lindabey

We are coming to Canada in August. We have a house for sale in the U.k
reading on some of these posts it looks like we may have to pay some sort
of tax for money we bring into the Country.
Not sure if the house will sell before be leave the U.K but if it does then we will
need to transfer this money to a bank account in Canada. I am hoping my
husband can come out and open an account prior to me coming and then
any monies I can send out. Will I get taxed on this if I send this from our
account by direct transfer to the account in Canada. Is there any other way ?.
If the house doesnt sell until after we are out there then could a solicitor send
the money electronically to our account and would we get charged tax on this
Thank you for any advice as big move and want to make sure i have lots
of answers

Mac2

No tax if the house is your residence. If you own houses you rent then there could be tax implications the same as there would be in the UK. This link should tell you all you need. http://www.cra-arc.gc.ca/tx/nnrsdnts/menu-eng.html

lindabey

Hi thank you for your reply . the house here in the u.k. is our main residence
and as we arnt sure if we can sell before we come out need the money to
be transferred into a canadian account when we get one.
its just ive read on these boards that you can be charged tax if you bring
money into the country. so was really checking what way would be best to approach this. thanks

canmoreskier

If you sell before leaving the UK, then under UK tax law there would be no capital gains tax as you would have sold your principal residence. There would be no Canadian tax if you transfer the proceeds of the sale to Canada.
However, if you attain landed immigrant status before the sale, any subsequent increase in the value of your house from the date you landed would be considered a capital gain by the CRA. If the sale were to be some time after moving, and you had acquired a property in Canada, your house in the UK would likely be no longer considered a prinipal residence by HMRC and you could be taxed on the capital gain from when you first purchased it.

ann m

Good post. OP - Presumably it is for sale now? Regardless, get a "proper" valuation of the house at the time you leave the UK. If it gains in value, you'll know the amount. And if you lose a bit, then that is documented too.

Not sure if you can right off a loss in value somewhere on your tax return?

lindabey

thank you for your reply. yes its up for sale now. we plan to come out
in August. but we will be renting in Canada until we get permanent residence

nfitz

It would be a Capital Loss then, rather than a Capital Gain. Which doesn't immediately do much for your taxes, but you report it and can count it against future Capital Gains.

Though unless there was a drop in the entire market, I doubt that it would be considered a loss, rather than a simple reflection of the value of the house in the first place that was better than the estimate.

And if your renting, and still don't own a house in Canada, I'd think under Canadian tax law, that it would still count as your primary residence, so it doesn't matter what the sale amount is. Not sure the British implications are though ...

lindabey

Thanks for your reply. Yes the way like i told you was we get into canada me going to study at college , my husband having a work permit . We have to do it this way and the way they see it is that we have to come home after
2 years its like a study course. But however the bigger picture is that my husband will get an offer of a permanent job and then apply for perm residence. But we arnt really supposed to sell our house as we are supposed to be coming back after 2 years. so not sure how we would go about transferring the money across if we arnt supposed to be selling our house.
any ideas on this situation any help would be appreciated

JonboyE

To recap:

Sell the house before you move to Canada - no tax to pay in Canada. You can transfer the money to a Canadian bank account, either by wire transfer through your bank, or through a specialist foreign exchange broker.

Sell after you move to Canada then there is a possibility that you may make a capital gain here. However, it is unlikely. If your house does not sell before you move it is because it is overpriced. Unless you plan to keep it and rent it out for several years then the chances of making a capital gain are slim.

But, if it hasn't sold by the time you leave keep some evidence of its value at the time. An independent appraisal would be ideal, but the estate agent's listing agreement is probably sufficient.

Your immigration status is irrelevant, whether before or after the sale. It is the date that you become tax resident that is key.

Regarding your last sentence there is some infomration in the wiki http://britishexpats.com/wiki/Tax_an...e_Sales-Canada. You will be unlikely to pay any CGT in the UK on a former principal residence - and definitely not from the day you first purchased it.

canmoreskier

Having earlier advised someone who was on a Working Holiday Visa to file as a resident for a year in which she had been in Canada for less than 183 days, you seem to presume that everyone who works in Canada is tax resident. Yet a Canadian who works abroard but maintains residential ties in Canada is considered tax resident by CRA. Immigration status is relevant, since it establishes a severance of ties with the country of the immigrant.

JonboyE

Relevant only so far is provides additional insight to the real test of residency.

The main tests for residency are a) where your day-to-day home is b) where you spouse and dependent children are and c) where the centre of your economic interests are.

Someone from the UK has a permanent resident visa and flew to Canada in September last year to activate the visa. The became permanent residents of Canada last year. However, they flew back to the UK after a week vacation. Now they have sold their home and worked their notice. They will move back to Canada to live in June this year.

They did not become tax residents of Canada in September last year. They will become tax residents in June this year. It is not your immigration status that counts - it is where you live.

Take a person on a temporary work visa. If they move to Canada with their family and live here much as a resident does: gets a driver's license, enrolls in Provincial Healthcare, have a regular rental home (or buys a house), to all intents and purposes lives like someone who lives here permanently then they are tax residents even if they have no intention whatsoever of staying here after their temporary visa expires. Again, it is not your immigration status that counts but where you live.

With regard to you example of a Canadian tax-resident working in a foreign country it depends on whether the other country has a tax treaty with Canada. If not the CRA will look at the three criteria listed above. If one criteria indicates the person hasn't really severed their residential ties with Canada then the CRA will treat them as continuing to be tax resident in Canada. No one wants the situation where someone takes an extended vacation in the Caribbean to realize a big gain tax free.

It the other country has a tax treaty with Canada then the criteria are looked at in turn. Where does the taxpayer have a home where they usually live? If in Canada or the other country then that is where they are tax-resident. If neither, then look at b) where is their spouse and family and so on ...

Only if all other ways of establishing where a person is tax-resident are exhausted will citizenship be considered. At no time is permanent residency a factor.

lindabey

Thank you for your post very informative.

canmoreskier

If someone is on a temporary work visa, but maintains a home in their own country, then it is likely that they would be considered a resident of that country. According to tax treaty tie-breaker rules:
he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him
He cannot have a permanent home available to him if he is on a temporary visa; however, once he becomes a landed immigrant, he is entitled to a permanent home in Canada, at which point the subsequent tie-breaker applies:
if he has a permanent home available to him in both States or in neither State, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests)

JonboyE

So are you suggesting that everyone in Canada on a temporary work permit should file income taxes as a non-resident?

canmoreskier

Or are you suggesting that everyone in Canada on a temporary work permit should file income taxes as a resident?