Canadian Moved to the US.. Canadian Brokerage account issues
Moderator: Mark T Serbinski CA CPA
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Canadian Moved to the US.. Canadian Brokerage account issues
My mom (Canadian citizen/resident) is moving to the US later this year. She is retaining a Canadian address, and is planning on using it for her investment (non-RRSP) account. If she receives interest and dividends from the investments, but does not pay any witholding taxes (the authorities think she is Canadian resident), what happens, eventually? Does she ever have to pay it? Could it cause her problems? What if she dies? Probate in both countries? I think she's making a big mistake.
Will it/can it cause me issues as her sole benficiary?
Will it/can it cause me issues as her sole benficiary?
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- Posts: 21
- Joined: Mon Feb 28, 2011 4:22 pm
Cdn brokers are not allowed to deela with US residents outside RRSPs. Period.
She would also need to report deemed disposition upon departure, and failure to do so is subject to fine, plus interest and penalties.
if you are the executor, it wil be a big headache for you.
She would also need to report deemed disposition upon departure, and failure to do so is subject to fine, plus interest and penalties.
if you are the executor, it wil be a big headache for you.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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I think that I understand. The (tax) year of her new US residency, she basically is deemed to have "sold" (for tax purposes) all her cash account investments and paid any necessary taxes in Canada.. stepped up the cost basis, so to speak. Is that correct?
Secondly, going forward if she owns, let's say $2mm of stocks and bonds in a Canadian brokerage account, and the securities generate $50,000 of interest and dividends each year. She is claiming the income on her US taxes, but there is no Canadian witholding as Canada thinks she is still a Canadian resident. Do they (CRA) typically come after these now US residents for the witholding tax on Canadian-sourced income that was never witheld? Is that yet another risk (not that there are not enough already!!).
Secondly, going forward if she owns, let's say $2mm of stocks and bonds in a Canadian brokerage account, and the securities generate $50,000 of interest and dividends each year. She is claiming the income on her US taxes, but there is no Canadian witholding as Canada thinks she is still a Canadian resident. Do they (CRA) typically come after these now US residents for the witholding tax on Canadian-sourced income that was never witheld? Is that yet another risk (not that there are not enough already!!).
Well, IRS will not accept the stepped-up basis unless she actually has filed the deemed disposition with her Cdn depature return. The new procedure for stepping up the basis requires this submission.
Second, failure to report her holdings at departure (regardless of profit or loss) will incur a penalty in canada.
As a non-resident, she will be subject to flat NR tax on and dividends. It would be less than what she would owe if she files as a resident.
CRA WILL deem her non-resident to get the deemed dispo tax at some point, and will be sure to get their share of any Cdn-sourced income along the way.
her brokerage will eventually demand that she close her account becuase of the regulatory jepo[ardy she is placing them in.
Just convince the old .... to file as departing resident.
Second, failure to report her holdings at departure (regardless of profit or loss) will incur a penalty in canada.
As a non-resident, she will be subject to flat NR tax on and dividends. It would be less than what she would owe if she files as a resident.
CRA WILL deem her non-resident to get the deemed dispo tax at some point, and will be sure to get their share of any Cdn-sourced income along the way.
her brokerage will eventually demand that she close her account becuase of the regulatory jepo[ardy she is placing them in.
Just convince the old .... to file as departing resident.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
To answer your question though, if she fails to decalre herself non-resident, and decides instead to file her taxes as a resident (surely she didn't think that she could pretend not to leave, but not report in canada), she will pay her taxes with her return. If the ammount owed is subastantial enough, they will put her on quarterly payments the folowing year (then she would have interest).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
One thing that might convince her to go non-resident is that, if she becomes US-resident, her OAS (is she maybe afraid she won't get OAS?), will not be subject to clawback and will not even be subject to Cdn tax (along with CPP).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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So, since he knows she is leaving the country, he rather break securities regs.... in non-retirement accounts it is against the regs to make a trade for anyone even physically outside the country at the time of the call ... priceless.
btw, she can still break residency and forget to tell the broker. If he is so willing to paly fast and losse with the regs, she should at least use it to her advantage.
btw, she can still break residency and forget to tell the broker. If he is so willing to paly fast and losse with the regs, she should at least use it to her advantage.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing