Goodbye Canada Hello Capital Gains Tax
Mar 30th 2014, 4:37 pm
#16
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Re: Goodbye Canada Hello Capital Gains Tax
It is based on the increase in value, in Canadian dollars, during the time you live in Canada.
The Canadian tax system is based on the assumption that everybody will diligently and honestly report their taxable income. There is a form (T1243) that you are supposed to complete to calculate gains and losses on emigration. They could cross reference this to T1135s you have filed.
The CRA have a special unit that tracks down undeclared foreign property of Canadian tax payers. They can search the UK Land Registry for example. However, their target is people who have c. $50 million in foreign assets. I have no idea how much effort they would put into tracking down people who failed to report more modest amounts.
I guess it is a bit like earning cash in hand and not reporting it. Some people do this and get away with it, others don't.
The Canadian tax system is based on the assumption that everybody will diligently and honestly report their taxable income. There is a form (T1243) that you are supposed to complete to calculate gains and losses on emigration. They could cross reference this to T1135s you have filed.
The CRA have a special unit that tracks down undeclared foreign property of Canadian tax payers. They can search the UK Land Registry for example. However, their target is people who have c. $50 million in foreign assets. I have no idea how much effort they would put into tracking down people who failed to report more modest amounts.
I guess it is a bit like earning cash in hand and not reporting it. Some people do this and get away with it, others don't.
Mar 30th 2014, 4:47 pm
#17
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Re: Goodbye Canada Hello Capital Gains Tax
It is based on the increase in value, in Canadian dollars, during the time you live in Canada.
The Canadian tax system is based on the assumption that everybody will diligently and honestly report their taxable income. There is a form (T1243) that you are supposed to complete to calculate gains and losses on emigration. They could cross reference this to T1135s you have filed.
The CRA have a special unit that tracks down undeclared foreign property of Canadian tax payers. They can search the UK Land Registry for example. However, their target is people who have c. $50 million in foreign assets. I have no idea how much effort they would put into tracking down people who failed to report more modest amounts.
I guess it is a bit like earning cash in hand and not reporting it. Some people do this and get away with it, others don't.
The Canadian tax system is based on the assumption that everybody will diligently and honestly report their taxable income. There is a form (T1243) that you are supposed to complete to calculate gains and losses on emigration. They could cross reference this to T1135s you have filed.
The CRA have a special unit that tracks down undeclared foreign property of Canadian tax payers. They can search the UK Land Registry for example. However, their target is people who have c. $50 million in foreign assets. I have no idea how much effort they would put into tracking down people who failed to report more modest amounts.
I guess it is a bit like earning cash in hand and not reporting it. Some people do this and get away with it, others don't.
Thanks for making that so clear to us. We have decided not to take a chance, as we probably will not have the cash later, nor do we want it hanging over our heads.
Mar 30th 2014, 4:51 pm
#18
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Mar 30th 2014, 6:44 pm
#19
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Re: Goodbye Canada Hello Capital Gains Tax
Mar 30th 2014, 6:58 pm
#20
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Re: Goodbye Canada Hello Capital Gains Tax
We have to fill in a form with our final tax returns for the year that we leave. They already know we have property because we had to declare it when we arrived. We then get a valuation, take off what improvements to the property and that is the sum we declare.
Mar 30th 2014, 7:01 pm
#21
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Re: Goodbye Canada Hello Capital Gains Tax
Can the valuation be self-declared?
Mar 30th 2014, 7:22 pm
#22
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Re: Goodbye Canada Hello Capital Gains Tax
Yes. However, the CRA can ask for evidence. If you can't produce documentary evidence to support your valuation the CRA could substitute a higher one and then it will be up to you to prove their valuation is wrong rather than prove yours is right. An appraisal will protect you.
I deal with a lot more immigrants than emigrants but I have yet to see the CRA challenge a self-declared valuation. This is not to say that they never will, but I suspect if the value declared seems reasonable, and especially if it is accompanied by a large cheque, a return will be accepted as filed.
