, but I love what I do and I have invested too much to turn back now. From my perspective, the industry's shortage of seafarers is a self made problem compounded by a lack of foresight by government and unions to prod industry to do something about it (much discussed as mentioned above).
When I hear about foreign nationals being brought in to fill Canadian seafaring positions, of course I get a little flustered - in my experience, less than most Canadian seafarers out there though - but after all, I made the investment in my career, not any companies on the coast except for the BC Ministry of Transport, who indentured me in their marine engineering apprenticeship (but promptly laid us off after the end of the program - go figure), but other wise most companies wouldn't even give me or many other young engineers peers much of a chance. Things are different now, finally, but still...
I have worked with many nationalities over my career and I am not afraid of working with them now. If a foreign trained seafarers chooses to come live in Canada and pay the same taxes and cost of living, go through the Transport Canada circus, then by all means, they are welcome and they should have the full right to compete shoulder to shoulder with any other Canadians. But I think we hold ourselves in a higher regards than deserved. I believe that allot of seafarers will not choose Canada to immigrate to, if they even immigrate to anywhere. I have heard of many frustrated Indian and Ukrainian nationals having immigrated to Canada, returning to their home countries because of equal if not better situations back there.
I believe that working internationally offer our younger engineers an excellent place for professional advancement not commonly available in Canada. Ultimately they will come back home to Canada, as I did, better trained and experienced, and a greater benefit to Canadian industry. But seafarers undertaking this step should be able to stand shoulder to shoulder with their peers internationally, and certainly feel like they are working towards something rewarding at home, otherwise they may as well become trades people and be better off personally and financially.
I hope I have explained my position adequately for you to understand. Like I said before, I can understand, and I expect many non seafarer to lament the requested special tax status for seafarers, but I believe the reasoning behind the arguments is sound. I welcome and look forward to your further input.
- Martin Leduc, October 2007
" I agree 100% with regard to some kind of tax break for seafarers working overseas. All the other common wealthy countries are doing it why should we suffer. We are bringing new money into the country and spending all of it here. In addition all you get is cash no benefits no pension plan and you have to pay all your CPP. Every seafarer should be concerned about this because even if you are working in Canadian waters now the possibility of going overseas is always there. Thanks for you time."
" Can tell me of ways to reduce taxes legaly?, The 2006 was a killer for me.
Does anybody recommend a good accountant in Vancouver?
I have read the letter that the finance minister sent to Martin and is not #$%&*!@ good! "
Visitor on the Galley Wireless
Taxes taxes taxes. I am pretty happy at this point that I am not getting paid in US Dollars right now. ehehehe. and my wife is quite happy about not thinking about taxes and budgeting and being so careful how we spend.
Relieved we are, because the best way to deal with taxes are to pay them. Well at least that's my official line and I'm sticking to it.
Know of any accountants ?
I have yet to find, or hear of an accountant specializing in seafarer taxes. Most are using some form of Canadian professional tax & accounting software. The reason is pretty clear, as stated by the Finance minister's letter found in the tax section of www.dieselduck.net, "we are not special"; so why should there be any special accountants. I had asked my brother's accountant in Victoria, back in early 2000s, if he knew of anything special about seafarers, or someone who might, and he was not comfortable in answering either question. At the time he was the president of the CGA association of BC, so there you go.
We are professionals, act like it !
Having said that, I have used several strategies to reduce the impact and be legit while still being considered resident of Canada. You, as a marine engineer are a licensed professional and recognized as such by Revenue Canada - the industry code for engineer is 541330. You can download the CCRA's Income Tax guide for Professionals here.
You make professional income from timed period contracts. Therefore your are allow to claim various expense which you made to achieve this income. Therefore you should be able to claim various and justifiable expenses and take them off your income. Things such as home office, meals and traveling, if not reimbursed by the company, bank fees for your US credit cards and account. Some long distance, portion of your internet service cost - you are on this website to better your professional situation are you not? If you have a spouse like mine, they look after your affairs, answer your calls and do bookkeeping; they should be compensated accordingly.
