File as a Non resident to Canada + TFSA/RRSP Questions

[purem4g1c 113]

Hey there I was wondering a few things about Declaring as a non resident to Canada.

 

1) Declaring as non resident to Canada tax obligations...

 Let's say its May 1st, 2019. I pay myself a $40,000 dividend to myself, then on May 5th, 2019 I go to USA would I owe the CRA 25% of that $40,000 because as I know Canada taxes 25% of dividends. Then on April 15th, 2020 I would just file a normal tax return paying the normal Ontario health premium tax and whatever other tax I pay and that would be the last year I pay any tax to Canada as I wouldn't be living there anymore.

 

2) What did you guys do with your TFSA? Did you end up leaving it collecting interest in Canada, or move it to a savings account and eventually move it to USA?

 

3) What did you do with your RRSP? Did you move it to a 401K in USA?

 

4) Moving a Canadian registered INC to USA, or better to leave it in Canada even if you're no longer a resident?

 

Sorry the questions may be more suited for an accountant but just thought I would shoot in the dark and see if anyone has similar experiences as me here.

[sweethrtt 124]

2 hours ago, purem4g1c said:

Hey there I was wondering a few things about Declaring as a non resident to Canada.

 

1) Declaring as non resident to Canada tax obligations...

 Let's say its May 1st, 2019. I pay myself a $40,000 dividend to myself, then on May 5th, 2019 I go to USA would I owe the CRA 25% of that $40,000 because as I know Canada taxes 25% of dividends. Then on April 15th, 2020 I would just file a normal tax return paying the normal Ontario health premium tax and whatever other tax I pay and that would be the last year I pay any tax to Canada as I wouldn't be living there anymore.

 

2) What did you guys do with your TFSA? Did you end up leaving it collecting interest in Canada, or move it to a savings account and eventually move it to USA?

 

3) What did you do with your RRSP? Did you move it to a 401K in USA?

 

4) Moving a Canadian registered INC to USA, or better to leave it in Canada even if you're no longer a resident?

 

Sorry the questions may be more suited for an accountant but just thought I would shoot in the dark and see if anyone has similar experiences as me here.

Hey hey, Accountant here, I’m going to try and answer your questions to the best of my ability...

 

1) yes you would have to claim that $40,000.00 dividend as income since you did so while still residing in Canada.

 

2) if you keep your Tfsa in Canada that is fine just as long as you do not go over the contribution limit. I haven’t moved, as I haven’t been approved for my visa yet, but when I do I’m going to pull all the money and bring over to the US (sadly will have to take a major blow on the exchange rate)

 

3) I do not have an RRSP (quite frankly I hate them, being taxed on money that has already been taxed, just stupid). You can keep your RRSP in Canada however you are required to claim the income when you withdraw from the account. IMHO I would pull it out, pay the tax on it and the bring the rest over to the states. Either way your going to have to pay tax on the money you are withdrawing.  

 

4) I’m assuming you mean inc as a company? Correct me if I am wrong. You can keep it in Canada but you will be required to submit a yearly income tax return. Even if you have no income to claim. In my opinion better to dissolve the business and refresh in The US. 

 

Hopefully I was able to be some help. And if anybody has more experience in this area than please chime in! 

Edited March 16, 2019 by sweethrtt
Spelling errors

[purem4g1c 113]

11 hours ago, sweethrtt said:

Hey hey, Accountant here, I’m going to try and answer your questions to the best of my ability...

 

1) yes you would have to claim that $40,000.00 dividend as income since you did so while still residing in Canada.

 

2) if you keep your Tfsa in Canada that is fine just as long as you do not go over the contribution limit. I haven’t moved, as I haven’t been approved for my visa yet, but when I do I’m going to pull all the money and bring over to the US (sadly will have to take a major blow on the exchange rate)

 

3) I do not have an RRSP (quite frankly I hate them, being taxed on money that has already been taxed, just stupid). You can keep your RRSP in Canada however you are required to claim the income when you withdraw from the account. IMHO I would pull it out, pay the tax on it and the bring the rest over to the states. Either way your going to have to pay tax on the money you are withdrawing.  

 

4) I’m assuming you mean inc as a company? Correct me if I am wrong. You can keep it in Canada but you will be required to submit a yearly income tax return. Even if you have no income to claim. In my opinion better to dissolve the business and refresh in The US. 

 

Hopefully I was able to be some help. And if anybody has more experience in this area than please chime in!

 

1] That is great news as Ontario is very good on dividends, I will send myself one after the end of this tax year. 😃

 

2) I see~ yeah the conversion rate sucks but not much you can do about it. I will probably end up moving my TFSA over too. I was just worried that I would get have to pay taxes on "TFSA" since I'm no longer a resident.

 

3) I only use RRSP to lower my tax at end of year, I do the minimal amount of money into it so I don't need to pay as much after doing my dividend >:)

 

4) Yeah, I was thinking of just dissolving the company and re-opening in USA. I got a question though, would the money that was already paid tax on and I was not ready to "pay" it to myself yet as I would get some mega tax, would I be able to just pay it to myself each year in USA the same as I do in Canada? Or after I dissolve the company would I have to pay it all to myself "personally" and get taxed heaps..? 😕

 

You definitely did help a lot. Thanks a lot for your time and help 😃 Appreciate it very much.

