Hello

Does anyone know how the Canadian Authrorities treat UK Premium Bonds and ISAs - which are tax-free in the UK? Do we declare our winnings and interest gained on our Canadian tax return?

Thanks for your replies in advance,

GandA

Interest on your ISAs are taxable. Not sure about Premium Bonds as gambling income is not taxable in Canada (probably because then people would try to claim tax relief on gambling losses).

I am not sure about premium bonds, but I have checked out ISAs. You have to be resident in the UK to hold ISAs - therefore I do not think you can continue to have ISAs once you are PR in Canada.

I am looking to close my cash ISA and see if I can retain my investment ISAs but just remove them from ISA status. There won't be any tax anyway as the investment ISAs are losing at the moment!

Hope this helps.

You can run a search on BE and you will find that someone will have posted the same question before.

check out this link

http://britishexpats.com/forum/showt...=premium+bonds

http://britishexpats.com/forum/showt...=premium+bonds

You could try PMing some of these people that have asked the same question.

Hope this helps

Thanks everyone for your replies.

I phoned the premium bond people and was told that provided I wasn't moving to the US, I could hold premium bonds overseas. I have also filled in a form so any winnings I reveive automatically buys more bonds rather than receiving a cheque in £s in Canada. Still not sure about the tax implications - though as mentioned in the various thread it is a winning just as in a lottery so I guess it isn't tax-deductable?

In terms of ISA's I was under the impression that we could hold them if we had already bought them before we moved abroad - however, we cannot add any more to it. Moggiemiss check the HMRC website as I copy pasted this a few months ago:
[I]" Q. What happens if I go abroad?
A. You can only open an ISA if you are resident and ordinarily resident in the UK for tax purposes (ask your Inland Revenue office if you are in any doubt about this).
If you start an ISA in the UK and then go abroad, you cannot continue putting money into the ISA (unless you are a Crown employee working overseas or the spouse or civil partner of a Crown employee working overseas). However, you can keep your ISA and you will still get tax relief on investments held in the ISA. When you return, you can start putting money in again (subject to the normal annual limits)."

GandA

I don't think there is an equivalent to Premium Bonds in Canada and I can't find any legislation relating directly how winnings are taxed.

Generally, gaming lottery and similar winning are not taxable in Canada (unless you are a professional gambler). So, if either of my 1 pound premium bonds wins a jackpot I don't think I will declare it.

Thanks GandA for the info re ISAs - this is very helpful - the terms of the ISA I hold just said you had to be resident.

Thanks again.

Unless you were thinking about going back to the U.K , there would be no reason to keep your money within the ISA. As mentioned , although what you have in there will still stay tax free in the U.K, You will still have to pay tax on it in Canada, as it is classed as worldwide income and this is taxed in Canada ! therefore defeating the object of having it in the ISA ! You might as well bring it over to Canada as this is now where you intend to live ! (however the exchange rate is pretty poor at the moment !)

On a similar note (and not meaning to hijack this thread ) I don't work so don't pay tax on any savings I have (ie in my current account - so basically like an ISA but without the higher interest rate ) - so would I have to pay tax on the interest I accrue on my ordinary savings account??

Anita

To declare or not to declare that is the question.The trouble is if you bring it over to Canada, the interest rates over here are pretty lowsy.

Yes, I believe that you would. You are taxed on your world-wide income.

So there's no way to avoid paying tax on hard-earned savings in your home country...?? No fair

Anyway, how do they find out about what savings you have? If you say you don't have any do they automatically assume you might be lying and do checks with your home country anyway? (surely this kind of financial information is private...??).

What is the rate of interest I'd pay on my savings anyway, does anyone know?

Thanks guys

Whether they would check everyone I doubt, but do you really want to risk your residency status by risking prosecution for tax evasion.

You are only paying tax on the interest you earn, not your entire savings. If you balance the fact that you will probably earn more interest in the UK than you would in Canada then even after tax you may be better off than if you had the money in a Canadian bank.

You do pay tax on interest on bank accounts in the UK too, although it is often deducted before you get the money. I think that you need to make sure that your bank are aware of your status so that you don't pay tax at both ends.

Someone else on here with more knowledge will no doubt advise you about the rate of income tax and allowances you can claim.

There is an easy way to avoid Canadian taxes. That is not to come to Canada. It you do, then you should expect to pay your fair share. What would you say about an immigrant to the UK who availed themselves of the NHS and other UK benefits, yet didn't pay any tax because they sheltered all their income offshore?

Anyway, climbing down off my very high horse, there is very little likelihood of the Canada Revenue Agency (CRA) finding out about a small amount of interest in the UK unless you tell them. But, you should tell them. There is a presumption of honesty when you complete your tax return. There is no clause in the Income Tax Act that says income is only taxable if the CRA find out about it.

If you have spare cash then it may be a good idea to leave it in the UK because interest rates are generally higher than Canada. Register with your bank as a non UK taxpayer so you receive the interest gross. If you don't you can claim a tax credit in Canada for UK income tax paid. The rate of tax you will pay in Canada will depend on your other earnings - it will be taxed at your marginal rate.

Which is legally possible for most immigrants to the U.K. under the "non-domiciled" rules, unlike in Canada.

Although expect these concessions to be abolished in the next few years (or at least restricted to those on temporary permits) as public opinion is tired of foreigners gaining benefits not open to indigenous Britons.