Don't forget about vehicle use. Just keep a mileage log, for us seafarers that is usually pretty simple since we only go to airport several times a year, or to the Transport Canada, get you medical very seldom. Being driven to the airport 4 time a year might add up to 60 km each time, might not be much when it turns out that represents only 13% of your total yearly mileage, but hey 13% of those new tires, fuel, service, car wash and the likes add up.
Trouble brewing, so I though
Revenue Canada did call me one day wondering where were my GST contributions where. Having being scared that I forgot about that, I calmed down and chatted with them. It turns out that as a professional, my services should be subject to GST... only if my services were rendered in Canada. Therefore my international income is not subject to GST and therefore none to be forwards to them.
The trick is that you must be able to justify it and it should be within reason. Arbitrary terms yes, but I am certain that you have that voice in the back of your head guiding your moral compass.
Why I pay an average 19% (last 6 years) of my marine engineering income to the Federal Government.
I for one, want to raise my kids in stable family home free of unexpected pressures, and near their extended family, so that why I always remained above board.
- Martin Leduc, October 2007
" Dear Martin and other my seagoing colleagues,
I appreciate much your great efforts towards seafarers’ taxation burden weakening and absolutely agree that the existing situation is far from fair. That is why I would like to share some my thoughts about that.
On my opinion the main obstacle from many ones on the way for resolving the problem consist of hidden, not visible on the surface, however nevertheless, high resistance of Canadian ship owners operating under national flag. Tax reduction for Canadian seafarers will mean for them labor loss at more or less large-scale. Maintaining exiting situation they simply tie up us just for Canadian soil (waters) without changing anything drastically in our maritime industry.
Look at Canadian Flagged fleet, especially those ships that work on Great Lakes. They are old, some of them too old. I would say that among well developed industrial countries our fleet is the oldest one. And if someone had a choice to work for the same salary (income) on board modern, up-to date ship and a old (almost ancient) one? The answer highly likely would be a new ship. Tell me how many new ships were built (not re-built or modified) or bought and brought to Canada recently? Not many, obviously. And naturally, companies protecting their own business are not interested in provision for seamen more options on labor market, especially the companies that have their very strong lobby in the Parliament with strong connection to financial tools.
I think it will be not easy to break this type of resistance. There are not too many of us. Without unification and Marine Unions support it will be impossible to do anything drastically. Unfortunately, Unions are not interested for the issue either at least as far as I know.
However, I would like to propose an idea of composing/issuing a Petition to the Canadian Parliament regarding seafarers’ tax situation signed up with as many as possible seamen of our country. It is not fastest way and apparently not easiest one but it might eventfully work. "
V. G. Marine Engineer
I do believe your are very right in your assumptions of the situation in Canada, and the lack of support for the foreign going seafarer. I further think this is a selfish short sighted view by the industry and its stakeholders, which ultimately resulted in the current stagnation of the industry in Canada because of the age of the equipment but mostly antiquated attitudes.
I am definitely not looking for instant gratification in way of a quick resolve, and so far it looks like we will never have it, but I intend to carry on the campaign, because it has the potential of having a large and positive impact on all of us who work in the industry.
Your idea of a petition might not be a bad idea. I believe there are tools now online that could make this project feasible without breaking the bank, or privacy issues. I will look into it.
Martin Leduc, November 2007
Above: Unscientific poll we ran on the site in 2004
" Martin, when my family and I lived in BC,-North Van. on couple of occasions we had a tel. conversation and some emails, that was around the year 1997,98 then you were just starting to build your web page. I was working for the Canadian Coast Guard as an oiler, and I was preparing myself for the 4th class engineer exam. Anyway many years passed away and many things changed. I do not work for the Coast Guard anymore and I also do not live in Canada anymore. I liked ships to much, Canada has none. I also like to keep my hard earned money in my pocket, that is impossible while you are living in Canada. It is a great country; with fantastic nature and beautiful places, but to make a living there it is a different story.
