Moggiemiss

Just trying to get my head around the key points for planning a return to the UK and as ever, the forum has been invaluable for this. I have tried to sum up the key points below and added a couple of questions. Any comments or suggestions would be gratefully received.

1. If you leave Canada before 5 years have elapsed since 'landing' you do not pay departure tax.
   
   
2. If you have a property to sell, make sure you are resident in Canada on the day that you close, otherwise 25% of the sale price will be retained for CRA pending your final tax return being submitted. (In other words, don't put your house up for sale and come back to the UK to live until it is sold).
   
   
3. Animals can enter the UK much more easily under the new DEFRA regs from January 2012 but must now travel cargo which is more expensive than excess baggage. However you need not travel on the same flights so could possibly buy a cheaper ticket for travel yourself. (Single tickets on Air Canada look around the same price as a return)
   
   
4. You must sever as many connections with Canada on leaving the country for good to prevent any grey areas about residency and tax implications. This is less of an issue, I understand, when there is a double taxation treaty in place but it does prevent having to file two tax returns if they accept that you are resident in the UK.

My questions/concerns ...
[LIST=1][*]I would want to keep a bank account open after returning to the UK for paying any outstanding bills and tax bill for the year I leave. This would be the only tie I would want to keep. I own a house in the UK, have a bank account and credit card there and would switch my pension back to being paid in the UK. Has anyone kept a bank account and had their residency challenged?

[*]I have RRSPs and TSFAs which are locked into accounts - at least one is unredeemable till the maturity date which is after I return to the UK. [I]Are there any considerations I need to take into account?

[*]If you have a permanent resident visa which is due to expire within weeks of returning to the UK , does this put you in a stronger position regarding your residency status rather than having citizenship? (Because if you re-enter the country your visa has expired and you are therefore a visitor)./LIST]
Thanks in advance for reading this and looking forward to further info

iaink

What is this departure tax? First Ive heard of one. Is it a provincial thing maybe? Please provide a link...

You are right about capital gains, that's the closest thing to a to a departure tax as I am aware of.

You can fill out a form to declare yourself non resident, just as you can when leaving the UK, but if you still have canadian sourced income it wont count for much.

Dont know about your first 2 qs, the 3rd one I expect it makes no difference, there are lots of non resident citizens around the globe.

Moggiemiss

Hi Iain

Thanks for your response.

You are correct - it is a tax on capital gains but apparently it is commonly called 'departure tax'

Here is the link for the form.

http://www.cra-arc.gc.ca/E/pbg/tf/t1161/t1161-10e.pdf

If my understanding is correct, it does apply to your principal residence but only if you have owned it more than 60 months ... and it also appears that if you have a vehicle and sell it for more than $10k that needs to be declared also

Am I correct? Answers on a postcard please ....

iaink

Maybe PM Jonboy, he's the resident tax expert..

Posidrive

Based upon our experience:

1) Not quite right. Up to five years you pay tax on gains for investments acquired while you were resident in Canada. Over five years you pay tax on the gains during your residence in Canada for all your investments even if acquired before you were resident in Canada.

2) Definitely the case and have heard some horror stories about how long it takes to get the money back. You can mitigate this by applying for an exemption certificate in advance though. This can take months though.

4) This is advised. Depends upon your status though. For example if you are on a TWP and returning to you country of origin then the requirements are much less stringent. Shouln't be any problem keeping a bank account open for "closing your affairs"

Bevm

You have to assess your investments as if sold and pay the tax that would be owing if you did sell them at that moment. IOW, Canada wants its take on any profits made.

You asked about bank accounts. We have kept some, including credit cards, and it's created no problem. It's not unusual to have bank accounts in places where one doesn't live. They're more concerned if you keep a property, and also if you DON'T open accounts in your supposed new home country.

Bev

Moggiemiss

Thanks guys for the info - all very helpful in gathering my thoughts together.