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Originally posted by freakoutguy

An acquaintance of mine who is a Canadian PR is getting divorced and will receive a one time alimony settlement in India. This lady has been in India for the past year and a half, so technically she is no longer an NRI, although her Canadian PR and residency is still valid.

She now wants to move to Canada permanently and wants to bring in the money with her. What is the best way of going about it? Will she have to pay taxes in India on the alimony (since she is no longer an NRI) and will CRA expect her to pay tax on the remittance? The amount is pretty substantial so she is worried, as she is not getting the right advice in India.

Thanks in advance to those who reply

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SUPPORT PAYMENTS

To your Acquaintance:

This information is for your guidance only. It depends upon the detailed definitions of and the taxes levied by, in accordance with the Status, such as Resident, RNOR, or NRI of an individual and also the Taxes paid to the countries where it is received from and the relief provided by the resident country where it is received. All of this involves collecting a ton of data, such as number of days that one stays outside of India. The number of Years that one stays and works outside of India, the number of years one can collect the same in India for FREE, such as first two years for free after seven years of residence out side of India, but still an Indian citizen etc., and then doing a detailed analysis to arrive at a conclusion. You do have a two year period of free ride, if you have been away for Seven years. It is an interesting subject matter to read and understand. Please bear with me.

This involves an analysis of the individuals Status and the Taxes paid at the source, which in this case is Canada and the Tax relief provided by the country in which she is currently residing, which is India.

Alternately, receive, but do not cash the same till she reaches the destination, which is Canada. (A Certified Cheque**) By which time she is no longer a resident in India, once again.

Cash it later in a period, in Canada, after the 30th of April of the next year, by which time the taxation year would have passed by at the resident state, which is India.

The taxes having been with held in Canada, it is received as a Normal
Payment and can avail all of the deductions available for the year in which it is received at the New Location. (The reliefs availed are a tad better in in Alberta and needs a detailed analysis to confirm the same. Residences could be changed after due analysis, if need be but before cashing.)

Who is an NRI.
http://law.incometaxindia.gov.in/TaxmannDit/IntTax/nrcont.aspx
DTAA: Look into Avoidance of Double Taxation.
Suppoert Payments. One time support payment. etc.,
You have to do a lot of reading to understnd the topic.
http://www.cra-arc.gc.ca/E/pub/tg/p102/p102-e.html

http://www.cra-arc.gc.ca/E/pub/tp/it530r/README.html

http://www.cra-arc.gc.ca/E/pub/tp/it530r/it530r-e.pdf

Info: You can obtain advance ruling by paying Re2500/=
only if the recipient decides to stay back. Do not alert them.
http://www.indiaenews.com/business/20060730/16697.htm
DTAA
**3. In the case of India, double taxation shall be avoided as follows :

(a) The amount of Canadian tax paid, under the laws of Canada and in accordance with the provisions of the Agreement, whether directly or by deduction, by a resident of India, in respect of income from sources within Canada which has been subjected to tax both in India and Canada shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax.*

It will take some time to read and understand. Take you own sweet time and do it. Trust you have enough patience to put together a line of action to take and path to pusue before arriving at the destination. Hope this helps you a little bit in making a decision and in your settlement.

'Good Luck to you in your future'. (To your friend and acquaintance)

Freddie.