Anyway in 2001 I got a job offer to start working as an engineer on one of the commercially operated yachts, since then, I work on white ships. In 2002 we sold the house and moved to the European Union where we live now. In your web page I read stuff about the seafarers and taxation, how the government doesn't give a shit about the seafarers situation. "
" I'm a Norwegian guy who has been a resident of Canada since 1993. I'm a master mariner and have many years behind me on ocean going fishing and cruise vessels etc.
I have been following your crusade against Revenue Canada for quite some time, and it's pretty clear that the tax system is unfair. The conditions that necessitated the OETC back in the 80's may not exist today. It's pretty burdening in Norway as well, but at least you get some tax breaks if you happen to be a sailor.
I think the merchant navy in Canada has lost most of its steam (no pun) due to the fact that most of the trade happens across the border to the US, on land. It certainly didn't help that the former prime minister was hiding behind a flag of convenience as either...
I have come to the conclusion that it is probably better to just play by their own rules. I'm currently with an offshore seismic company as chief mate. Some of the seismic crew on those vessels are Canadians. Many of them have been hired through consulting companies such as http://www.uniglobeeng.com/. Uniglobe complies with the OETC requirements and will take care of all the fillings with Revenue Canada. If you make, let's say, $100,000 you will be deducted approx. $17,000 in taxes (fees included). This is of course a far cry from the 40-50% you would have to fork out as a regular employee.
At the moment, I'm unable to go the same route due to the fact I'm hired through a manning agency. As soon as I will be able to get hired directly through the seismic company, I will become a client of Uniglobe. "
" I have looked over the page on taxes, more than once to be sure. You have fought the good fight. I on the other hand am thinking most seriously about "voting with my feet." I have just gotten a job offer that will have me out of the country and away from the sinking Great Lakes rust buckets. I will have a 5 week rotation, and there is no telling where in the world I will join and leave ship.
I am looking into the non-residency issues, and wonder if you can put me in contact with anyone that has first hand knowledge of gaining residence in Costa Rica. It would be good to talk to another sailor who has had some experience with the whole thing. "
Sadly, I understand exactly how you feel. The sinking rust bucket is a pretty apt title for most vessels in Canada, not just in the Lakes. I would suggest you post your query on The Common Rail, our forum area. I cannot offer any guidance myself, but I am sure there is someone out there that can offer insight, and that’s the best place to reach them and start a conversation.
Martin Leduc June 2009
" I write on behalf of my husband who is a marine engineer just like yourself.
I read your website with great interest.
Thank you for all the time, effort and sacrifice you put into this. Your persistence, I hope, will pay off for the benefit of all Canadian Seafarers.
I believe the Minister of Finance and the Canada Revenue Agency is just turning a blind eye to the issue. With current economic pressures and budget constraints, this issue would be on the bottom on the agenda at the moment. Lobbying with our MP is helpful but I doubt it would generate any result in the immediate future.
My husband followed me to Canada 18 years ago, while already in the seafaring trade, with the hopes of finding a land-based job. Wishful thinking! No Canadian Certification and no Canadian Experience landed him in a factory job earning minimum wage of $8 for over 2 years. It was a stressful time for both of us, but expected for all new immigrants like us. You drop to ground zero. He persevered, and started self study to gain the marine competency certification that earned him his 1st Class Engineer Cert. from Ministry of Transport. Then he started applying to the Canadian Shipping Agencies, and you can count them on one hand. No one wanted him because he didn't have any Canadian experience. With little funds left, he sought the last option. We borrowed money from a bank for airfare and he flew to Hong Kong to find a shop in a position he was trained for. Thankfully he found a job after a week, and has been gainfully employed with the same company. That, from the we arrived Canada, took a good 5 years. We are immigrants that have not drained Canada's economy but contributed to it. From the time of arrival till now, we have not taken handouts. Thank God, my father has money to help us from time to time.
