Search found 3 matches
- Sat Sep 25, 2010 2:08 am
- Forum: Canada / United States Tax & Accounting
- Topic: In Canada for three years, tax stratergy, RRSP, TFSA
- Replies: 4
- Views: 3213
Well on second thoughts I may be better just to keep my funds in a margin account and take more of a dividend yield approach......well at least now I know the implications of an RRSP now I just need to put together a few scenarios in excel....assuming no growth or loss or dividends a RRSP would be a...
- Sat Sep 25, 2010 1:44 am
- Forum: Canada / United States Tax & Accounting
- Topic: In Canada for three years, tax stratergy, RRSP, TFSA
- Replies: 4
- Views: 3213
- Fri Sep 24, 2010 1:10 pm
- Forum: Canada / United States Tax & Accounting
- Topic: In Canada for three years, tax stratergy, RRSP, TFSA
- Replies: 4
- Views: 3213
In Canada for three years, tax stratergy, RRSP, TFSA
Background:
27 year old, single, New Zealand citizen. I have lived the last ten years in the US, on a student visa and for the last four on an H1B (work visa). I am currently in Calgary on a Canadian work permit and plan on remaining here until May 2013. After that I will be returning to the US to work for three more years on my H1B and then returning to New Zealand. The following is my tax strategy whilst in Canada. I would appreciate any comments or recommendations.
2010
Salary + Bonus = $80,000
TFSA Contribution = $5,000
RRSP Contribution = not allowed
2011
Salary + Bonus = $95,000
TFSA Contribution = $5,000
RRSP Contribution = $11,000 (18% of prior years income, note that I was not in Canada for the full year)
2012
Salary + Bonus = $100,000
TFSA Contribution = $5,000
RRSP Contribution = $17,100
2013
Salary + Bonus = $110,000
TFSA Contribution = $5,000
RRSP Contribution = $18,000
Time to leave
Balances
TFSA - $25,000 (assuming modest growth)
RRSP - $55,000 (assuming modest growth)
Withdrawal Strategy
TFSA – not too much strategy here, I will simply sell everything in my account and request a cheque from Questrade prior to leaving Canada.
RRSP – For simplicity sake let’s say I am leaving at the end of May, 2013. In early May I will sell all the investments in my RRSP and buy new investments, thus increasing the basis in my investments to the current market value. I will then leave Canada cutting all ties for tax purposes, upon returning to the US I will begin making periodic withdrawals from my RRSP which should only be exposed to the 15% Canadian withholding plus any capital gains that have amassed (since increasing my basis by selling a re-buying my portfolio in May, 2013) would be subject to tax in the US.
OK here are my questions:
The withholding rate is confusing to me, I spoke with Questrade and they told me that they withhold the following on withdrawal amounts of $0-$5,000 = 5%, $5,001 - $15,000 = 10%, >$15,000 = 15%.
From reading the CRA website and the US/Canada treaty it appears that the withholding should be either 15% or 25% dependent on if the withdrawal is made as a periodic payment or a lump sum.
So if I make periodic withdrawals over 2013-2017 am I required to file a Canadian tax return each year? Additionally how do I determine the allowable withdrawal amount to qualify for “periodic withdrawal†status?
My ideal situation would be to pull it out in $15,000 chunks and pay the 10% withholding through Questrade and be done with it from a Canadian tax prospectus, is this possible or just wishful thinking?
27 year old, single, New Zealand citizen. I have lived the last ten years in the US, on a student visa and for the last four on an H1B (work visa). I am currently in Calgary on a Canadian work permit and plan on remaining here until May 2013. After that I will be returning to the US to work for three more years on my H1B and then returning to New Zealand. The following is my tax strategy whilst in Canada. I would appreciate any comments or recommendations.
2010
Salary + Bonus = $80,000
TFSA Contribution = $5,000
RRSP Contribution = not allowed
2011
Salary + Bonus = $95,000
TFSA Contribution = $5,000
RRSP Contribution = $11,000 (18% of prior years income, note that I was not in Canada for the full year)
2012
Salary + Bonus = $100,000
TFSA Contribution = $5,000
RRSP Contribution = $17,100
2013
Salary + Bonus = $110,000
TFSA Contribution = $5,000
RRSP Contribution = $18,000
Time to leave
Balances
TFSA - $25,000 (assuming modest growth)
RRSP - $55,000 (assuming modest growth)
Withdrawal Strategy
TFSA – not too much strategy here, I will simply sell everything in my account and request a cheque from Questrade prior to leaving Canada.
RRSP – For simplicity sake let’s say I am leaving at the end of May, 2013. In early May I will sell all the investments in my RRSP and buy new investments, thus increasing the basis in my investments to the current market value. I will then leave Canada cutting all ties for tax purposes, upon returning to the US I will begin making periodic withdrawals from my RRSP which should only be exposed to the 15% Canadian withholding plus any capital gains that have amassed (since increasing my basis by selling a re-buying my portfolio in May, 2013) would be subject to tax in the US.
OK here are my questions:
The withholding rate is confusing to me, I spoke with Questrade and they told me that they withhold the following on withdrawal amounts of $0-$5,000 = 5%, $5,001 - $15,000 = 10%, >$15,000 = 15%.
From reading the CRA website and the US/Canada treaty it appears that the withholding should be either 15% or 25% dependent on if the withdrawal is made as a periodic payment or a lump sum.
So if I make periodic withdrawals over 2013-2017 am I required to file a Canadian tax return each year? Additionally how do I determine the allowable withdrawal amount to qualify for “periodic withdrawal†status?
My ideal situation would be to pull it out in $15,000 chunks and pay the 10% withholding through Questrade and be done with it from a Canadian tax prospectus, is this possible or just wishful thinking?