Residency and demutualization

[Marianne]

I'm a dual who lived in Canada for years and have had an insurance policy with Standard Life. It's now demutualizing, offering shares or cash to Canadian residents but only cash to U.S. residents.

I moved back to the States this January, thinking 2005 would be my exit return to Canada. However, I married a Canadian this March and he's gone back to Toronto to wait for his visa. Surprise! I'll still on the hook for taxes in Canada for 2006 (since the husband's residence is the matrimonial home?). Once he does his own exit return next year, I can finaly do mine.

So. Would it be okay for me to send a change of address to Standard Life, using my husband's Canadian address, so I could receive shares instead of cash? Could these go into my RRSP, which is still sitting in Canada?

[nelsona]

I moved back to the States this January, thinking 2005 would be my exit return to Canada

Well, if you moved in january 2006, then 2006 would have been your exit return, not 2005.

It would be pretty hard to justify a position of non-residency based on 2 months of no ties, especially since your husband has taken POSITIVE steps to establish those ties, so, until he leaves canada you are a Cdn tax resident.

I don't see a problem using your Cdn home adress to get those shares. I would be sure however to be physically in canada when making these arrangements.

they can go into your RRSP. They can't be used as a deduction on your US return of course. and any income that the demutualization genarated will have to be reported on both Cdn and US return.

[Marianne]

Thank you, nelsona. I just may leave well enough alone for a number of reasons:

1. I've been at my U.S. address on a permanent basis since mid Dec. 2005. I thought of declaring Dec. 31 as my last day in Canada, to make things neat and tidy. I didn't realize marriage to a Canadian would make things less tidy.

2. I've already sent back my Ontario Health card, driver's license, and a few other "financial ties."

3. I'm ready to start a full-time job in New Jersey. I'll have no physical presence in Canada except a quick visit when my husband's visa is approved and he can leave immediately.

4. By the time there's a vote on demutualization, and shares are deposited in my Canadian RRSP, we'll both be in the U.S. (September?) There won't be enough time for them to increase in value before I collapse the account and move all assets to the U.S. Besides, I can't trade them from the U.S. anyway.

Probably better to take my meager IPO value and pay the taxes in Canada, the U.S., and Weird New Jersey.

[nelsona]

I've been at my U.S. address on a permanent basis since mid Dec. 2005. I thought of declaring Dec. 31 as my last day in Canada, to make things neat and tidy

Residency is a matter of fact, and unless you left on decemebr 31, you cannot put dec 31 as your departure date. Nothing 'happened' on Decemebr 31st to indicate a change in status.

Besides, I can't trade them from the U.S. anyway.

If they are in your RRSP, you can trade these and most other commodities. NJ allows RRSP trading, so long as you have Cdn brokerage willing to accept you. (TD waterhouse most certainly does).