No one is to blame that we chose to come to Canada.
But what many don't understand is seafarers, live an adventurous and sometimes even a dangerous life, to earn their keep. Money is not made easy. Yes, they come back a few months a year to be with their families, but don't indulge in the benefits that many other land based Canadians do. While most sleep soundly in the bed, most seafarers are braving rough seas. No one can guarantee that they will make it to land safely. When he is at home, he rarely goes to a doctor and I am gainfully employed so he is my dependent on my extended medical plan.
Thankfully, and ironically, we don't have kids, but like you, we pay property taxes and every other tax that other individuals succumbed to.
I agree with your assumption about amending the OETC. Those 3 points are more than sufficient. Even if the Canadian Government does not want to let the seafarers go tax free, they should at least tax us on 25% of income. Getting a petition going is worthwhile but do we have enough people to sign on? Can we not pay a lawyer, like that Darren Williams guy, to take this to Tax Court as a class action of some sort? If we have say 25 people to sign on, we can all share the cost; I know I am willing to share the cost.
Again, thank you for your time and effort and upkeep of this website.
Blessings of good will and success to you and your family. "
I don’t think the government lack of care for Canadian seafarers, and the overall maritime industry, is anything new, and has been a deeply rooted attitude for some time for reasons that escape me. Its good to hear of your story, but sadly, you have both had to endure quite a bit hardship to remain in the industry. The power that be, don’t seem to realize the investment people put in a maritime career. Most people faced with your adversities would have certainly parted ways with the industry, thus my scepticism persist vis a vis a global shortage of seafarers and the associated whining from governments and companies alike.
The irony of this affair is that we are a small group. On one side, implementation of a tax credit for seafarer would have a negligible effect on the economy. On the other hand, we are not a big voting group, so we will most likely never be pandered to as a political demography. I have not done much on this file for the last couple of years, other than maintaining these web pages as an information source, as it is painfully obvious that this is a very low priority for the government. I don’t believe that a petition or legal action will do much in our favour, the government has to adopt a policy shift, and that, in my view, will be most effective if it is championed by professional associations. But going back to our small group comment, therein lies the solution to this problem; I would say that active participation in, and lobbying the group’s direction in bringing this issue to government, is the way to exercise political pressure for this issue. Only then we will have a chance. Any other strategies are doomed to failure because of lack of momentum.
" I just wanted to say hello and to say that you definitely have our support in anything that we can do. We will definitely be following up on a letter to our MP as I think this is very important issue.
We also live in Nanaimo. My husband is a British citizen, who has just recently immigrated to Canada. He is a Master Mariner, a Deputy Captain on the cruise ships. We were so shocked to learn that there was absolutely no tax exemption at all, and on top of that to find out that we can not even get health care coverage because he spends too many days outside the country. And yet he is taxed at full rate?? Moving from England, it is shocking how little Canada does for its seafarers.
So, just wanted to say hello, and to offer our support in anything we can do to make change."
" I share your frustration over Canadian seafarers' taxation by the CRA, myself having worked previously as an engineer on luxury yachts. As I did not have much emotional or strong family ties in Canada, I left and applied for a 3-y renewable residency permit in Turks and Caicos. I reside 6 months out of the year in Mexico and the rest is spent between TCI and the South Western US. Given property prices have plummeted considerably, it's foreclosure paradise over here!
I was able to enjoy my wage tax free. In the midst of it, I became acquainted with a BVI hedge fund manager that has been managing my affairs ever since. Himself being a Canadian, he went on explaining that Canadian residents can nevertheless enjoy tax-free compounding of their investments as long as the shares or units of the fund are not disposed of. Upon sale, a capital gain tax would be applicable in Canada. Way better than a RRSP which taxes everything at 48% (I used to live in QC) when you redeem or non-registered accounts that are taxable year after year. Furthermore, short-selling is prohibited in RRSPs and taxable as income in non-reg accounts...
