Dashie

Interested in this also. I'll send JonboyE a message and ask him if he can come and see this

Englishmaple

Any info appreciated here too - I move back in late March/beginning of April and was going to leave my RRSP untouched in Canada and then convert it to a RRIF when I retire in the UK (whenever that is!) - but would be leaving the RRSP in Canada for at least 15 - probably 20 years. I planned to do this as collapsing it would mean I would have to pay 25% tax (so I'm told).

Related to this - I saw my bank this week and was told by one person that if I change the address on my RRSP from a Canadian one to a UK one (which I will be because I'm moving to the UK and will no longer be resident in Canada) that it would impact what the bank could do in terms of changes to the contents of the RRSP (eg risk profile) - the person I spoke to didn't sound very sure though and said they would get back to me.

There seems to be a real dearth of practical info on what to do with Canadian RRSPs when you're moving back to the UK ...

JonboyE

Dashie pointed me to this thread so this is what I believe the situation to be:

The UK government does not recognize the tax sheltered nature of an RRSP or RRIF so, once you are a UK tax-resident any income or gains made within the funds are taxable in the UK. You will be able to use your annual capital gains allowance.

Withdrawals from an RRSP are considered as taxable income in Canada and so are subject to a 25% non-resident withholding tax. The UK does not consider the withdrawal as income - just getting your own money back. The UK does not tax the withdrawal so you get no relief for the Canadain withholding tax. In some ways this is logical. You were given a tax refund in Canada when you put the money into the RRSP and now repay the tax when you take it out.

RRIFs are a bit more complicated. Lump sum withdrawals are subject to the same rules as RRSPs. Taxation of regular payments will depend on how they are classified. I believe that periodic payments from a RRIF should be classified as a pension (Income Tax Conventions Act section 5 definitions "pension" a(iii)). A pension is only taxed in the country the pensioner is resident in.

This is my interpretation of the rules. I don't prepare UK tax returns so I have never tested the rules regarding periodic payments from a RRIF. The tax treaty does not include a RRIF amongst its list of pensions in Article 17 (3).

JonboyE

The problem with this is that all the income and growth over the next 15 - 20 years will be subject to tax in the UK. I don't know what province you are in but I would certainly consider withdrawing sufficient funds to ensure you use all the available tax bands that are less than 25% while you are still resident in Canada.

After you move back to the UK this you will be subject to 25% withholding tax on withdrawals. However, what tax relief will you get if you pay the money into a pension plan in the UK? 20%? 40%? Even if it is only 20% you will easily make back the difference by not paying tax on the growth within the pension fund.

Englishmaple

JonboyE I'm in Ontario at the moment.

I'm seeing an accountant in March to sort out my Canadian tax return but would really like to connect with a professional for independent fee paying advice re: tax issues like the RRSP. Do you know anyone who practices in Ontario who deals with international tax issues?

Charell

I am in exactly the same situation as you. I too am hoping to connect with an accountant with UK/Canada Tax knowledge before I leave Canada in June. Will post any advice down the road.

lf1

Prior to moving back to the UK I used Trowbridge/Global Tax Network. Received good advice but I was still unclear on the treatment of growth within my RRSP portfolio. I would caution that their fees are very expensive. Depending on what specific advice you need you might be cheaper to speak with a local tax expert on both sides of the pond.

I thought I had found another firm, based in Calgary, but the business is being sold, so I may have to continue my search.

Englishmaple

How expensive? For eg $2000? Any ballpark figure would do - just to get a sense.

I am going to contact my Canadian accountant and see whether he can help or can suggest someone as well.

nun

I believe that withdrawals from a RRSP will be subject to 25% Canadian withholding tax and also UK income tax. You can't get a tax credit in the UK for Canadian tax withheld, but you should look into whether Canada will give you a tax credit for the tax you pay in the UK. Withholding tax isn'y usually your final tax bill, it's just an amount held back to cover potential tax liabilities and to encourage you to file your taxes.

If you transfer to a RRIF and take regular payments I think that there will be zero canadian withholding and tax will only be due in the UK.

I don't see anything in the treaty about whether any tax sheltered gain in either funds is recognized by the UK.

deepcpearl

Am I understanding this right? If I keep my RRSP intact while becoming a non-resident of Canada, and moving to the UK, I would begin to pay capital gains in the UK on annual gains made in the RRSP. At some point in the future, when the RRSP is converted to a RRIF, I would then pay CRA 25% tax. In the first tax year back in the UK, does the UK calculate CGT only from the date of becoming UK resident or from the date of purchase of the asset?

lf1

£350 to each consultant for the intial consultation. Consultation was done via one conference call with both consultants.

nun

I was looking through the treaty for some recognition of the tax deferred status of an RRSP by the UK. I couldn't find it.

deepcpearl

I think we've already established that the UK doesn't recognize an RRSP as a tax shelter. My question was the date of valuation of the asset for the purposes of calculating CGT - the date of becoming a UK resident or the date of original purchase, bearing in mind the asset could have been held in Canada for the previous 20 years.

Where are all the expats that have returned from Canada and been through this? It would be really helpful if you could share your experience.

BCCanuck

Just going through this exercise myself right now. Received the January SDRIF statement from the bank and it indicates that there is now a required minimum payout. I sent an email to our financial advisor this week at the bank to find out how the money can be moved and what tax issues may arise. I'll post any answer I get here.

When we left Canada we filed a departure tax return with CRA. Their receipt acknowledged that we were non-resident for tax purposes. My private Canadian pension & CPP have not withheld any tax. I reported that income in my self assessment tax return to HMRC (and paid tax). Everyone seemed happy.

JonboyE

Income up to $40k is taxed at 20% so withdrawing from your RRSP to top up you income tp $40k before you leave makes sense to me.