As a teacher living and working in China, do I need to pay taxes on a housing allowance from my employer?

[dmaksym]

I pay the "fapiao" tax which is exempt in China from further tax, and cannot transfer housing allowance amount outside of China. Is CRA allowed to consider this amount as income?

[TurboImpotLiseD]

Is your employer a Canadian company? Did you receive a T slip indicating that the housing allowance is a taxable benefit? If so, you might have to declare that benefit and pay taxes if applicable. 

[dmaksym]

Hello, thank you for your reply. I work for a Chinese company and pay fapiao tax on the housing allowance. Does that help to answer? No tslip is generated. 

[TurboImpotLiseD]

There is no reason why you would pay Canadian taxes if your employer is a Chinese company, you are working and living in China. How long have you been in China? Do you have other income from Canada that you must file a Canadian return?  Has CRA contacted you? 

[dmaksym]

Hello, thank you for your response. I have been living in China since 2015, which a brief return to Canada in 2019-2021 to complete graduate studies in Toronto. I have rental income on a property I own in Kitchener, and am currently being reassessed by CRA. CRA states that I owe taxes in my housing allowance from my employer. I normally get reassessed each year I claim foreign income, and upon providing documentation, they readjust back to my original income tax filing. However, for the 2022 year, CRA is now stating that I owe taxes on my housing allowance, and I have made a dispute on this amount as the amount is upwards of $4000 with penalities. The China government does not have clear documentation to provide that state housing allowance should not be included, as it once did it previous years, as they have done away with their own version of NOA for foreigners. I have purchased the premium turbo tax filing for the 2022 year. Wondering if Turbo Tax can help communicate these guidelines with CRA that housing allowance should not be included, or at least review my filing for the 2022 tax year.

[TurboImpotLiseD]

After reviewing your file, we see that you have purchased Assist and Review Premier for tax year 2022. Open your TurboTax software and schedule a call with an expert. Review of past years' returns is included in your Assist and Review purchase. Your situation is complex and need assistance from a tax expert. 

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