Here's the most fun part: making use of the Canada-Barbados Tax Treaty. If the move abroad discourages you, you can still be residing in Canada whilst being taxed at 2.5% overall. Numerous Canadian businesses such as Canada Steamship Lines (ex PM Paul Martin's company) and Eugene Melnyck of Biovail have saved hundreds of millions of dollars doing so. The CRA estimates that Canadian businesses save upward $2B in taxes claiming exemption under that treaty and that Foreign Direct Investment by Canadians in Barbados amounted to more that $25B!
The hedge fund manager that I referred above still resides in Canada, has setup a management company for the fund in Barbados, gets taxed at 1% there, and the remainder of the management and performance fees are remitted tax free in Canada. He would not disclose exactly, but he claims that over the past few years, he has saved millions in taxes using that treaty. CRA challenges, but to no avail. And he has setup what he calls independent cells and private mutual funds for wealthy families and trades people that allow them to get rid of the capital gain tax in Canada for a more favourable 2.5% overall.
Hope to provide you with a glimmer of hope. Let me know what you think.
Regards, David "
Thank you for your insightful comments. For me, the fear of the “process” and my deepening social roots in BC, kind of scare me off the procedures you have undertaken, but I was aware of similar situations. It is nice to hear your feedback and comments on such a system, and that perhaps it is within the reach of more of our peers, than we think. There is certainly many avenues in dealing with our income tax situation, we must just choose to expand our definition of what is “the norm”.
Martin Leduc, July 2010
In The News
A new section on Martin's Marine Engineering Page - www.dieselduck.net Tax Campaign web page. Here are some articles that may be of interest to you that have been published in the media.
Plans to end offshore tax breaks fuel union fury
Move will hit the UK’s ability to provide workers for its maritime clusters, argue unions
Sandra Speares, 30 September 2008 Lloyds List
SEAFARING unions are calling for urgent action to head off plans by the UK tax authorities to withdraw tax breaks to members in the offshore industry.
Andrew Linington, head of campaigns & communications at officers’ union Nautilus, said that the latest moves by HM Revenue & Customs have caused “unprecedented outrage” among members of the officers union.
The tax office has announced plans to withdraw Seafarers Earnings Deduction for construction, construction support, well service and dive support vessels, a step that, according to the RMT union, will result in a 20% loss on overall earnings for seafarers employed on these vessels.
The RMT said that employers can expect seafarers to be looking for correspondingly higher wages to compensate for the loss.
Both the RMT and Nautilus believe that the tax authorities’ attitude runs counter to statements by the Department for Transport, in which it said it wanted to encourage an increase in UK seafarers.
Both unions have written to shipping minister Jim Fitzpatrick and the Chancellor Alistair Darling to protest about the changes. The UK Chamber of Shipping is also planning to write.
At issue is what is defined as a ship for the purposes of the tax break.
According to Mr Linington, the tax concession was originally introduced after the Gulf War with the intention of ensuring a strategic supply of UK seafarers. “The Revenue can’t seem to get it into its head that that is why [the concession] is there,” Mr Linington said.
The issue of what is classed as a ship is an ongoing debate, not only at EU level but in the context of the UK’s tonnage tax regime. According to UK Chamber of Shipping director-general Mark Brownrigg, the trade organisation was “at one” with the unions in protesting over the reclassification of vessels considered to be ships for the purposes of the tax concession.
“We will act in concert over any specialist ships that may be affected,” Mr Brownrigg said. The move could affect the UK’s ability to provide seafarers for the UK maritime clusters, with “illogical and potentially damaging results," he warned.
Yes, you can flee taxes for sunnier climes, judge rules Air Canada pilot kept his job, left taxes, ex-wives for Turks and Caicos
Arthur Drache, Financial Post, Tuesday, January 02, 2007
Allot of taxpayers who feel they are overtaxed dream about becoming non-residents of Canada and thus avoiding Canadian taxes. The fantasy often involves taking up residence in a sunny and warm location with little or no income taxation.
