Do I need to file a Canadian Income Tax Return anymore?

[JoeCanuk 3]

RRSP's a scam how so? They are a great investment tool. And it only makes sense that one gets taxed on them if you take them out early, as you did get a tax break when you first got them!! Whats sucks for me is that i took mine out when the cdn dollar was in the .70 cent range,lol

The government charges you taxes on your paycheck. Then you put money into your RRSP. You take it out and they tax you again...at 25% Cash it out when you retire and I believe they tax you then too. I just believe it is a scam. My interest on my RRSP was no better than if I had just put the money in a savings account. It even lost money sometimes.

LOL yeah that does suck for you. Sorry about your unfortunate circumstance. haha

[trailmix 77]

RRSP's a scam how so? They are a great investment tool. And it only makes sense that one gets taxed on them if you take them out early, as you did get a tax break when you first got them!! Whats sucks for me is that i took mine out when the cdn dollar was in the .70 cent range,lol

The government charges you taxes on your paycheck. Then you put money into your RRSP. You take it out and they tax you again...at 25% Cash it out when you retire and I believe they tax you then too. I just believe it is a scam. My interest on my RRSP was no better than if I had just put the money in a savings account. It even lost money sometimes.

LOL yeah that does suck for you. Sorry about your unfortunate circumstance. haha

I disagree. If you take your RRSP out early, you basically break even (depending on your tax bracket).

Let's say over a period of 10 years your tax bracket is 25%.

Employer pays you 1000.00, you pay $ 250.00 tax on the earnings.

You put the $1000 in an RRSP, on your tax return you get a $ 250.00 credit as you have reduced your income by that $1000.

The next year you decide you need the money for doughnuts and take it out. Your income is now increased by the $1000 so you pay $250.00 in tax on it.

The example above doesn't allow for variables - like 30 years from now you will probably be in a higher tax bracket etc - on the same note though, the intention is for retirement earnings, so in theory if you manage the RRSP funds well you should be able to only take out enough to live on comfortably without putting yourself in a higher tax bracket (or possibly not incurring any tax on those earnings at all).

Edited January 19, 2008 by trailmix

[Flames9_RN 358]

Great post trailmix!!! I think RRSps are great!! Mine normally did very well!! I should have just left them alone!! I sort of took mine out without discussing it in great detail with my wife,lol Sure wished I left them alone!! Oh well! Re-invested down here!!

[trailmix 77]

Great post trailmix!!! I think RRSps are great!! Mine normally did very well!! I should have just left them alone!! I sort of took mine out without discussing it in great detail with my wife,lol Sure wished I left them alone!! Oh well! Re-invested down here!!

I like RRSP's, I took all mine out the year before last as I decided I didn't want to hassle with them when we moved. While they aren't perfect I like that they give people a tax break when they are younger and need lots of ready cash - and I particularily like that they can be used towards purchasing a house, so there is that benefit on top of the tax break which probably helps a lot of people buy a house

[Cassie 8]

I didn't say you did say you were using it, I was merely pointing out the law.

If you check the website for your provincial healthcare office, there will be information there about what you are supposed to do should you leave the province/country. On the OHIP website (I'm originally from Ontario) they state you are to send them a letter to notify them that you are no longer an Ontario resident as of your date of departure.

Ok, no problem. Please accept my apology.

Thanks for the information. The problem was, I was never aware that I had to check it in the first place. Hopefully it is not too late? Do you know how long I would have to live in Ontario if I were to move there to get it back again?

Just to answer your question about eligibility, I found the following here http://www.health.gov.on.ca/english/public...ligibility.html

You must have Ontario health insurance to use Ministry of Health and Long-Term Care funded health care services. You are eligible for the Ontario Health Insurance Plan (OHIP) if :

* You are included under one of the following categories :

o you are a Canadian citizen, permanent resident or landed immigrant, convention refugee, or are registered as an Indian under the Indian Act

o you have submitted an Application for Permanent Residence or an Application for Landing and have been confirmed by Citizenship and Immigration Canada as having satisfied the medical requirements for landing

o you are a foreign worker who holds a valid work permit or employment authorization which names a Canadian employer situated in Ontario and your prospective occupation, and is valid for at least six months

o you are a foreign clergy member who will be providing services to a religious congregation in Ontario for at least six months

o you hold a Temporary Resident Permit or Minister's Permit with case type 80 (for adoption only), 86, 87, 88 or 89

o you are the spouse, same sex partner, or dependent child (under 19 years of age) of a foreign clergy member or eligible foreign worker who is to be employed in Ontario for a period of at least three consecutive years

o you hold a work permit or employment authorization under the Live-In Caregivers in Canada Program or the Foreign Domestic Movement

o you have been issued a work permit or employment authorization under the Caribbean Commonwealth and Mexican Seasonal Agricultural Workers Program administered by the federal department of Citizenship and Immigration

* and you make your permanent and principal home in Ontario

* and you are in Ontario for at least 153 days of the first 183 days immediately following the date you establish residency in Ontario (you cannot be absent for more than 30 days during the first 6 months of residency)

* and you are in Ontario for at least 153 days in any 12-month period

To follow up what flames said earlier, I did have to fill out a form stating that I was no longer a Canadian resident when I filed my Canadian 2004 Income Tax Return, because my chartered accountant contacted Revenue Canada to ensure that we were filing it properly and they stated that I needed to fill it out. It's not a hard form, just checking off stuff and confirming that the country I moved to now considers me a resident for tax purposes. Wasn't a big deal.

Oh, and I had to go to the emergency room on my last trip to Canada for a gall bladder attack (sweet Lord that hurt so much!) and my insurer here in the US did not pay for a penny of it, as far as I could tell. And we had to pay $400 upfront before I could even be seen. Because of this I did not go to the emergency room again a week later when I fell and hit my elbow. I waited until I came home, got it x-rayed and found out I had been walking around with basically a broken bone for three weeks.

Edited January 19, 2008 by Cassie

[frustrated1 0]

Thanks Flames, Joecanuck, Trailmix and Cassie. this is great information. since last year was my last year there I will have to declare non-residency and file taxes for 2007. to complicate my situation, I have what they call 'locked in' rrsp's that you cannot cash out. now they may have a rule for non-residents, but I'll have to find out from INGdirect.

I also got the lovely child tax benefit for both of my kids (for those not familiar with it, it's $100 per month per kid under 7 regardless of income bracket). I need to pull the plug on that too so I don't owe them anything down the road. just a little apprehensive about cutting these ties before getting my SSN and green card here. perhaps I should wait and then make the changes retroactive to the I-94 date.

Edited January 19, 2008 by frustrated1

[Flames9_RN 358]

I may have had something similar to ur "locked in" RRSP. Can't recall the name of it, but there was a "maturity" date, and after that date I could then take it out. But u can leave the RRSP's in Canada. The form 8891 that u fill out to notify the IRS is pretty easy, only 1 page. Its a fairly new form, so some IRS agents have no clue about it! Google it and u wil see it.

[Kathryn41 3,205]

I have locked in pension funds still in Canada. I have no problems leaving them there until I can retire and then draw upon them. I did cash my RRSPs in before I left Canada, included them in my final tax return as income and paid the tax on them (they are tax deferred until you do cash them in or start drawing on them at retirement) as it was going to be a big hassle reporting them each year on my US tax returns as the US does not see them as eligible for tax deferment. It was easier to investment in an IRA here in the US.

I also didn't file anything other than my tax return when I did my final returns in Canada - just filled in the date that I had left Canada.

If you are receiving Child Tax benefits or GST credits, once you leave Canada you are no longer eligible to receive them and once you file your taxes indicating the date that you left Canada, you will be required to pay back any payments received after that date. If, heaven forbid, something doesn't work out and you return to Canada prior to getting your green card, you just submit an application to have the CTB re-instated. GST is based on your previous tax year so it would depend when you returned if you were eligible to receive a GST benefit or not.