Edited March 16, 2019 by purem4g1c

[sweethrtt 124]

7 hours ago, purem4g1c said:

1] That is great news as Ontario is very good on dividends, I will send myself one after the end of this tax year. 😃

 

2) I see~ yeah the conversion rate sucks but not much you can do about it. I will probably end up moving my TFSA over too. I was just worried that I would get have to pay taxes on "TFSA" since I'm no longer a resident.

 

3) I only use RRSP to lower my tax at end of year, I do the minimal amount of money into it so I don't need to pay as much after doing my dividend >:)

 

4) Yeah, I was thinking of just dissolving the company and re-opening in USA. I got a question though, would the money that was already paid tax on and I was not ready to "pay" it to myself yet as I would get some mega tax, would I be able to just pay it to myself each year in USA the same as I do in Canada? Or after I dissolve the company would I have to pay it all to myself "personally" and get taxed heaps..? 😕

 

You definitely did help a lot. Thanks a lot for your time and help 😃 Appreciate it very much.

1) Seems with dividends they are good, they fall short on other sources of income lol, but hey everybody has got to pay the piper 😋. 

 

2) Keep in mind as a non-resident if you decide to keep your TFSA you are subject to a 1% tax for each month the contribution is in the account (should have mentioned that earlier, my apologies). Yes the exchange definitely sucks but I believe that you are better off bringing it with you, as you said, and you could always do small withdrawals when you the exchange is at a good rate so you don't take too much of a hit all at once!

 

3) The US recognizes the tax deferred nature of the RRSP (or RRIF).  So if you move to the US, you can just leave your RRSP in Canada. In this case, you won’t have Canadian income anymore, so making further RRSP contributions is not possible. But keeping your RRSP is allowed. The general rule is that when a non-resident makes a withdrawal from the RRSP, the Canadian government has a withholding tax of 25% at source. However, the 25% figure is based on one time or lump sum withdrawals. If you begin taking out regular periodic withdrawals (for example, monthly), then the withholding tax is reduced to 15%. Please note that RRSP withdrawals also form part of your worldwide income. So again, if you’re in the US, you have to declare this income to the IRS on your US tax return. However, you will also be able to claim a foreign tax credit on the amount withheld in Canada – there is no double taxation on the withdrawal.

 

4) I believe that is a good idea! Just to clarify are you are talking about a distribution from your company to pay yourself, or the money left over from dissolving the business? Just want to make sure before I give you the wrong answer 😁

 

No problem at all... I love what I do! Anytime you have any questions please don't hesitate to ask or send me a message!

[purem4g1c 113]

3 minutes ago, sweethrtt said:

4) I believe that is a good idea! Just to clarify are you are talking about a distribution from your company to pay yourself, or the money left over from dissolving the business? Just want to make sure before I give you the wrong answer 😁

About this. I was thinking let's say you have $140,000 in the business. $40,000 is paid as a dividend to yourself, afterwards there is $100,000 left in the business account and it's time to dissolve the business. What happens to that $100K? Can I just move it into USD and re-open the business in USA and pay myself each year from that money in USA and not pay tax on it as it has already paid tax in Canada from following years?

[sweethrtt 124]

On 3/16/2019 at 10:33 PM, purem4g1c said:

About this. I was thinking let's say you have $140,000 in the business. $40,000 is paid as a dividend to yourself, afterwards there is $100,000 left in the business account and it's time to dissolve the business. What happens to that $100K? Can I just move it into USD and re-open the business in USA and pay myself each year from that money in USA and not pay tax on it as it has already paid tax in Canada from following years?

Hey hey sorry for the late reply!

 

What type of business (service, retail etc.) is this? (This will help me better answer your question)

 

[purem4g1c 113]

43 minutes ago, sweethrtt said:

Hey hey sorry for the late reply!

 

What type of business (service, retail etc.) is this? (This will help me better answer your question)

 

Online retail you could say. Similar to selling stuff on Amazon, although all currency is USD and sales are outside of Canada.

[sweethrtt 124]

4 minutes ago, purem4g1c said:

Online retail you could say. Similar to selling stuff on Amazon, although all currency is USD and sales are outside of Canada.

Okay, so presuming you still paid income on these funds (converting from US to CAD to declare the income) then anything leftover other then what you have to declare for 2018 income is yours to keep. When you decide to move the funds over to the us, open your new business and then pay yourself like you stated above. You are good to go!

[purem4g1c 113]

1 minute ago, sweethrtt said:

Okay, so presuming you still paid income on these funds (converting from US to CAD to declare the income) then anything leftover other then what you have to declare for 2018 income is yours to keep. When you decide to move the funds over to the us, open your new business and then pay yourself like you stated above. You are good to go! 

Sounds like smooth process, thank you very much for your help! Appreciate your kindness

[sweethrtt 124]

1 minute ago, purem4g1c said:

Sounds like smooth process, thank you very much for your help! Appreciate your kindness

As smooth as smooth can be lol. Anytime you need any help let me know!!

 

Have a great day 😊