Transferring Funds - UK to Canada - Xchange Rate - Capital Gains
 

Hi All,

I hope everybody is doing wonderfully well.

I would like to pick your brains based on the following assumptions:

• "Soft landing" to activate PR card takes place in January 2016, GBP:CAD say is 1:2. Following the soft landing (which was simply an overnight stay in Canada before returning to the UK), I return back to the UK to continue life there until the time is right to settle.
• Settlement takes place in January 2018, GBP:CAD say is 1:1.75. "Settlement" being when I declared my intention to reside in Canada, got my Goods Accompanying and Goods To Follow lists stamped, and submitted my P85 to HMRC.
• Balance in UK current account at the point of Settlement was £100k.

I am yet to transfer (Transferwise) any funds over with me to Canada, all of which are in my UK current account (not a savings account and without any interest accruing) and have been idle in that account prior to my settlement date here.

I have read some people stating that they are waiting on the rate to improve whilst others stating that they do not want to incur a capital gains tax which I did not quite understand. In any case, I may hold out for a few weeks before transferring any amount dependent on a few factors, however I would appreciate it if anyone can provide me with any insight on the process please?

Which date is used to determine the exchange rate against which my gains/losses would be calculated? I would have assumed that the date used would be my settlement date, however I am slightly confused at the moment as RBC refused to accept my settlement date when opening my account with them and instead went with the activation date on my PR Card which caused quite a headache in relation to my eligibility for their Newcomers Package.

Are there any other factors I need to consider before transferring funds over?

Thank you in advance and as always for your continued support, greatly appreciated!!

Re: Transferring Funds - UK to Canada - Xchange Rate - Capital Gains
 

If you are a resident for tax purposes, any gain in the FX is a capital gain and taxable in Canada.
https://www.canada.ca/en/revenue-age...cy-status.html

Re: Transferring Funds - UK to Canada - Xchange Rate - Capital Gains
 

Your Canadian residency status will become resident when you live in Canada for 183 days. As you moved to Canada permanently in Jan 2018, that will be triggered by July this year.

Since your soft landing in 2016 until Jan 2018 you would be considered non resident, assuming you have no property in Canada and your spouse lives with you outside Canada, so no Canadian tax implications.

You will be taxed in Canada on any capital gains from your worldwide income in 2018 when you become resident.
E.g
House value at £100k at exchange rate of $1.75 is sold when exchange rate is up 1% to $1.7675 means you will be taxed on the 1% gain of $1750
Unfortunately it does not work the other way on a loss due to a fall in the exchange rate.

You are required to declare all property held offshore worth more than $100k to the Canadian tax authorities (T1135)

Have you told the UK government that you have left? I.e Filled a P85 form
https://www.gov.uk/moving-or-retiring-abroad

For more in depth information on tax and transferring money into Canada, read the following
http://britishexpats.com/wiki/Transf...m_UK_to_Canada

Re: Transferring Funds - UK to Canada - Xchange Rate - Capital Gains
 

Annual taxes in Canada include a provision for a Capital Gains Tax and a Capital Net Investment Loss deduction (CNIL).
i.e. I've often sold equity shares and paid a Capital Gain Tax but offset with a CNIL on other shares I sold at a loss.

Re: Transferring Funds - UK to Canada - Xchange Rate - Capital Gains
 

There are a number of inaccuracies in this post. The OP should read up on Canadian Tax Residency, T1135 and the requirements, capital gains and capital losses.