Endowments maturing-Tax?
 

Hello, help please.
Now we are nearly there, we have just had a last minute thought. Does anyone know if you have to pay tax on UK based endowment assurace policies which mature after you take up residency in Canada for tax purposes or are they tax free as they would be in the UK.
Anyone out there have any experience of this or know of a good tax advisor in the Annapolis Valley region of NS.
Pam.

Re: Endowments maturing-Tax?
 

I am an accountant, but not a specialist in personal or international taxation. The most similar financial vehicle to endowment policies that I can think of in Canada are whole life policies. The gains in these policies are tax free as long as they remain within the policy (and are paid tax-free on death) but the gains are taxable if you withdraw from, or cash in, the policy.

Canada is not required to recognize the tax-free status of savings policies in the UK so my guess is that gains in the endowment policy will be taxable. However, only the gain between the day you land in Canada and the time you cash in the policy is taxable in Canada. If the endowment policy was in support of a UK mortgage you need to decide if it continues to be a worthwhile investment for you. If yes, then you should get a valuation of the policy before you land. If no, and you cash the policy in, or sell it, before you land in Canada there will be no Canadian tax to pay.