Q516. Get Foreign Pension in India - Taxes on Foreign Pension in India on Canada Pension

Question: I have a question about old age pension :

After completion of 20 years in Canada and attaining age 65, If I live in Canada, how much Old age pension including supplement ,

would I get and after that If I decide to move to India how much would it be. I will appreciate, if you could give the break up of

income considering, at that stage, I would not have any other income in India or Canada except my CPP which would be ard $ 200

canadian/ month.

Regards

sudesh behl

Answer: You don’t mention if you are already 65 years of age and have completed 20 years stay in Canada, the reason I say this is because there are some changes coming to Canada Pension plan age eligibility which will effect those who are born in 1958 or later. Canadian old age pension benefit is available to those who chose to live abroad under the current rules, if they have resided in Canada for at least 20 years after age 18 and are 65 years old or more. I believe the maximum Canadian old age pension at present (Jan 2014) is about $551 per month. The amount of pension you get, will depend on how long you have lived in Canada after age 18. To get the exact amount, contact the Canada pension plan office. If you move back to India after meeting the age 65 and residency requirement of 20 years, you may be entitled to receive in India your Canada pension and Old age pension. However, the supplement in Canada, is payable to only those low income pensioners who live in Canada to help them meet the cost of living. If you move to India, the supplement payment will be for only six months and then canceled.

Taxes on Canadian Pension Income when living in India

Kindly note that the Canada pension payments are taxable in Canada and tax is withheld from the monthly payments made. The tax amount deducted is based on the country where the person resides. For those who reside in India and receive Canada pension payments, 25% tax is withheld from their monthly pension benefit. Note: Some countries have reciprocal agreements with Canada and lower or no tax is withheld. For more information on tax withheld in Canada for various countries check: http://www.servicecanada.gc.ca/eng/services/pensions/international/nrtax.shtml

Reduction of Tax withheld for a non-resident of Canada

For those who have low income, withholding of 25% tax can be a problem. There is a tax form called NR5 that can be used to apply for a reduction in tax withheld for Canadian non-residents. This Form does not have to be filled every year but only once every five years. A sample of this form is available by clicking HERE