UK vs Canada financial side
#31
Re: UK vs Canada financial side
That was the reason I opened this tread.
I gave details of how it works in the UK, yet, you have not managed to reply in the same simple terms about how it works in Canada, but are advising me to search on CRA's website.
That's not very helpful, is it?
If I was looking for a specific website, where I could research the subject, I would be asking that specific question, but if you went and read my opening post once again, you would have realised I was looking for simple examples, and not for a complicated tax advice.
I gave details of how it works in the UK, yet, you have not managed to reply in the same simple terms about how it works in Canada, but are advising me to search on CRA's website.
That's not very helpful, is it?
If I was looking for a specific website, where I could research the subject, I would be asking that specific question, but if you went and read my opening post once again, you would have realised I was looking for simple examples, and not for a complicated tax advice.
As you appear to be incapable of doing so, I will explain to you that Canadians have the ability to put money into an RRSP. The amount they can put in is set out in legislation and, if you search the CRA's website (or Google information regarding RRSPs) you will discover how much is permitted.
RRPS operate in a similar way to ISAs in the UK in that one can simply hold cash or can use the RRPS to invest in all manner of investments. Again, the rules surrounding what can, and can not, be held via a RRSP is readily available on the internet.
For you, it may not be. For me, it is.
In addition, try making a withdrawal from your pension, let's say, at the age of 30 in the UK. A withdrawal from a RRSP can be made at any time in Canada. That may, or may not, be a big advantage.
However, try withdrawing the remaining 75% of that pension in the UK immediately. While I accept that that may have changed since I left the UK, when I left, that simply couldn't be done. That can be done in Canada if one wishes to do so.
The Canadian equivalent is a TFSA. From what you have stated above, you appear to appreciate the difference between the two. I suspect that, as a percentage of the population, there are likely to be as few people in the UK that are able to maximise their allowable contributions in the UK as there are in Canada.
#32
Re: UK vs Canada financial side
Having said that, of course it will attract tax in the tax year as though it were normal income (and of course any even sensible sized pension pot will push you well into the highest tax bracket).
#33
Re: UK vs Canada financial side
Very minor point, you CAN now withdraw the remaining 75% from age 55 in one go - it is called 'flexible drawdown' (came in, errr..... maybe April 2015-ish, stands by to be corrected!).
Having said that, of course it will attract tax in the tax year as though it were normal income (and of course any even sensible sized pension pot will push you well into the highest tax bracket).
Having said that, of course it will attract tax in the tax year as though it were normal income (and of course any even sensible sized pension pot will push you well into the highest tax bracket).
Is the rule that an annuity has to be purchased been changed too? If so, then, IMO, that is a great step.
As I am sure you are aware, there is no limit on how much can be taken from a RRSP although, of course, the same issues arise regarding tax.
#34
Re: UK vs Canada financial side
The famous quote from the pensions minister at the time was 'they can buy a Lambourghini with it if they want'.
PS I am recently early retired myself with a personal pension pot so yes, took the 25% and the rest is in an income drawdown.
Last edited by Hurlabrick; Aug 6th 2017 at 8:50 pm.
#35
Re: UK vs Canada financial side
Note that unlike a Canadian RRIF, with an Income Drawdown in the UK you do not HAVE to take any income at all if you don't want to.
#36
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Re: UK vs Canada financial side
"The comment was about it driving you nuts rather than there was no sense in it. It's one of those swings and roundabout things."
There is nothing about taxation that drives me nuts. Had a simple question about a simple subject, presented it in a simple way, and was expecting an easy, simple answer, but for some reason, some people have decided to twist it and turn to suit their own agendas, such as for example include their idea of preferred lifestyle and what their children think about the new country's lifestyle, which had nothing to do with the subject of the opening post.
There is nothing about taxation that drives me nuts. Had a simple question about a simple subject, presented it in a simple way, and was expecting an easy, simple answer, but for some reason, some people have decided to twist it and turn to suit their own agendas, such as for example include their idea of preferred lifestyle and what their children think about the new country's lifestyle, which had nothing to do with the subject of the opening post.
As a member who has contributed very little to the board, then coming asking questions about a complex subject such as taxation, I would suggest being more amicable and friendly would be a better way of getting people to respond. The in's and out of taxation in all countries are complex, so complex they require professional qualifications which take years to acquire and even then people become specialists in specific areas of taxation. Something I am sure you're aware of. However you don't seem to appreciate being directed to the relevant Canadian website and instead you'd like someone to give you an 'explanation' using 'simple examples'. But why would anyone go to that site in their own time, digest the information and then regurgitate it for you using simple examples when your responses to this thread have been nothing short of hostile.
