Individuals resident in Canada are liable for Canadian tax on their worldwide income during the period they are residents in Canada. This makes the date of arrival or departure very important. Canada taxes 50% of capital gains and all investments at the full tax rates. Those realities create different priorities for those entering or leaving Canada.
When getting ready for planning, you could consider:
• Which country has the higher tax rate? Usually Canada.
• What time of year should you move to minimize income tax? Partial years often minimize total income tax.
• Foreign pensions and life insurance may trigger unintended tax consequences.
• Have any stock options that have not been exercised?
• As an immigrant, how long can you legally avoid tax on your world-wide income?
• We have a team that focuses on these issues for people coming to Canada, even if only for work terms, or leaving Canada to work or retire elsewhere.
Immigrant - (even temporary)
Minimizing capital gains subject to Canadian tax an important pre-arrival issue. This may be as simple as confirming the value of assets before you arrive. There may be planning available to legitimately reduce your net investment income subject to Canadian income tax. almost invariably, this planning must be done prior to arrival in Canada.
Emigrants - Departing Canada
Canada taxes all income and gains made by residents. Usually, you can avoid income tax until you dispose of an asset. However, departing residents are deemed to sell at fair market value most of their assets to themselves. Most property, other than real estate, pension rights (including RRSPs) and stock options are subject to the artificial sale. The income created by these artificial transactions is subject to income tax as is any other income.
Often, pre-departure planning is essential to avoiding double taxation. We can help! Contact us today.
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