JonboyE
 

Could you pop into the Moneycorp thread and provide us with some of your wisdom?

Thanks awfully;)

Re: JonboyE
 

Sorry, been using rather too many grape products tonight while enjoying the work of one of my favorite artistes who died today.

Enjoy this and I'll try and post something sensible tomorrow.

http://www.youtube.com/watch?v=rxGNZnnwyCg

Re: JonboyE
 

We listened to her too - fantastic voice...............and thanks;)

Re: JonboyE
 

Are you heading back to the UK? Have you sold your house yet? How many years have you been in Canada?

Re: JonboyE
 

UK, yes. House not on market yet. By the time we go back will have been in Canada almost 13 years.

Re: JonboyE
 

I am working today so I will do this in bits.

It will make things much easier if you sell your house before before you leave. That way you get to keep all the proceeds tax-free.

If you are already non-resident when the house sells the the buyer has to withhold 25% of the selling price and remit this to the CRA. You can make an undertaking to file a tax return and then the buyer only has to withhold 25% of your expected profit. Either way the CRA get to look after a good chunk of your money interest free until you file a tax return for the year.

You will have to stop contributing to the RESP unless the beneficiary remains a tax-resident in Canada. You can collapse it and get a return of your contributions (the government take their contributions back). The beneficiary does to need to attend a university in Canada to be eligible to receive payments form an RESP. Payments from the plan that represent a return of contributions are tax-free. If the beneficiary is non-resident in Canada for tax purposes I suspect that the payments that represent investment growth within the plan will be subject to a 25% withholding tax.

Re: JonboyE
 

We will all be resident in Canada when home sells. Thanks for taking the time to go through this for me, much appreciated.

What about RRSP's can we cash in on those and move the money or best leave them here?.

Re: JonboyE
 

The problem with cashing your RRSPs is that all the money you take out is added to your taxable income for the year. Depending on your other income in the year you could quite possibly pay more tax on the withdrawal than you saved when you made the contributions.

You don't have to cash them in. There are no immediate tax consequences to leaving them where they are. Once you are non-resident you will be subject to a 25% withholding tax on any withdrawals.

The tax treaty does not work very well here. An RRSP is not a pension fund and UK tax law does not recognize the tax free status of the fund. So, after you return to the UK any income or gains within the RRSP are subject to UK tax. As they are not taxed in Canada there is no foreign tax credit to claim. However, lump sum withdrawals from a savings fund are not taxable events in the UK so although you pay 25% tax in Canada there is no UK tax to claim a credit against. http://www.hmrc.gov.uk/manuals/dtmanual/DT4617.htm

It may well be worthwhile living with the lost 25% in Canadian withholding taxes instead of adding the income into your final year in Canada but I can't say for certain without knowing the numbers involved.

If you have a traditional type of pension you will have to apply for it to be paid free of tax in Canada. You add it to your UK taxable income.

You will not qualify for Old Age Security as you have to be resident in Canada for 20 years between the ages of 18 and 65 if you are outside Canada when you claim it.

You will be entitled to a pension from the Canada Pension Plan if you have made any contributions.

Re: JonboyE
 

Fantastic info JonboyE, thanks ever so much for your time and wisdom.

Just 1 question if I may, regarding the RESP's - does the 25% withdrawal tax only apply to the capital gains portion OR the whole thing? (government contributions aside as I know they take theirs back) seems unfair that we'd be taxed again on already taxed money put into the RESP initially.

Re: JonboyE
 

Only the income/gains. You should be able to get a return of your contributions tax-free at any time.

http://www.cra-arc.gc.ca/tx/ndvdls/t.../sbbn-eng.html

Re: JonboyE
 

Savings:

As long as you have paid tax on the income up to the time you leave Canada you can take savings back to the UK with no problems.

Shares and other investments;

There is a rule that when you become non-resident all your capital property is deemed to have been sold on the day you leave. This is sometimes called the departure tax. Therefore any capital gain that has accrued while you were in Canada is taxed. There are quite a number of exceptions. For example, Canadian real-estate, RRSPs, and cash held in Canadian dollars. However, if you have lived in Canada for more that five years then shares are not an exception.

It might be an idea to roughly calculate what our exposure is. Remember that capital losses can be offset against capital gains and only half of the gain is taxable.

I would expect this deemed disposition will reset the shares' cost for UK tax purposes. It works that way for new arrivals in Canada. However, I can't find and reference to it on HMRC's website at the moment.

Re: JonboyE
 

You're such a sweetheart JonboyE, thank you so much.:starsmile: