montpro

Hhhmmm, scary reading - especially for anyone who has become 'tax resident' at $1.70 to the £ and still has assets (cash/property) in the UK !!!!

macadian

Found this a few minutes ago....on the BBC 'Latest headlines'.....

http://news.bbc.co.uk/2/hi/business/8301418.stm

''UK interest rates will stay low for years amid tax rises and spending cuts, according to an economic forecast.
The Centre for Economics and Business Research (CEBR) believes the rate will remain at its current 0.5% level until 2011 and not reach 2% until 2014.
The report, due on Monday, will predict the pound will weaken further, falling to $1.40 and "possibly" below 1 euro.
Its forecast is based on the government managing to slash the UK budget deficit by £100bn over the next parliament.
It will say that about £80bn of this would come from spending cuts, and a further £20bn from tax rises''



Scary.....have funds in the UK...an investment....not making anything for me really...and can't move it over here as I would take to big a hit on the exchange...and no prospect of this being viable in the foreseeable future....

johnh009

I wonder how many people actually go to the trouble to actually check the exchange rate on the day they land and then on the day that they actually exchange their money? Then do the maths and declare a capital gain or loss to Canada Revenue Agency.

Aviator

CRA will work it out for you! Tell you how much you owe and it is up to the tax payer to prove otherwise. The information is out there and should be part of everyones research. Much easier now in the days of the Internet. CRA use Bank of Canada rates.

Gaz67

Waiting for PR we have been trying to decide what would be best for us to do, either sell our house or rent it out...

seeing as luckily before the crunch we took a lifetime tracker out it would seem better for me to rent the house and keep the house to sell either in a few years time or maybe keep it and use it as our pension ...

im no finance expert but opinions on the matter would be appreciated :0

Cheers
Gaz

Alan2005

Been busy, had visitors so have mostly been out. Be bored at work next week so more posting then probably.

bzriddell

I was always informed that there is no capital gains tax on monies brought over from the UK once you have landed. No one in their right mind will be exchanging now at 1.65. Having sold a house in the UK (at a lower price) prior to landing we certainly don't want to lose out again with a poor exchange rate. We do look at the currency rates almost daily afterall you want to get the best possible deal the days of 2C$ to teh £ are long gone.

Aviator

The information you had is incorrect. When you land any funds or assets held are deemed to have been disposed of and valued as at that time. Any gain in the currency value after becoming a tax resident is subject to tax, either as a currency gain or capital gain (there are some exemptions, but currency gain is not one of them). If you land and the rate goes up by 35c after you land, like it or not that gain is subject to taxation at your marginal rate. CRA can often go back in an audit around 3 years, but can go 7 years. If they suspect fraud or deliberate misreporting, they can go back as far as they like up to the point you became a tax resident. The exchange rate used is the CRA rate (from Bank of Canada) or the rate you physically exchanged at, not a verbal rate you get from a website or bank.

To be clear talk to an accountants in Canada.

woofwoof

But then you get nailed by the currency gain from $1.65 to $2, presuming you are a canada tax resident between the low and high figure.

P-O-B

Just to clarify, is this from when you 'land' or when you start paying Canadian tax?
Scenario; Im likely to 'land' next summer, then come right back to the UK. For how long, im not sure. As long as it takes to find a good job in Canada and sell the house, could be 12 months or more.
Im guessing the gain isnt measured from when you land? In this case it would be from when you actually move to Canada? Probably reading too much in to peoples use of the word land, but I wouldnt want to be caught out by a bad FX rate when I nip over to formally land... Fair enough when I finally move over there and have sold my house I need to make the decision to take the rate at the time, or leave the cash in the UK and bring it over later (and maybe pay some tax on some of the gain).

woofwoof

Its calculated from when your a tax resident of canada. Plenty of people land and come back to the UK and do what you want to do.

dollface

OOwwwwwww, then I have visitors from Tuesday evening for 2 weeks - so i'll miss you - bum

johnh009

Interesting times, who knows what will happen? My job has taken me all over the World and I have never considered the exchange rate a major issue until recently. On saying that, I did get out of South Africa in the 1980s before the Rand crashed. Many of my former colleagues who decided not to move when I did are still there, sort of financial prisoners. This is an unfortunate reality for those who wanted to leave.

Sometimes, I envy those who have stayed in the same job and lived in the same town all of their lives, they do not have all of this nonsense to deal with. And they probably have accumulated a massive private pension to boot, especially if they have a government job.

SNOWDUDE

There have been a lot of interesting points on here, a big shock was learning of the double whammy effect of being hit over the head with a low rate followed by a kick in the pants CGT hit if the rate subsequently increases.

I have looked at the rates over the last 20 years (see below averages for each year) and what it does show is that the current rate is not unusual in the long term. If we see our application though, our predicament would then be wether to make an early landing / transfer on the assumption things will get worse - in one of the years I listed the lowest rate was in the $1.30s !!!! or wait it out till the last possible minute which with meds this month would be Oct 10. The only thing I can pin any hope on is that the Tories will grasp the nettle on public spending etc and that the markets will respond positively.And yes I know I'm assuming they will win - but baring a miracle Gordon is gone.

Year Average
1979 $2.49
1980 $2.72
1981 $2.43
1982 $2.16
1983 $1.87
1984 $1.73
1985 $1.77
1986 $2.04
1987 $2.17
1988 $2.19
1989 $1.94
1990 $2.08
1991 $2.03
1992 $2.13
1993 $1.94
1994 $2.09
1995 $2.17
1996 $2.13
1997 $2.27
1998 $2.16
1999 $2.40
2000 $2.25
2001 $2.23
2002 $2.36
2003 $2.29
2004 $2.38
2005 $2.21
2006 $2.09
2007 $2.15
2008 $1.96
2009 $1.80

Madhouse

I'll second that! What a nightmare. Still, as others have said before in this thread, our move to Canada is not based solely on financial reasons. However, we are reconsidering our expectations of the house we will be able to afford! Even so, we will still be able to afford a much bigger place than in the UK. Great thread.