Should I submit late T2062

ggvozden · Post by **ggvozden** » Wed Nov 07, 2007 3:10 am

Hi All,

First of all, thank you very much for keeping this forum alive !

We left Canada on Aug 18, signed house sale papers before leaving, but sale closed on AUG 31. None of the lawyers mentioned need for T2062, but after learning there are fines of up to CAD2,500 I got worried ?

I submited NR73 just a couple of days ago but did not mention anything about house sale.

Getting CCRA over the phone is like winnig a loterry, so hopefully somebody will know the answer.

Thanks,
Goran

nelsona · Post by **nelsona** » Wed Nov 07, 2007 11:26 am

Why did you submit NR73? It is not a required submission.

Now, it will seem starnge that you would have sent a documant that is not required, but not send one that is.

because you sent an NR73, I would now be sending T2062 as well.

In a sense it is admitting guilt, when maybe it would have gone unnoticed. But your NR73 filing has already done that.

ggvozden · Post by **ggvozden** » Wed Nov 07, 2007 11:02 pm

Thanks for the reply ! Yeah, I know ! I filed NR73 earlier while in Canada to get a fill how they would look at me if I kept and rented the house. Well, at the time they told me they don't have all the facts they need :)

I did not submtit T2062 since it looked to me that I don't have to, and nobody told me otherwise:

1) none of the lawyers made any issues about the certificate although i told mine I'll be probably be considered as NR at the closing date ( she said OK - no problem with that )
2) there is actually no tax due

It is not clear at all what to do while status is not determined ? How was I supposed to file NR documet while not having confirmation from them that I'm really considered as NR - if you ask me its chicken & egg problem, but off course that probably will not prevent them from collecting 2500 fees - I'm just not sure for what ( no tax obligation at all ) !

On the other hand - these are law tricks - you would thing you're paying a lawyer for their knowledge of the law and how to apply it - well, it looks I paid mine for nothing, and that his fees will increase for additional 2.5K :(

At the top of all of this, yesterday I was really happy to learn from the forum that hard earned money from house sale will be taxed when I convert CAD to US - oh gosh - will I have to pay tax on the 2500 they will collect back :)

My wife was telling me - where are we going, we're fine here - We already get used to 6 monts of winter and -30 oC ! Maybe she was right !

Thanks for listening - fill much better now :)

Regards,
Goran

nelsona · Post by **nelsona** » Wed Nov 07, 2007 11:40 pm

"At the top of all of this, yesterday I was really happy to learn from the forum that hard earned money from house sale will be taxed when I convert CAD to US"

Whay would you be taxed? tax has nothing to do with converting or not converting money, nor where it is kept. Your sale is tax-free. Period.

Bring the money or leaving it in Canad has no bearing on tax.

ggvozden · Post by **ggvozden** » Thu Nov 08, 2007 2:49 am

I've read the post where you've said that if money is kept in CAD in Canadina bank account and at later time exchanged to U$, or used to buy anything ( more than 200 ), there is tax obligation on currency gain !

Did I get something wrong, or this is only aplicable to FOREX trading accounts ?

nelsona · Post by **nelsona** » Thu Nov 08, 2007 9:19 am

How much gain do you think you are going to have? You shouldn't be keeping several 100,000 in a bank anyways.

Besides, if the dollar has peeaked, you will actually have losses.

And, again, it not the conversion to US that would trigger taxes, it would be the changing of it from cash to anything else, in any currentcy, including Cdn.

nelsona · Post by **nelsona** » Thu Nov 08, 2007 9:29 am

Just to give yo ua quick example, since this confuses lots of people.

Say you took your house proceeds, $200K, and put in bank on Sept 1. The dollar was, say at par, now today, you have at 1.10, if you were to buy a C$50,000 car, or buy C$50,000 worth of euros, or put C$50,000 down on a condo, or transfer C$50,000 to a US bank account, each of these would trigger US$5000 capital gains on your US tax return.

Its not what you do with the money, its the change from one investment (Cdn dollars in cash) to another.

Think of $200,000 in a Cdn bamk account as a 200,000 units of a mutual fund.

Thu Nov 08, 2007 11:32 pm

.. But let's keep in mind that no gain is realized for tax purposes anywhere until the funds are actually transfered into another currency.

nelsona · Post by **nelsona** » Fri Nov 09, 2007 10:25 am

This is not true. That is like saying selling shares of ABC in C$ and buying XYZ in C$ does not trigger cap gains in US, sine the currency was not changed.

Of course it does.

So does taking $50K of Cdn dollars which has grown in value from $40K to $50K in US dollars and buying ANYTHING, be it a car, US dollars, japanese yen, or shares in a company.

nelsona · Post by **nelsona** » Fri Nov 09, 2007 11:53 am

http://www.irs.gov/businesses/small/art ... 24,00.html

A Cdn bamk account does not qualify as a QBU, thus every transaction that takes palce in it is to be expressed in US dollars. This gives rise to gains and losses on every transaction.

In its wisdome, IRS has determined that transactions giving rise to less that $200 currency gain or loss are not reportable.

But, a Cdn dollar account (held in canada or elsewher) when the exchage rate is fluctuating over 10% per month, certainly gives rise to cap gains on even modest transactions of $2000 or more.

ggvozden · Post by **ggvozden** » Sat Nov 10, 2007 10:19 am

RE: You shouldn't be keeping several 100,000 in a bank anyways.

What do you recommend ?

Goran

nelsona · Post by **nelsona** » Sat Nov 10, 2007 10:59 am

This is a tax forum.