The reality is that to become a non-resident, one must essentially sever all economic ties with Canada. This can be achieved, but usually only with the help of a lawyer or accountant who is familiar with the rules.
A recent case out of the Tax Court of Canada is essentially a primer on the rules, few of which are actually part of the Income Tax Act.
In this case, Jean Maurice Laurin took the position that he had ceased to be a resident of Canada and that for the period in question, 1996 to 2000, he was resident in the Turks and Caicos Islands.
The case was heard by Chief Justice Donald Bowman, whose judgment could be used as part of a first-year tax-law textbook on the notion of residence.
The Canada Revenue Agency argued that Laurin, a pilot with Air Canada at the time, remained resident of Canada and produced a lengthy list of "evidence" to this effect, including the fact that he had Canadian credit cards, had medical and dental insurance in Canada through his employer and had ex-wives, children and siblings in Quebec.
He had been involved in a relationship with a woman in Quebec and had a house there. But as Bowman determined, the relationship broke up before the tax years in question and he sold his interest in the house to the woman.
When this happened, he left Canada. He cancelled his health and car insurance; he exchanged his driver's licence for an American one; he sold his car in 1994; he closed all his Canadian bank accounts, with the exception of those required by Air Canada to deposit his paycheques.
During the relevant taxation years, Laurin returned to Montreal on a number of occasions. He stated that flying to Florida was easier out of Montreal rather than from Toronto. Every year he spent some time in the Montreal area, in addition to the time spent in Vancouver, Winnipeg or Toronto due to work obligations. He never spent more than 183 days in Canada for any of the taxation years. This is important because had he spent more than 183 days in Canada, he would have been deemed by the statute to be resident, no matter what the other evidence was.
Bowman made this observation:
"It is certainly possible for an employee of a Canadian company to be a non-resident of Canada for tax purposes. The person may indeed have been born in Canada, maintained their Canadian citizenship and passport, and even have family in Canada, but still sever all relevant ties with Canada and thus be considered a non-resident."
In finding that Laurin was a non-resident, Bowman also said this:
"Moreover, to say that one has not severed residential ties with a country is not tantamount to saying that one is resident there. Residual friendships and employment connections do not create residency."
Readers should be aware that these cases almost always turn on specific facts. That having been said, Bowman's comments certainly clarify that all economic and social contacts will not automatically result in being a resident of Canada.
Visiting friends and relatives, working for a Canadian employer and even retaining a Canadian bank account are not the "kiss of death" in such cases. But there is no doubt that there must be significant steps taken to show that the key links to Canada are severed -- and that certainly includes not leaving a spouse behind.
Financial Post, firstname.lastname@example.org, - Arthur Drache, CM, QC, is an Ottawa-based lawyer with Drache LLP and is associate counsel to Miller Thomson LLP.
Click here to download the CCRA Information Bulleting on determining Canadian residency. Click here to read the transcript of the official decision on this landmark case reported on above.
Telegraph (NUMAST / NAUTILUS) September 2007
Australia urge to give tax credit to their seafarers
AUSTRALIAN maritime union calls for tax concessions for the country’s seafarers have been backed in a new report. An inquiry by the Senate employment, workplace relations and education committee has recommended tax breaks for Australian seafarers serving on international trades as part of a package of measures to help the country’s maritime industry recruit and retain sufficient seafarers.
In a separate report, another parliamentary inquiry has called for ‘bold measures’ to cut congestion on Australia’s roads by shifting more freight to shipping. The report recommends action to upgrade Australian ports and tonnage tax to support shipping.
Click here to see Numast / Nautilus' spread in the Numast paper regarding the UK's move against income tax breaks for oil rig workers and seafarers.
