Deemed disposition of Canadian assets, taxation of dividends

[ecurb]

In September 2010 I moved to the US from Canada to work under a TN visa. Based on what I have read in the forums, I believe I need to file an emigrant return in Canada, declaring only Canadian sourced income, and a 1040 in the US, declaring worldwide income for the whole of 2010 (and an 8833 citing the non-discrimination clause of the treaty). Please let me know if this is incorrect.

I have some ETFs in an unregistered account with a Canadian broker, acquired before my move. As I believe my move to the US will only be for a few years, I am happy (for now) to leave the ETFs in my Canadian brokerage account. However, I understand that I will be deemed by CRA to have disposed of these at FMV on the date of my move, thus triggering a capital gain. I have a few questions in connection with this:

1. Do I need to notify my broker that I am no longer resident in Canada? Presumably they need to know as they will need to withhold tax from future distributions?

2. Do I calculate the capital gain myself, or do I ask my broker to do it and report it on whatever slip they issue?

3. The ETFs made some distributions in 2010. I understand I will need to include these on my US return. Are these regarded as "dividends" that I would report on line 9a of the 1040? Or is some portion of the distribution potentially regarded as a capital gain?

4. Presumably I can claim a credit in the US in respect of any tax paid on the ETF distributions in Canada. How do I calculate the amount of this credit?

Many thanks for your assistance.

[nelsona]

Just to be accuarte, you will file a departure return for canada, reporting world income until the departure date, not just Cdn sourced income.

You do not need to file an 8833 with your 1040 for what you intend to do, but it will not harm you.

1. You need to notify your broker that you are a US resident.
2. You calculate your deemed disposition yourself.
3. Your broker will need to tell you what the breakdown was for these and future distributions.
4. You will get credit using form 1116, you apportion the overall tax you pay in canada towrds each type of income you are claiming credit against.
If your dividend is 1% of your Cdn income, you apportion 1% of your fianl tax towrds it, and so on.

[lapfrank]

Hi Nelsona,

I'm trying to figure out how to calculate the deemed dispositions on my mutual funds by myself, but I'm at a loss.

I must do that with the quaterly or yearly reports I get from the brokerage firm ? Since I've added money on it over the years, I'm not quite sure how to calculte the %% of gains or losses I have gotten since inception.

Thanks,

[nelsona]

your fund statements should have an "average price" or "average cost" for each fund that you hold -- how else were you going to determine how much tax to pay when you sold?