gungamunga

My PR is about to come thru in the next couple of weeks. I am currently on a TWR in a British Gov job in Canada which I will be retiring from but will take up a Canadian Gov job once the PR is here. As this job offer was unexpected I had thought I would be going back to the UK after a few years so kept my house and some savings back there (For tax I was still classed as a UK resident and paid all my tax there) Now it seems I may not be going back after all but I would like to keep my options open but I don't want to be paying tax where I don't need to. What do you think I should do with my house in the UK (it is mortgage free and rented out)? Also my UK government pension, should I keep it in the UK or have it paid into my Canadian bank?

lf1

I am no tax expert, but there are others on here who will be able to help you in more detail. Unless you need to access your UK pension I would keep it in a GBP account and exchange it into Cdn dollars when the FX rate improves. If you are to be taxed as a Cdn resident then you will be taxed on your worldwide income which would include you rental income on your UK property, less any deductible expenses.
There is a tax treaty between the UK and Canada, so you should not be taxed twice on the same income. That is my laypersons understanding, but as I have found out there may be some grey areas depending upon circumstances, but my experience is in the opposite direction - Canada to UK.
Good luck.

Novocastrian

I'm not an expert, those will show up eventually, but I can make some observations.

Once you become PR and tax resident in Canada, you will be taxed here on your global income (including UK pension and rent for example) and be deemed to have sold the UK house fair value on the day you become tax resident. After that any capital gains or currency exchange gains realized upon it's eventual actual sale will be subject to CGT in Canada.

If you are still subject to taxes in the UK, you'd only pay the difference to CRA (if there was one).

JonboyE will expand.

Paul Bradley

Hi gungamunga,

For the house, as well as the tax (which Novocastrian has outlined) you should consider your life intentions:
Do you want to retain the flexibility to move back to the UK in the future?
Are you managing the rentals from Canada? How much hassle does that cause you?
Do you need income in Canadian Dollars or do you need GBP too?

For the pension:
If your aim is to stop within Canada, and ultimately retire there, it would generally be beneficial to transfer the pension into a Canadian RRSP (QROPS)

It is possible to transfer your British Government pension to Canada via QROPS (a special pension regime approved by the UK tax authority: Qualifying Recognised Overseas Pension Scheme) and it will go into an RRSP. This may be preferable to having it paid into a Canadian or UK bank account as it would save you FX (currency exchange rate) fees and would save you from the risk of the £(GBP) devaluing against the Canadian dollar and reducing your retirement income.

There are also benefits based on death and when you start drawing the pension income, i.e. the full value of your fund would roll over tax free to your Spouses RRSP.

This type of transfer should not be undertaken without looking at the detail of your British Government transfer illustration and benefit statement.

I hope this has provided a little further information based on your question.

Novocastrian

Hmmm, a new expert. Welcome aboard Paul.

Paul Bradley

Thanks Novocastrian!

mandymoochops

lol Yes and JonboyE will be breathing a sigh of relief - especially come Feb / March time