Dateline: 08/12/99
So you're retiring to sunny Florida. Or you've just got a great job offer down south and plan to move. How will it affect your investments? Your RRSPs? Your taxes? Read on!
If you move down to the U.S., how will this affect your investments within your Registered Retirement Savings Plan? Will you be able to trade stocks or mutual funds within the plan?
Leanne Bishop, a broker with Canaccord Capital, advises me that currently Canadians moving south "can only liquidate their holdings and deregister or let it just sit. However, this particular situation is before the U.S. SEC right now and we expect an answer in about 6 months. If investors can sit tight until then, they may be allowed to trade the RRSP's."
In other words, you cannot actively manage your RRSP account after you move to the U.S. but the law may be changing soon. This is elaborated on by Kerr Financial Corporation in a Q&A at their website. The U.S. Securities and Exchange Commission regulates all stock transactions for U.S. residents and has penalized Canadian companies for trading stocks for clients living in the U.S., even if they are Canadian citizens. But because RRSPs are trusts that "must be maintained in Canada" and "cannot be moved to the United States", the SEC is considering changing the rules for RRSP accounts only.
Non-RRSP transactions are a separate topic and will be covered in more depth Monday.
Another question is mutual funds. Many people hold mutual funds in their RRSPs. Ms. Bishop advise me that "Investors can only buy mutual funds in the countries in which they reside. So, Canadians can only buy Canadian mutual funds and Americans can only buy U.S. mutual funds. It has to do with the registration of mutual funds. Some are even more limited than that. Take the Multiple Opportunities fund, for example. They are only registered in B.C., so the only people who can invest in that fund are residents of B.C. I understand that revisions in these regulations are being discussed between the two countries, but nothing has changed, yet. "
The SEC could change the rules and allow trading within RRSPs while the mutual fund rules stay the same. In that case, investors would be able to trade stocks within their RRSPs but not mutual funds. But as noted, any regulatory changes are still pending and for now, you cannot actively trade within your RRSP account if you live in the U.S..
Investors planning to move to the U.S. in the near future should rearrange their RRSPs so they are invested in instruments they are content to hold for the long term before they move.
Yes! You can still collect your Canada and Quebec Pension Plan payments after you leave Canada. According to Robert Kerr of Kerr Financial, "you have the right to receive a pension provided you have paid into it while working and employed in Canada. Payments will be made to someone outside Canada, but only in Canadian dollars." The government has detailed info on the Canada Pension Plan at their website.
As for the Federal Old Age Pension, Kerr notes that "you may be able to claim the federal Old Age Pension at age 65, but only if you have resided in Canada for at least 10 years or have resided here at least five of the last 10 years before making the claim." But the OAP is only good for six months if you did not reside in Canada for twenty years after age 18. You can find out more on the Old Age Security Program at the Government of Canada website.
Taxation is a sticky and complicated field best left to professionals. It varies depending on your circumstances and sources of income. There is also the issue of off-shore tax shelters, Swiss bank accounts and so on.
However, Canadians contemplating taking American citizenship should be aware that the U.S. taxes on the basis of citizenship whereas Canada taxes on the basis of residency. So if you take out U.S. citizenship and move back to Canada, you'll have to file two tax returns. Similarly, a U.S. citizen moving to Canada must file two tax returns.
Canadians moving to the U.S. to work need file no Canadian income tax return "for income arising after your departure, unless you earn business income, rental income or salaries here" according to Robert Kerr of Kerr Financial. He addresses this question in more depth at Kerr Financial's website.
Tax consultant Michael Atlas discusses the issue further on his website with his Canadian Tax Guide for Non-residents. Note particularly the rules applying to capital gains tax on disposition of assets after leaving Canada. Atlas recommends consulting a taxation specialist before emigrating.
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Info for Non-residents - a collection of Net Links on information for ex-patriate Canadians and foreigners wanting to invest in Canadian stocks. Most of the info is geared towards U.S. residents.
Government Resources Net Links - a collection of Net Links on info from government, including pension plans, and provincial stock market regulatory agencies.
08/09/99 - Internet
Update: iWave.com and eStation.com Profiled
Along with our Movers & Shakers list and updates to our
Internet indices, we profile two new additions to our indices.
08/05//99 - A
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Daryl Maddeaux, artist and philosopher, is building spires and
inspiration for kids and businessmen.
08/02/99 - Internet
Update: Dispatch and AdvanteXCEL Profiled
We profile two new stocks added to our indexes as well as our
usual Monday look at the Internet Movers & Shakers.
07/26/99 - Internet
Update: Actfit.com and Multiactive Software Profiled
We profile two new stocks added to our indexes as well as our
usual Monday look at the Internet Movers & Shakers.
07/22/99 - Making
Us More User Friendly
We've added a new resource page and tell you all about it.
As subscribers to the newsletter know, I'm on vacation right now and writing sporadically. Today's column on Info for Ex-pats will be followed up by a column Monday on Info for Americans wanting to invest in Canadian stocks. Then there will be no column for a week and a half until August 25 or 26. That will likely be a belated Mutual Funds Analysis, although I will try and get the Power Performers tables updated before I leave. Have a great summer!