Fees/Taxes to anticipate as result of moving from Canada?

[karlita 0]

Hi all.

I've been hearing about taxes that Canadians have to pay on assets left in Canada as well as the vehicle they're bringing over to the US when moving, so I figured that I'd ask those of you who have moved to the US from Canada to confirm. I don't really have much assets (does RRSPs count?), and all I'm really bringing of value is my Toyota Matrix.

I'm just trying to prepare for when it's time for me to move (budget-wise and getting documents together-wise). Any info regarding the little but annoying things to expect would be helpful!

Thanks!

[zyggy 9]

Hi all.

I've been hearing about taxes that Canadians have to pay on assets left in Canada as well as the vehicle they're bringing over to the US when moving, so I figured that I'd ask those of you who have moved to the US from Canada to confirm. I don't really have much assets (does RRSPs count?), and all I'm really bringing of value is my Toyota Matrix.

I'm just trying to prepare for when it's time for me to move (budget-wise and getting documents together-wise). Any info regarding the little but annoying things to expect would be helpful!

Thanks!

There is no taxes on a vehicle... However, if it is financed by a Canadian Financial Institution, you will need to pay off the loan before you import the car as exporting the vehicle violates the terms of the note.

There is a tax in that you will be considered a deemed resident of Canada if you have property in Canada and have not rented it out at the time that you leave Canada.

You can keep your RRSP's.. but if you took out a loan against it for the various reasons that you can (home or school), you have to either pay it back or clain the amount outstnading as imcome in the year that you leave Canada. In addition, you must report your RRSP income to the IRS each year.

[Reba 2]

if you don't want to report your RRSP to the IRS on your annual taxes, you can cash it out and then Revenue Canada will take 25% off the top. Then you will need to report that on your IRS report, and may or may not have to pay more tax on it, depending on your tax bracket and how much you already paid out to CRC.

There's a book at book stores called The Border Guide that has great information on moving across the border and financial implications.

Oh, I might add that you should check with the state laws of where you're moving to, about foreign financial institutions and investments. One of the reasons I cashed out my RRSP when I moved was that NC has this really stupid law that does not allow foreign financial planners/advisors. Foreign investment is fine, but not the advisors who manage the account. Pain in the ####### really.

[Kathryn41 3,205]

Here is a link to a really useful publication from Canada Revenue Agency about emigrants and taxation:

http://www.cra-arc.gc.ca/tax/nonresidents/.../leaving-e.html

It will provide you with the information you need about cashing in your Canadian assets and how to prepare your Canadian income tax return for the year that you leave. For instance, if you work after you get to the US, then you would prorate your deductions and claim them for the time you were in Canada; but if your sole source of income was Canadian based and your World income for the whole year was just the Canadian income then you can claim the whole year's federal and provincial deductions if you write a letter requesting that. Like Reba, I also recommend "The Border GUide" as it discusses concerns like liquidating assets, retirement investments and cross border benefits. You will also need to file US taxes and ideally you can file declaring your Canadian income and then claiming a foreign tax credit. You will need to do your Canadian taxes first so you have the values you need to insert into your US tax return - and their return date is 2 weeks earlier, so start early. I also cashed in my RRSPs because there was little benefit to keeping them in Canada and I could include it in my Canadian income tax return more easily. Good luck - and good for you for starting to look into this early! Btw - you can keep your Canadian bank account open and have your income tax return direct deposited next year while you do your banking on-line. Make sure your bank knows your plans and they will redirect everything to your new US address without a problem, and set you up for internet banking if you aren't already. You will also need to advise CRA of when you move, especially if you receive any benefits such as GST rebates; they will automatically mail your tax return to your new address as well.

[no one 0]

Btw - you can keep your Canadian bank account open and have your income tax return direct deposited next year while you do your banking on-line. Make sure your bank knows your plans and they will redirect everything to your new US address without a problem, and set you up for internet banking if you aren't already. You will also need to advise CRA of when you move, especially if you receive any benefits such as GST rebates; they will automatically mail your tax return to your new address as well.

Probably stupid questions, but please bear with me because I don't really understand all these financial matters...

How much money can we keep in our Canadian bank account without being subjected to taxes, or so that we don't look as though we're still Canadian residents? Or it doesn't matter how much money we still have in our accounts?

What's the best way of transferrring your money from your Canadian accounts to your U.S. one (once you open one)? Wiring looks pricey... ~ $30 to wire a max limit of $1000 or something like that. My parents mentioned that banks can write you some kind of cheque (that you don't pay for) when you close your Canadian bank account, and you can deposit that in your new U.S. one... is this true?

Also: anyone moving / moved to the San Francisco Bay Area? Any HSBC or TD Banks there...?

[Reba 2]

if you have ANY money in a bank account or an RRSP in Canada, you would still be considered to have ties to Canada, and CRC can and has charged back taxes on Canadians abroad because of it.

I highly suggest you speak with a financial planner who is familiar with the laws of both countries and the province you currently live in, and the state you are moving to.

As for banks, check their respective websites and look for branches, they should have the information there. You'll probably have better luck with HSBC than TD.

[cmartyn 0]

What Reba said.. the best option, if your worried about CCRA considering you to be a Canadian resident for tax purposes is to close all of your accounts. That might not be the best investment option though.

There is a number (100,000.00) in one account / investment that triggers this behaviour almost automatically. Its reasonably difficult to dispute. (There is a hearing) and at that point you will have to show you are a bonafide US resident and not a border hopper who has kept their provincial health plan and maintains a home in both countries which is what they are looking for.