I deal with a lot more immigrants than emigrants but I have yet to see the CRA challenge a self-declared valuation. This is not to say that they never will, but I suspect if the value declared seems reasonable, and especially if it is accompanied by a large cheque, a return will be accepted as filed.
Mar 30th 2014, 7:52 pm
#23
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Re: Goodbye Canada Hello Capital Gains Tax
Yes. However, the CRA can ask for evidence. If you can't produce documentary evidence to support your valuation the CRA could substitute a higher one and then it will be up to you to prove their valuation is wrong rather than prove yours is right. An appraisal will protect you.
I deal with a lot more immigrants than emigrants but I have yet to see the CRA challenge a self-declared valuation. This is not to say that they never will, but I suspect if the value declared seems reasonable, and especially if it is accompanied by a large cheque, a return will be accepted as filed.
I deal with a lot more immigrants than emigrants but I have yet to see the CRA challenge a self-declared valuation. This is not to say that they never will, but I suspect if the value declared seems reasonable, and especially if it is accompanied by a large cheque, a return will be accepted as filed.
Mar 30th 2014, 8:33 pm
#24
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Re: Goodbye Canada Hello Capital Gains Tax
Jon, what do you make of this? (values for illustrative purposes only)
2007 - became tax resident in Canada. UK property worth GBP300,000. At 2007 exchange rate (2.20) this is worth $660,000.
2014 - leaves Canada. UK property worth GBP350,000, plus had GBP100,000 of refurbishment. At 2014 exchange rates (1.80) that's $630,000 value plus $180,000 refurbishment.
Could I claim a capital loss from 2007 to 2014 of:
$660,000 less ($630,000 + $180,000) = -$150,000?
2007 - became tax resident in Canada. UK property worth GBP300,000. At 2007 exchange rate (2.20) this is worth $660,000.
2014 - leaves Canada. UK property worth GBP350,000, plus had GBP100,000 of refurbishment. At 2014 exchange rates (1.80) that's $630,000 value plus $180,000 refurbishment.
Could I claim a capital loss from 2007 to 2014 of:
$660,000 less ($630,000 + $180,000) = -$150,000?
Mar 30th 2014, 8:34 pm
#25
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Re: Goodbye Canada Hello Capital Gains Tax
If the filing will result in a tax refund there is a significantly increased chance that the CRA will want to see supporting documentation.
Mar 30th 2014, 9:10 pm
#26
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Re: Goodbye Canada Hello Capital Gains Tax
Jon, what do you make of this? (values for illustrative purposes only)
2007 - became tax resident in Canada. UK property worth GBP300,000. At 2007 exchange rate (2.20) this is worth $660,000.
2014 - leaves Canada. UK property worth GBP350,000, plus had GBP100,000 of refurbishment. At 2014 exchange rates (1.80) that's $630,000 value plus $180,000 refurbishment.
Could I claim a capital loss from 2007 to 2014 of:
$660,000 less ($630,000 + $180,000) = -$150,000?
2007 - became tax resident in Canada. UK property worth GBP300,000. At 2007 exchange rate (2.20) this is worth $660,000.
2014 - leaves Canada. UK property worth GBP350,000, plus had GBP100,000 of refurbishment. At 2014 exchange rates (1.80) that's $630,000 value plus $180,000 refurbishment.
Could I claim a capital loss from 2007 to 2014 of:
$660,000 less ($630,000 + $180,000) = -$150,000?
Mar 30th 2014, 9:12 pm
#27
Lowering the tone
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Re: Goodbye Canada Hello Capital Gains Tax
Mar 30th 2014, 9:14 pm
#28
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Mar 30th 2014, 9:31 pm
#29
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Re: Goodbye Canada Hello Capital Gains Tax
2007 was a peak year for U.K. property prices, and in nominal terms, prices (at least on average) have not yet recovered to that peak.
Mar 30th 2014, 9:34 pm
#30
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Re: Goodbye Canada Hello Capital Gains Tax