Martin Kapp, accountant in the USA
The September 2004 edition of Professional Mariner Magazine ran this article by US Accountant Martin Kapp, in which he gave his opinions the United States' IRS and their tax credit for seafarers. He was later slapped by the Government because of his stance, read about it here.
CBC News, 10 Aug 2005
Feds spending $30M more to catch tax cheats
The federal government plans to create 11 new "centres of expertise" to track down Canadians who hide their money in illegal tax havens abroad.
The offices will bring together auditors who specialize in international tax, special audits and tax avoidance, according to a release from the Canada Revenue Agency.
The centres are part of a $30-million funding boost to tax compliance programs announced in the last federal budget.
National Revenue Minister John McCallum says there's no way for Ottawa to know how much money is being hidden away so that tax scofflaws don't have to give the federal government its share.
"We can have guesses and estimates and we know that the amount of money that Canadians have placed offshore has gone up exponentially over the last decade," he said. "So we have a very good idea that there's a lot of money to be found by the tax authorities."
McCallum said more than 90 per cent of Canadians pay their taxes honestly and on time, and it's the government's responsibility to go after those who don't.
The centres to tackle "aggressive international tax planning and the abusive use of tax havens" will be located within existing tax offices in Halifax, Saint John, Montreal, Laval, Que., Toronto, Ottawa, London, Ont., Winnipeg, Calgary, Vancouver and Burnaby, B.C.
The Canadian Press, Friday, October 22, 2010
Harper seals Swiss tax treaty
Canada has sealed a deal with Switzerland that would free more financial records after years of applying pressure to the European banking haven to cough up information about tax evaders.
Prime Minister Stephen Harper, left, meets with Swiss President Doris Leuthard at Lohn Manor in Kehrsatz, Switzerland on Friday.
Prime Minister Stephen Harper announced changes to an existing double-taxation agreement Friday during a visit with Swiss President Doris Leuthard.
The measures would help with the exchange of information on citizens who might be suspected of hiding taxable income.
"Switzerland's been very co-operative with us in that regard," Harper told reporters at a joint news conference.
"The double-taxation agreement we're signing today will further enhance co-operation and obviously we'll use the information we gain through this to ensure that Canadians respect Canadian tax laws."
Canada, through the Organization for Economic Co-operation and Development (OECD), pushed for years for Switzerland to co-operate more on the exchange of tax information.
The United States threatened a lawsuit against the Swiss UBS bank last year in the hopes of recouping millions in lost tax revenues. The Swiss government finally brought in major changes to its banking system that broke down some of its stringent confidentiality laws around private accounts.
Countries such as Canada with existing taxation treaties had to individually negotiate with Switzerland in order to have the changes apply to their own circumstances. But the renegotiated treaty is unlikely to help Canada find out more about thousands of accounts held by Canadians with the HSBC and UBS banks. If the treaty changes are finalized before year's end, they will apply in January 2011.
The Canadian Revenue Agency has already collected $33 million from Canadians who have stepped forward to admit they had money in accounts at the HSBC and UBS banks over the past year. Details on those accounts had been leaked to the U.S. and French governments by former bank employees, and then shared with Canadian authorities.
Harper is also announcing an expanded air-transportation agreement with Switzerland, which will allow airlines from each nation to operate more flights into third countries. Harper is in Switzerland to attend the Francophonie summit. On Sunday, he will travel to Ukraine for an official visit.
The Government of Canada released the following in Sept 2010.
Canada cracks down on unreported offshore account holders
Ottawa, Ontario, September 30, 2010
The Honourable Keith Ashfield, Minister of National Revenue, Minister of the Atlantic Canada Opportunities Agency and Minister for the Atlantic Gateway, today announced that the Canada Revenue Agency (CRA) has recently received information from the government of France about HSBC account holders.
Since receiving the information, the CRA has continued to analyze account data to ensure that the Canadian holders are declaring all their income for tax purposes. The CRA has begun a series of audits.