Last edited by Shakyuk; Aug 7th 2017 at 9:49 am.
#37
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Joined: Jul 2017
Location: Toronto
Posts: 48
Re: UK vs Canada financial side
I'm open to numbers from the Economist, the Telegraph, the Indy, AFP, AP, Reuters, even the Spectator. Most any source of news so long as it's fake.
OK - even if you don't like the Financial Post - Take a look at the author of the piece. He works for the CIBC as Managing Director of Tax and Estate planning. I doubt the bank would let him post "fake news" Surely you can agree that is a solid source?
https://www.cibc.com/en/about-cibc/m...-golombek.html
A 93% tax rate? Private corporation tax could make it possible | Financial Post
#38
Re: UK vs Canada financial side
As a member who has contributed very little to the board, then coming asking questions about a complex subject such as taxation, I would suggest being more amicable and friendly would be a better way of getting people to respond. The in's and out of taxation in all countries are complex, so complex they require professional qualifications which take years to acquire and even then people become specialists in specific areas of taxation. Something I am sure you're aware of. However you don't seem to appreciate being directed to the relevant Canadian website and instead you'd like someone to give you an 'explanation' using 'simple examples'. But why would anyone go to that site in their own time, digest the information and then regurgitate it for you using simple examples when your responses to this thread have been nothing short of hostile.
#39
Re: UK vs Canada financial side
OK - even if you don't like the Financial Post - Take a look at the author of the piece. He works for the CIBC as Managing Director of Tax and Estate planning. I doubt the bank would let him post "fake news" Surely you can agree that is a solid source?
https://www.cibc.com/en/about-cibc/m...-golombek.html
A 93% tax rate? Private corporation tax could make it possible | Financial Post
https://www.cibc.com/en/about-cibc/m...-golombek.html
A 93% tax rate? Private corporation tax could make it possible | Financial Post
The managing director of tax planning would, as part of his job, seek to sow panic about taxes so as to drum up business so, no, that’s not a good objective source of tax information.
He is saying that, theoretically, a corporation somewhere in Canada could, with poor tax planning, incur a marginal tax rate of 93%. You are saying that people in Canada experience an actual overall tax rate of 53%. That’s a nude figurine and apricot comparison, even if you believe him, what he says doesn’t matter to individuals and is irrelevant to your argument.
I think you misunderstood my reference to fake news.
Still, this is an engagingly weird thread as even the original post makes little sense in that it focusses on such a narrow and specific issue. One is unlikely to decide an emigration plan based on the mechanism for handling withdrawals from tax deferred savings in each country. The thread on the probability of getting tickets for speeding at various speeds addressed an issue of more relevance to most people. As such, I don`t think we`re doing anyone a great disservice in disrupting it.
#40
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Joined: Jan 2008
Location: Near Kingston, Ontario
Posts: 1,316
Re: UK vs Canada financial side
I've been thinking about both countries and how they compare when it comes to financial aspect.
Lets just assume someone earned the same in the UK as he would in Canada.
What are the tax/ general financial advantages of living in either country.
1. In the UK you can put £20K every year into your ISA and earn tax free interest/capital growth/dividends.
In Canada it is only CAD$ 5K, which is a much smaller amount
2. In the UK if you earn over circa £43K you can invest the amount you earn over £43K into your SIPP and get 40% tax back from the government deposited into your SIPP, where you earn interest/capital growth/dividends tax free, you only get taxed 20% when you retire and start taking money out, plus you can take 25% of your SIPP investment out in as a lump sum, tax free.
What Canada has to offer in this respect? Nothing
Are there any such advantages in Canada?
Thanks
Lets just assume someone earned the same in the UK as he would in Canada.
What are the tax/ general financial advantages of living in either country.
1. In the UK you can put £20K every year into your ISA and earn tax free interest/capital growth/dividends.
In Canada it is only CAD$ 5K, which is a much smaller amount
2. In the UK if you earn over circa £43K you can invest the amount you earn over £43K into your SIPP and get 40% tax back from the government deposited into your SIPP, where you earn interest/capital growth/dividends tax free, you only get taxed 20% when you retire and start taking money out, plus you can take 25% of your SIPP investment out in as a lump sum, tax free.
What Canada has to offer in this respect? Nothing
Are there any such advantages in Canada?