[Kathryn41 3,205]

CRA is not going to consider you a Canadian resident because you have a Canadian bank account. You change your mailing address with them; you change it with your bank; you do not pay tax on money held in an account - you pay income tax on income. You are in the US so you are not using a direct deposit to your Canadian account from your foreign employer. If you have investments in Canada then you have to declare them on your US tax returns. There is a residency test that both Canada and the US use and having a foreign bank account does not make you a resident of that country. Many Canadians have American bank accounts, especially if they do business in the US, and there are those of us in the US who maintain a Canadian bank account because we still do have connections - although not residential ones - with Canada. I maintain the one accoutn and the one credit card. When I make purchases in Canada I charge them to the Canadian account and card. I pay off the card by a bank online transfer paid from my Canadian account. If I wish to make deposits to my Canadian account I actually send a physical check to the bank and have them deposit it in my account. My father has deposited money as a gift into my Canadian account. A friend reimbursed me the postage cost of sending her something she wanted and couldn't get in Canada by depositing the money into the Canadian account. I have my bank statements and the credit card statements mailed to my US resident address. There has never been a problem - and as I said it resolved the issue of trying to cash a Canadian check here in the deep southern USA where they don't even know that other countries exist. I have been doing this for more than 2 years now and have no difficulties with either US or Canada considering me as anything but a US resident.

Edited August 7, 2006 by Kathryn41

[no one 0]

CRA is not going to consider you a Canadian resident because you have a Canadian bank account. You change your mailing address with them; you change it with your bank; you do not pay tax on money held in an account - you pay income tax on income. You are in the US so you are not using a direct deposit to your Canadian account from your foreign employer. If you have investments in Canada then you have to declare them on your US tax returns. There is a residency test that both Canada and the US use and having a foreign bank account does not make you a resident of that country. Many Canadians have American bank accounts, especially if they do business in the US, and there are those of us in the US who maintain a Canadian bank account because we still do have connections - although not residential ones - with Canada. I maintain the one accoutn and the one credit card. When I make purchases in Canada I charge them to the Canadian account and card. I pay off the card by a bank online transfer paid from my Canadian account. If I wish to make deposits to my Canadian account I actually send a physical check to the bank and have them deposit it in my account. My father has deposited money as a gift into my Canadian account. A friend reimbursed me the postage cost of sending her something she wanted and couldn't get in Canada by depositing the money into the Canadian account. I have my bank statements and the credit card statements mailed to my US resident address. There has never been a problem - and as I said it resolved the issue of trying to cash a Canadian check here in the deep southern USA where they don't even know that other countries exist. I have been doing this for more than 2 years now and have no difficulties with either US or Canada considering me as anything but a US resident.

Does it matter how much money you have in your Canadian bank account? The interest earned in my accounts are negligible, but just wondering...

What Reba said.. the best option, if your worried about CCRA considering you to be a Canadian resident for tax purposes is to close all of your accounts. That might not be the best investment option though.

There is a number (100,000.00) in one account / investment that triggers this behaviour almost automatically. Its reasonably difficult to dispute. (There is a hearing) and at that point you will have to show you are a bonafide US resident and not a border hopper who has kept their provincial health plan and maintains a home in both countries which is what they are looking for.

So $100K's the magic number? In that case, I should be okay...

[Reba 2]

I suggest you have a look at a book called "The Border Guide", all sorts of information for Canadians moving to the US and what to do with your money.

[Officer's Fiance 0]

I was wanting to leave my RRSP's here in Canada and not touch them. Is this going to be a problem? I don't see why I need to report this on my US tax return if I am not going to cash them, at least not for another 30 years! Anybody else leave their RRSP's here in Canada?

[cmartyn 0]

I left both mine and my wifes. They are both self directed RRSP's and at two different brokerages. Both brokerages are licenced in Connecticut so they had o issues with me maintaining them there.

You have to report them to the IRS each year and disclose how much tax deferred income was made. For example. If you have an RRSP with 100,000.00 in it and you leave on August 31st, 2006. Then on December 31st your RRSP account has 110,000.00 in it you have a gain of 10,000.00 which you must declare. You can elect to defer the gains indefinately. You must also report the 110,000.00 as a foreign trust account.

Other than that, no problemo.

[Officer's Fiance 0]

Ahhh, I got it now. Thanks for the post, and thank goodness I have a financial advisor who can help me take care of this for me.

I left both mine and my wifes. They are both self directed RRSP's and at two different brokerages. Both brokerages are licenced in Connecticut so they had o issues with me maintaining them there.

You have to report them to the IRS each year and disclose how much tax deferred income was made. For example. If you have an RRSP with 100,000.00 in it and you leave on August 31st, 2006. Then on December 31st your RRSP account has 110,000.00 in it you have a gain of 10,000.00 which you must declare. You can elect to defer the gains indefinately. You must also report the 110,000.00 as a foreign trust account.

Other than that, no problemo.

[girl 37 7]

You can keep your RRSP's.. but if you took out a loan against it for the various reasons that you can (home or school), you have to either pay it back or clain the amount outstnading as imcome in the year that you leave Canada. In addition, you must report your RRSP income to the IRS each year.

Thanks for that very valuable info. It didn't cross my mind that I'd have to do anything about the RRSPs I cashed out to go back to school.