Canadian Payroll - Tax?

There are posts on the Hypo tax for U.S. payroll, don't know if that search would be helpful to you.

Hopefully some of the Canadians on the forum will be able to give you an answer.

This is an excellent post. A lots of newly hire Canadian have the same question and I hope someone from Canada already living there as a non resident Canadian will help us understanding the benifit of being non resistant Canadian in terms of hypo tax.

We're also new hires on Canadian payroll. We had asked about removing this hypo tax since we were non resident for tax purposes in Canada but were told the same by HR - see response below which seems to be the same as per the booklet they sent.

The Hypothetical tax cannot be removed. To understand the tax element of the Overseas Cost Difference, it is necessary to remember that the objective of the “balance sheet” is to provide you with about the same amount of after-tax income from your base salary that a comparable employee has in Canada. To balance the income tax element, a subtraction from your pay is made to approximate the tax liability that you had on your base salary, had you remained in Canada.

The Hypothetical Tax is an estimate of your Canadian income tax liability on your annual base salary. A pro-rated portion of the Hypothetical Tax is subtracted from your pay every month. This is not an actual tax, but rather an adjustment to pay.

Thanks everyone for your replies. I still don't see the need for an adjustment in the form of "Hypo Tax" - wouldn't it be much simpler to give a net salary without the use of the tax term? It is quite possible even though we are non-resident Canadians, the government would refund this money as typically firms do this to estimate tax burden so that the employee doesn't have to pay taxes when filing. In our case being a non-resident Canadian, we should get a return back from the Government upon filing even if the Hypo tax is not going to them - after all it is calculated the same way. My situation is even more frustrating since I was anyway living in the Middle East, so I never had the tax issue, adjusting for Canadian tax just doesn't make sense to / for me. Anyone here know of a good tax adviser?

Leaf, the fact is the Canadian government cannot refund a tax they are not paid. If you claim Canadian resident status (ie keep your licence, house, health card, bank accounts etc) then yes you may have a point. But then keep in mind that you will pay full taxes on all your income worldwide when you file your income tax return. By taking the steps necessary to declare yourself a non resident, you avoid the Canadian taxes hence there's nothing for the Canadian government to refund.
Please note that I am NOT an accountant so do not take my advice as the be all /end all. As many have said on this board, consult a tax accountant so you have full details of what the implications are for you.

HI
I am in a lousy situation. I am a canadian immigrant with a PR card and not a passport. Being offered a job would i also pay a tax or something, or what will happen.
PLease help so i make a decision if or not to accept the offer.

All the Canadians , who claim nonresident cant have a bank account in Canada ? What about Rrsp's and resp which mostly Canadians contribute to living in Canada ... So many things to consider before moving....