Thanks
Canada has nothing in this regard. You can make contributions to your RRSP up to the maximum allowed per year, you will get a tax break at your marginal tax rate on this. You cannot withdraw 25% tax free, you pay tax on all the withdrawals from your RRSP because you got a tax break to begin with.
The advantage Canada has is the following:
1. Depending on where you live- lower house prices for much more of a house and land.
2. Depending on where you live- lower crime that the UK
3. If you choose to- as a CDN citizen you can go south for up to 6 months each year to get away from the winters.
4. Depending on where you live- the healthcare lists are shorter.
5. For me- less stressful living, in the countryside, happy in my job, quality of life.
I do miss my family in the UK, and the food but the pro's for me outweigh the cons.
As you get older you realise that money and possessions are not everything- its about how you spend the time you have.
A good site to review taxation stuff is
http://www.taxtips.ca/
Last edited by shelley748; Aug 9th 2017 at 6:22 pm. Reason: adding info
#41
Re: UK vs Canada financial side
simple me will try to explain the Canadian model.
I haven't a clue how it works in the UK
The maximum RRSP (SIPP) is yearly max of $26,000 or 18% of income
Based on you are employed, tax deducted at source, with a $75,000 taxable income with a $26,000 RRSP contribution the tax savings/refund (depending on which province) will be around $8000 +/- $500. Again depends on your income level to what tax refund you get
Suppose over a 10 year period ones salary & RRSP contributions are the same. the RRSP will be $260,000 + any interest or growth. At the point when a withdrawal is made from the RRSP it immediately becomes taxable as income. If you take out say $100,000, it's possible that you'd pay $40,000 in income tax depending if you have other income, if not it could be as low as $30,000
The TFSA (ISA) maximum contribution is $5500/yr. No tax relief on this
Any interest earned or growth in the account is tax free
.
I haven't a clue how it works in the UK
The maximum RRSP (SIPP) is yearly max of $26,000 or 18% of income
Based on you are employed, tax deducted at source, with a $75,000 taxable income with a $26,000 RRSP contribution the tax savings/refund (depending on which province) will be around $8000 +/- $500. Again depends on your income level to what tax refund you get
Suppose over a 10 year period ones salary & RRSP contributions are the same. the RRSP will be $260,000 + any interest or growth. At the point when a withdrawal is made from the RRSP it immediately becomes taxable as income. If you take out say $100,000, it's possible that you'd pay $40,000 in income tax depending if you have other income, if not it could be as low as $30,000
The TFSA (ISA) maximum contribution is $5500/yr. No tax relief on this
Any interest earned or growth in the account is tax free
.
Last edited by not2old; Aug 9th 2017 at 6:51 pm. Reason: added to the post
#42
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Thread Starter
Joined: Apr 2013
Posts: 78
Re: UK vs Canada financial side
Thank you Shelley748 and not2old for taking your time to explain it all to me.
#43
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Joined: Jan 2009
Location: Picton, ON
Posts: 194
Re: UK vs Canada financial side
This
2017 Personal tax calculator - EY - Canada - EY - Canada
may be useful if you want to estimate your income tax - and if your affairs are fairly simple
2017 Personal tax calculator - EY - Canada - EY - Canada
may be useful if you want to estimate your income tax - and if your affairs are fairly simple
#44
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Joined: Mar 2012
Posts: 465
Re: UK vs Canada financial side
ISAs and TFSAs are similar. As others have pointed out, the contribution is now only $5,500 for a TFSA. It was as high as $10,000 for one year, but the new Government decided to reduce it. If you don't contribute all the amount in one year, it is saved for the following year. Whilst with an ISA, it is either use or lose it for the year. So even though the ISA contribution is higher, you have to contribute to it that year. Not the case for a TFSA.
#45
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Joined: Mar 2012
Posts: 465
Re: UK vs Canada financial side
As a member who has contributed very little to the board, then coming asking questions about a complex subject such as taxation, I would suggest being more amicable and friendly would be a better way of getting people to respond. The in's and out of taxation in all countries are complex, so complex they require professional qualifications which take years to acquire and even then people become specialists in specific areas of taxation. Something I am sure you're aware of. However you don't seem to appreciate being directed to the relevant Canadian website and instead you'd like someone to give you an 'explanation' using 'simple examples'. But why would anyone go to that site in their own time, digest the information and then regurgitate it for you using simple examples when your responses to this thread have been nothing short of hostile.