Liquidate Canadian investments when moving to USA?

sigurd · Post by **sigurd** » Mon Dec 08, 2014 12:52 pm

Hello,

I am planning on moving to the USA temporarily for work in September of 2015 and I am trying to figure out what to do with my Canadian investments (about 50k in a mixture of non-registered and TFSA, mostly in ETFs). Through my research I've sorted out that the following are [b]bad[/b] ideas:

1) Holding Canadian mutual funds or ETFs. If I do this I will have to fill out PFIC forms and file to the IRS

2) Holding a Canadian TFSA. There are various problems with how the IRS considers these.

This leaves me with a couple of options:

1) Assuming that I'm going to want to use the funds as a down payment for real estate when I return to Canada (~3years) and leaving it as a Canadian GIC. What are the tax implications of doing this?

2) Bringing the funds with me to the USA. Are there any pitfalls here I need to be worried about?

My final question is that if I am to bring funds with me to the USA do I need to liquidate the accounts on the 2014 calendar year or can I wait until August of 2015? That is will I have to fill out IRS forms if I hold a canadian mutual fund / TFSA up until the day before I leave for America?

nelsona · Post by **nelsona** » Mon Dec 08, 2014 2:59 pm

Coments:
You are correct that keeping a TFSA is not the best idea, reagrdless of wht is in it. You can always put back evey cent you take out when/if you come back to canada

As for your non-resgistered investments, you are best not to keep Cdn MFs or ETFs for the reason you outline, not only because of PFIC forms, but also year-over-year-taxation. Besides you can't have a Cdn broker hold these as a US resident. Plus, there wiul be deemed disposition tax when you depart to deal with as well.

My suggestion would be to liquidate all assets jus be fore leaving. Then whne in US invest in items that can be repartiated back to canada. By holding these until you retunr to canada, you will avoid US taxaion on any gain, and you will noy have to pay gain to canada for those incurred wheile in US.

Then, put back whatever amount you took out of TFSA when you come back.

nelsona · Post by **nelsona** » Mon Dec 08, 2014 3:03 pm

Whther of not these funds will need to be reported in US or not will depend on how you file in US for 2015. Since you are going in Sept, you wil be llowed to file as a non-resisnt for the year, or as a dual-status filer, in both cases what happened outside US in the time before you moved to US is ignored for US purposes.

So, I don't see a problem holding off making any changes until next summer, when you are more sure to leave.

sigurd · Post by **sigurd** » Tue Dec 09, 2014 10:51 am

Thanks for the advice nelsona. A few more thoughts.

What constitutes a US investment that can be repatriated to Canada? Are there ETFs that qualify?

Do you have any thoughts on if I can hold Canadian GICs while working the in states?

nelsona · Post by **nelsona** » Tue Dec 09, 2014 8:46 pm

You can but why on earth would you? I just explained you can basically have all your cap gains tax free while in US.

Just look at etf's you can buy right now as a Cdn resident. If you can buy these in US too, then these can be brought back. And almost all stocks of cours, including those of Cdn companies sold on US markets.