immigrating and taxes

[niteshadepromises]

This message concerns a question I have about the transfer of money during the immigration process. I'm not much of a whiz with accounting so maybe you can explain it in simple terms. My husband and I would like to immigrate to Canada from the US, and we are wondering what kind of a hit our total assets will take due to taxation by the Canadian government. We have a sizable bank account and would likely be considered in the highest tax brackets, if our entire net worth is considered taxable. We are just looking for a vague estimate (percentage) so that we can decide whether or not to continue pursuing immigration, so any info you could provide would be greatly appreciated

[Mark T Serbinski CA CPA]

When you enter Canada, your capital and investments are not taxed... nor are there any "departure" taxes in the U.S.

However, when you establish residential ties to Canada, your capital properties (investments outside of retirement plans, real estate, etc.) are valued at fair market value on the date of your entry to Canada. This number becomes important when you sell the properties, since the date of entry value is used as the cost basis in determining the capital gain or loss.

Record and keep track of the FMV at entry, and also keep the original cost, which you will use for U.S. tax purposes on the disposal.

[nelsona]

Indeed.

Exactly what kind of country does 'nite' think Canada is?![:(!]

If you were under the impression that your wealth would be taxed, what other possible reasons would still make you 'like to immigrate' to Canada? The Weather, or Gay Marriage[?]

<i>nelsona non grata</i>

[Carson]

Agreed.

And keep in mind that if you want to give up your US citizenship as well, the expatriation rules are becoming more onerous every year (some say ominous). In fact, there has been some discussion of banning ex US citizens from re-entering the US, though this may just be rhetoric.


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Regards,

Carson Hirner

[nelsona]

I would suggest that these two are not immigrating for political reasons.

It should be pointed out that retirees (drawn by the lure of 'free' 'health' 'care') don't score very well in the immigration points test, so this better be a younger couple with income, rather than just assets.

I didn't hear any talk of them renouncing citizenship. However, the rules as they exist are already so onerous as to make it almost impossible for one who has renounced US citizenship to set foot in US.

There already is a <i>de facto </i> bar on those 'folks' (as BabyBush would say).

<i>nelsona non grata</i>

[niteshadepromises]

Since there is some talk in this thread about our reasons for considering immigration, I will enlighten you. First of all we are a young couple (my husband is 31) and we did not acquire our wealth ourselves. It is part of an inheritance. We are young and naive (yes I can admit this!) so we are ignorant of many things involving finances. All we know at this point is that our money is well invested and there is a lot of it! I read: "At the time of landing, an immigrant's worldwide assets and property become subject to Canadian taxation. The immigrant is deemed to have disposed of all assets at fair market value immediately prior to landing and to have immediately required those same assets immediately after landing. " I was unsure if this meant net worth was taxed. I apologize if I offended someone for insinuating Canada taxed wealth [:(]

As for our reasons for considering immigration, some are political in nature. I am impressed by the Canadian health care system, as well as the parliamentary form of government. I feel the electoral college is outdated and I'm tired of my vote not counting each presidential election. I'm also tired of living in a country that feels compelled to "save" the world to the detriment of its own people (yes I'm speaking of the mess in Iraq). Finally, I prefer what seems to be the prevalent attitude of Canada's people. The USA is gripped (to a lesser degree than many nations I know) by religion, and this far too often affects our judgements. A recent example is the gay marriage issue here. I heard a former Canadian prime minister say that it was extremely unlikely for a Canadian prime minister who believed the jury was still out on evolution to be appointed. And yet we have elected GWB twice!

Anyway, thank you for the posts educating me of the taxation in Canada as well as the other useful information.

[nelsona]

Well, I guess I was wrong, you are political refugees after all.

If your beef with the electoral college is in how your vote does/does not translate into a vote for the Presidency, then you won't find our system much better, since one doesn't vote for the PM at all.

Quite regularly, the PM's party gets 30-40% of the popular vote. So don't complain about having a Prez elected by 49.9%.

By the way, you do realize that you won't be voting in Cdn elections for quite a few years anyways, since you're not citizens.

I'll agree on all the other matters however.

<i>nelsona non grata</i>

[Gofigure49]

Just a note on renouncing U.S. citizenship. You are not necessarily banned from entering the United States. You have lost your "right" to enter but you may enter as any other foreigner. If one renounces it is assumed that you are doing it for tax purposes and you will continue to have an obligation to file U.S. tax returns for 10 years...the good news is that it is only for U.S. source income and not world-wide income so if you have no financial ties in the U.S. it is simply a matter of filing an NR return. One should not make this decision lightly and must ensure they have a new homeland and citizenship in their new home. There are horror stories circulating regarding traitor lists. Yes, there is a list. It is located on the Federal Register website and you find it by doing a search called "Chosen to Expatriate". It is a simple list with only a name...no other identifying details. It has not been updated since April 2004.