Almost Canadian

[QUOTE=woofwoof] No what I am saying is this: Say, at the time that you land, the value of it is £10000, it matures 10 years later (and you are still living in Canada) and you receive £30000, you have made a capital gain of £20000 and you will be taxed on the £20000 not the £30000.

However, if when you land the value is £10000 and 10 years later it is worth £20000 and you leave Canada without having "cashed it in" then you will not be taxed by Canada on it at all.

It is the usual capital gains tax calculation = value when asset is liquidated -value at time of landing = amount to be taxed upon. From this you can deduct any allowances that the Federal & Provincial Governments allow you to

Only thing I will say is - what is the point of landing if you don't intend to stay ? The example I gave was that, as none of us knows for definate what we will be doing in 5, 10 or 20 years time, you may decide to keep it running "just in case"

HTH

woofwoof

Only thing I will say is - what is the point of landing if you don't intend to stay ? The example I gave was that, as none of us knows for definate what we will be doing in 5, 10 or 20 years time, you may decide to keep it running "just in case"

HTH[/QUOTE]

We're one of those that will land, (if we ever get accepted) then come back with a view to returning permanently 6-8 months later We've debated about this for a while and at the mo it sort of suits us.........but ya never know....things may change and we may go straight away.

Posidrive

As others have said, you get taxed on any increase in value between the date you land in Canada and the date you redeem the endowment. So you will be taxed on the growth over the final 4 years. Make sure you get a valuation for the day that you leave the UK.

Where it gets tricky is:

- Can you allocate a value to the termininal bonus contribution for the date that you landed. Otherwise you will effectively be taxed on the entire terminal bonus.

- Offseting the monthly payments gets tricky because it is part investment and part life insurance. See if you can get a statement from your companies that break down the monthly payment into each. I suppose that doesn't become an issue if you make it "paid up".

One reason for keeping the endowment is that if you have had it for several years and you value having life insurance then it is probably a relatively cheap way of getting some life insurance.

suecakes

Thanks for your reply, do you know what percentage of tax we would have to pay on the difference?

Posidrive

I'm not an accountant, so take what I say as guidance only. I just left everything to an accountant last year and ended up happy that I had to pay the tax man less than expected.

But, as I understand it capital gains are taxed at 50% of your marginal tax rate so here in Alberta where the marginal tax rates are between 25 and 39% you would end up paying between approx. 13 and 20% tax on the growth after you arrived in Canada.

dbd33

Isn't there a one time CGT exemption? I know there was but some government may have rescinded it.

Buchan6

Still dont get this or what the problem is.

Say today your policies worht 10K and in ten years time 20K which is duly deposited in your bank UK account.

If you bring rthe cash over "discretely" how will the Govt ever know you had it ????

dbd33

Based on current technology and laws they won't. We have a subcontractor who's in Australia, we pay him into his bank account in the Isle of Man and he withdraws cash. He's gone on like this for ten or more years without much bother; the only real hassle being the withdrawal limit and the need to make hundreds of trips to the ATM to get the cash to buy his boat.

Souvenir

Surely you are not suggesting that someone might migrate to Canada, at the same time becoming of zip interest to the UK tax people, then cash in an endowment, whack it it a UK bank and occasionally withdraw bits of it using an ATM in Canada? No; I can't believe that you might be suggesting that.

Buchan6

Oh, No of course not

Just call me Al Capone..............Tax Evader !!

Souvenir

Didn't he die from syphilis?

Biiiiink

All prospective PRs are screened for syphilis in the immigration medical I think. I suppose that means they can concentrate on worrying about the tax evasion instead

dogboy

cashed it in and spent it on a 5 year old chrysler sebring...

Higgy

Don't know if anyone has mentioned this 'cos I just scrolled to the end as I'm on my lunch hour. We cashed in our endowmwent before we left the UK and we got a good settlement from the company. Don't think that anyone has mentioned that your endowment policy will no longer cover you as life insurance as you will no longer be a UK resident. That's one of the reasons that there was no point in keeping it going.

getoutofbritainquick

I have just found this advice on the web. Has anyone used this route to shelter capital gains/

The Income Tax Act does allow an immigrant to shelter non-Canadian source income and capital gain for a period of up to sixty months after their arrival in Canada. The sixty-month period commences on January 1 of the calendar year during which the taxpayer becomes resident in Canada for tax purposes. Typically, income/capital gain-producing assets that are situated outside of Canada are transferred into an "offshore trust". A non-resident financial institution is used as trustee. All income and capital gains attributable to such assets that are earned by the trust, escape Canadian tax during the period that the individual is a Permanent Resident of Canada and is in the qualification period of Canadian Citizenship. This "tax holiday" expires at the end of the sixty month period. If the trust continues in place thereafter and the person remains resident in Canada for tax purposes, the trust itself will become a resident taxpayer and liable for Canadian taxation on its world-wide income.

Paul