Departure return and section 217

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eortlund
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Departure return and section 217

Post by eortlund » Wed Jan 11, 2017 6:02 pm

So I'm getting ready to complete our departure returns. We left Canada last summer and now live in the UK. As advised here, we collapsed all of my husband's RRSP after we left, and half of my spousal RRSP. He works full-time, I worked very part-time in Canada and not at all here.

So I'm hoping to reclaim some of the 25% that was taken at source when I collapsed my RRSP. Do I somehow include the section 217 with the departure return, or is it something I send it separately? I'm used to filing with Ufile, and our returns get coordinated by the software, ie. who should claim what.

nelsona
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Post by nelsona » Wed Jan 11, 2017 6:30 pm

Doing a 217 in your departure year is a little moe complicated than when you are already non-resident, but essentially you report ALL YOUR RRSP withdrawals on YOUR final return. You will have to show what % of your RRSP income was your world income for the portion of the year after he left. U-file should be able to handle this.

You will roughly get the difference between your overall tax rate vs. 25%, on the RRSP income.

Your spouse needn't bother with 217, as it really only works for a person who doesn't work, so I doubt that 217 will help at all. So, his doesn't get reported.

I'm pretty sure that had I been asked specifically whether a working individual living in UK should take a lump-sum of HIS RRSP, I would have said to rather switch it to a RRIF, pay no tax to Canada (by treaty), and report the yearly income in UK. maybe that wasn't made clear in our earlier discussions. can't remember

I don't know the rules for UK, but I suspect he needs to report the RRSP income in UK, as do you (but we may have discussed this point before).
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eortlund
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Post by eortlund » Thu Jan 12, 2017 3:26 am

Thanks! I will give it a go with Ufile and come back with any questions.

Yes we talked quite a bit about converting to a RRIF because of the advantages
you mentioned with the UK-Canada treaty. However for simplicity's sake and my husband's age (40), we just decided to collapse everything and put all the money into ETFs. Easier too to have all our money in two countries not three.

nelsona
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Post by nelsona » Thu Jan 12, 2017 10:09 am

I guess that means you should be taking the rest of your spousal right now.
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eortlund
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Post by eortlund » Thu Jan 12, 2017 11:54 am

Already done last week. As you advised. :)

eortlund
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Post by eortlund » Thu Mar 02, 2017 9:54 am

So I've done this with ufile now. While I am getting a refund of the RRSP tax, our whole refund as a family is not as much as I thought it would be. Since I reported the RRSP withdrawal as my income, it looks like we lost much of the refund my husband would have gotten, probably because our total famiy income is higher and he lost the spousal deduction I used to get when income was below 10K.

nelsona
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Post by nelsona » Thu Mar 02, 2017 10:29 am

The point of 217 is not to refund all your money. It is to REDUCE your tax to the level you would pay as a resident in that year.

As, I likely reminded you back then, if you were really keen on not paying Cdn tax on your RRSP you would only make withdrawals in years when you were not working -- and were FULLY non-resident, so your spouse would not be eligible for the spousal amount.
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eortlund
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Post by eortlund » Thu Mar 02, 2017 10:39 am

I believe we did discuss it, but your opinion was that I knew I wouldn't be working in 2016-2017 once nonresident, but my work future was unclear after that, so best do it now.

nelsona
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Post by nelsona » Thu Mar 02, 2017 11:42 am

You might want to try without the RRSP and see what your taxes are. By having to report the income AND losing the spousal amount, you might be better off just leaving it unreported and accepting the 25%.
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eortlund
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Post by eortlund » Thu Mar 02, 2017 11:44 am

Not a bad idea. I think our refund is still larger with the RRSP tax refund, but it woud be good to make sure.

eortlund
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Post by eortlund » Thu Mar 02, 2017 12:01 pm

$1300 more with the RRSP tax refund

eortlund
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Post by eortlund » Mon Mar 06, 2017 6:45 am

So I am reviewing what I entered into Ufile.

On the Emigrant page, there's this bit:

'If the Canadian-source income you are reporting for the part of the year you were not a resident of Canada is at least 90% of your net world income for that part of the year (or if you had no income from sources inside and outside Canada for that part of the year), you are eligible to claim the full value of deductions and credits on your tax return. Otherwise your deductions and credits must be prorated by the time you resided in Canada. The program will decide if you are eligible for the 90% rule based on the information you enter here.'

I earned less than 2K during the part of 2016 I was in Canada. Since we left Canada, I have no work income at all. However, I do have the $19000 RRSP withdrawal. Does this count as Canadian income I 'earned' while a NR? On the drop down menu under Canadian income, there is no option for RRSP withdrawal.

nelsona
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Post by nelsona » Mon Mar 06, 2017 8:12 am

Yes
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eortlund
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Post by eortlund » Mon Mar 06, 2017 8:14 am

OK, would you suggest I tick the box Employment Income even though it is not?

nelsona
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Post by nelsona » Mon Mar 06, 2017 9:24 am

Don't be confused by the term "earned". Does it say pension? Look at your return. Are you getting credit for all your deductions? If not, call the s/w company. I don't deal with program questions.
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