Is my British pension taxable in Canada?

[mdcaven]

Thank you I appreciate the response. I keep my dual residency because I still work in the UK and file dual returns. My challenge is how/where  do I report my UK pension to the CRA on my return and indicate it is exempt from Canadian Tax?  I am still working on my self employed return but as it stands at the moment it's including my UK Pension as taxable income.

[TonyC11]

You should determine your residence for tax purposes. This is decided by CRA, it’s not an arbitrary decision made by the taxpayer.

If you work and live in the UK it may be you are considered non/resident in Canada. Or the other way round. Either way you should be able to input foreign pension as exempt under treaty on your Turbotax file. I’ve never had to do that, but it is sn option on the foreign income page. Contact Intuit help if it’s not obvious.

( It is an option  because some CRA filers eg from India will report exempt pension income as their treaty with Canada works differently from the UK Canada deal).

[TinRobot]

I believe that is true, and important.  For tax purposes, you are resident in one place only and all worldwide income needs to be reported to that place. It's based on how long you reside, not your own choice to file UK income only to the UK. If CRA finds out you did not declare all your income, that's tax evasion and needs to be corrected.

In terms of pensions, note that a UK pension has to be a pension from a company. Like if you worked for a UK company and built up a pension they administer, then that's what the CRA considers a pension. What the CRA does not consider a pension is what in the UK is called a "personal pension". The kind that is much like an RRSP in Canada. That is, self funded and managed. That is not a pension to the CRA and has to be treated like any old investment.

If you sell holdings in a UK PP and buy other investments, that has to be reported to the CRA as a gain or loss every time and every year.  If you hold on to the investment in your UK PP and never trade anything, when you sell it, the CRA will want every tax $ on the gains in one full swoop.  So if you hold a UK PP worth say, $500k and it grows to a $1 million over a period of time, and then you sell it and cash out of your pension (being over 55) you will have to pay full Canadian capital gains tax on that $500k gain all at once. That's a big tax hit, so be careful how you manage your UK personal pension, if you have one, and if you are a Canadian tax payer.

[mdcaven]

Thank you. Nothing as grand as that unfortunately. Just an ordinary state pension paid monthly like CPP.

[mdcaven]

Thank you again.