Reporting Roth (non-)income to CRA.

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nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Reporting Roth (non-)income to CRA.

Post by nelsona » Tue Jan 29, 2019 5:00 pm

Just wondering how those living in Canada with Roths, that are protected (ie. no Cdn contribution made, all withdrawals tax-free by US rules) are reporting the "income" in Canada?

As I see it there are two methods:
1. Report nothing. The tax guide is silent on this matter.
2. Report the entire amount on Line 115 as a foreign pension, and then deduct the same amount on line 256 as exempt foreign income.

In neither case is the Roth income eligible for splitting, nor is it considered foreign income for foreign tax credit purposes.

So, what is the difference? Some income tests for credits and, importantly, the OAS claw back, are determined before you take 256 deduction. Your Roth income could push you above these limits, so even though you are not otherwise taxed on it, you could in the end be quite highly "taxed" due to loss of these benefits.

Curious how you are filing
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

MaggieA
Posts: 101
Joined: Sun Oct 31, 2004 4:06 pm

Re: Reporting Roth (non-)income to CRA.

Post by MaggieA » Sat Feb 02, 2019 2:11 am

Have not yet taken any income from Roth so don't have an answer; will be interested to see any.

Comment on foreign pensions: My father has a small government pension of about $20K per year derived from employment in our country of origin before we emigrated to Canada in the 1960s. This pension is quite clearly, by treaty, nontaxable in Canada. So he reports it on line 115 and deducts on line 256. CRA has questioned this multiple times, over the years. Having moved dad's taxes to an accountant last year I thought I was over having to deal with this, but CRA queried for 2017 and then the accountant needed me to get documentation AGAIN. I have observed that this pension actually costs dad his OAS - it pops him over the limit, just as you describe. I confess I have thought that it would be so much easier - and financially advantageous - to just not report this income, which gets wired to his Canadian bank account with no accompanying documentation. Since it's not taxable in the country of origin either, they just send the money and don't bother with statements. But it really is a foreign pension, so we dutifully report it, although this virtuous behaviour is not appreciated by CRA it seems.

nelsona
Posts: 15819
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Reporting Roth (non-)income to CRA.

Post by nelsona » Sat Feb 02, 2019 3:31 pm

That is probably the way to do it.
Note that CRA always accepts the explanation. It might be useful to get in touch with the foreign pension plan and ask for something official every year.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

MaggieA
Posts: 101
Joined: Sun Oct 31, 2004 4:06 pm

Re: Reporting Roth (non-)income to CRA.

Post by MaggieA » Sat Feb 02, 2019 5:41 pm

You are right. Until recently dad did his own taxes and dealt with these periodic requests from CRA in an ad-hoc fashion. This year I got in touch with the NZ GSF and discovered I could order up an annual certificate. It runs from April to April and is in NZD but the accountant thought this was just the ticket, and asked me to just order it annually henceforth. So, fingers crossed, this hassle has now been reduced to a straightforward routine.

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