“This is just another example of how our government is taking action to crack down on people who unfairly exploit offshore accounts,” said Minister Ashfield. “We know that most Canadians pay their taxes and play by the rules. That's why we are taking aggressive action to recover money owed to Canadians.”
The CRA can confirm that over 1,000 bank accounts are linked to Canadian taxpayers. The largest accounts are now being audited, and others will follow. All accounts that are linked to Canadian taxpayers will be reviewed.
Through communication with international partners, the CRA continues to benefit from the increased flow of information under its tax treaties. In this regard, the CRA collaborates extensively with the Organisation for Economic Co‑operation and Development, the Seven-Country Working Group on Tax Havens, and the Joint International Tax Shelter Information Centre.
Last year, the CRA uncovered over $1 billion in unpaid federal tax from Canadian taxpayers hiding assets and accounts offshore or through other international transactions. For the same period, the CRA identified another $138 million in unpaid tax through the CRA's voluntary disclosure program. Just five months into this fiscal year, the number of last year's disclosures has already been surpassed.
Those Canadians who have undeclared income in foreign jurisdictions can make a voluntary disclosure and pay only taxes owing plus interest. The CRA's Voluntary Disclosures Program (VDP) allows taxpayers to come forward and correct their tax information.
Not reporting income from foreign sources is illegal. Tax recovery continues to grow as a result of the CRA's international efforts and audit processes. The CRA is committed to continuing collaborative work to protect Canada's tax base.
"Non Resident status" for Indian seafarers on domestic shipsIndian seafarer get "non resident status" allowing for income tax break on domestic flagged ships to combat shortage of seafarers on domestic flagged ships. Tax rules changed for Indian seafarers
Offshore earnings in India deemed taxable
In mid 2016, India tax courts handed down a pretty significant ruling in regards to income earned offshore, but paid to local banks accounts, which makes it taxable according to the Government. A ruling promised to be appealed by the seafarer's union, read more here India Tax Ruling on seafarers.
A little though on Taxes in general, from a fwd email...
Tax his land. Tax his bed, Tax the table at which he's fed.
Tax his tractor. Tax his mule, Teach him taxes are the rule.
Tax his work. Tax his pay, He works for peanuts anyway!
Tax his cow and tax his goat. Tax his pants, his shoes and coat.
Tax his ties. Tax his shirt, Tax his work. Tax his dirt.
Tax his tobacco. Tax his drink, Tax him if he tries to think.
Tax his cigars, wines and beers. If he cries tax his tears.
Tax his car. Tax his gas, Tax until you've got all he has.
When he screams tax him some more, Tax him till he's good and sore.
Then tax his coffin. Tax his grave, Tax the sod in which he's laid.
Put these words upon his tomb, 'Taxes drove me to my doom...'
When he's gone do not relax, It's time to apply inheritance tax.
Accounts Receivable Tax
Airline surcharge tax
Airline Fuel Tax
Airport Maintenance Tax
Building Permit Tax
Corporate Income Tax
Dog License Tax Driving Permit Tax
Environmental Tax (Fee)
Federal Income Tax
Federal Unemployment (UI)
Fishing License Tax
Food License Tax
Gasoline Tax (too much per litre)
Gross Receipts Tax
Hunting License Tax
Hydro (Debt repayment tax)
Marriage License Tax
Personal Income Tax
Prescription Drug Tax
Provincial Income and sales tax
Real Estate Tax
Recreational Vehicle Tax
Retail Sales Tax
Service Charge Tax
Telephone Federal Tax
Telephone Federal, Provincial and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
-- and in 2010 in B.C. and Ontario, the HST
STILL THINK THIS IS FUNNY ?
Not one of these taxes existed 100 years ago, & our nation was one of the most prosperous in the world. We had absolutely no national debt, had a large middle class, and Mom stayed home to raise the kids.
Read the Article A Q&A Start your research What you can do Readers' comments Send us your opinion Tax Free in Quebec Not in the oil industry In the news
Please let me know what you think about this topic and the above comments. Is it worth continuing?