Re: UK endowments
 

Hiya,

Yes, the company will tell you what the terminal bonus's are at this moment in time. I've just been down this road with mine.

Cheers

Y

Re: UK endowments
 

I had a with-profits endowment with about 8 years to run when we were coming to Canada. It was due to have a terminal bonus but, when we calculated how much the premiums would total to get it to the maturity date, and deducted this from the likely amount we would receive in the UK, and then deducted the tax we would likely have to pay in Canada, we decided to cash it in there and then. We then moved that cash to Canada with us, applied it to our RRSP, and continue to pay what we would have paid in premiums in the UK into the RRSP. We think we are likely to achieve a better deal this way but only after number crunching like crazy, taking advice from someone that really knows their international rules and deciding it was better to be safe than sorry. In light of what has happened to the economy recently, our decision appears even better (when we moved the exchange rate was much better. Each to their own.

Don't forget you can surrender the policy back to the institution that granted it to you. We found the "cash it with us" sorts actually offered us less than our provider would.

You will have to declare the increase in the value of the policy, if any, that has accrued since you became a resident for tax purposes in Canada. As the terminal bonus is likely to represent a significant portion that potential increase my feeling is that, unless you are very close to maturity, you are likely to be better off by cashing it in now. In Canada, one is only taxed on 50% of any capital gain made, after deducting any exemptions/deductions as appropriate. You will then be taxed on the marginal rate applicable to you, only you will be able to anticipate what this is likely to be based on assumed income.

If the 50k represents half the increase in the value of your policy from the point you become a resident for tax purposes and the date of maturity and, if your marginal tax rate will be 25%, then what you have stated is likely to be correct.

When somebody above made reference to the fact that they intend to allow one of their policies to mature, pay this into an English account and use that to pay the premiums of the other policies, and not pay tax, I cannot understand why they think this. They may be correct, but I honestly can see how, unless there is an exemption for using money to pay premiums. All Canadian tax residents pay tax on their worldwide income, so how she intends to avoid this is beyond me. However, I am not an international tax expert. I took advice specific to my circumstances at the time and I am fully aware that that advice cannot be extrapolated to situations of others.

HTH

Re: UK endowments
 

Get the endowments valued when you move to Canada. Your capital gain in Canada is what you receive when the policies mature, less its value when you moved here, less any premiums you paid after you moved here.

Your taxable capital gain is half this amount.

Re: UK endowments
 

I would talk to your accountant again. Unless there is something in your circumstances that I don't get from your post it seems as though you are not getting good advice.

Any gain you receive once you are tax resident in Canada is taxable in Canada, regardless of where the funds are paid.

Re: UK endowments
 

We have 2 endowments with 5 years to run and we've opted to keep them running with funds in the bank to pay from our uk account because if we'd cashed them in we wouldn't even get half the value we paid in back.
fiona