Canadian Mutual Fund Investment--Capital Gains?

[nelsona]

As was outlined to you before, US mutual funds are not *supposed* to be sold/dealt to Cdn residents, so the US mutual fund option is not really available to you long-term.

Because you are a US citizen, you will be reporting all capital gains -- wherever they are made -- to the IRS, and will be reporting all capital gains -- again, wherever the source -- To CRA as well, because of Cdn residency. The result will be to pay cap gains at the higher-taxed jurisdiction rates. In fact, you will be reporting ALL income in both jurisdictions, and claiming foreign tax credits/deductions and exclusions where possible. The only exception will be your Social securitry, which you will not have to pay tax on in US (Canada only).

Your medium-term goal is to leave all your "retirement" funds/accounts in US, and your "non-retirement" funds in Canada. This will be easier from a regulatory point of view, but will not save/cost you anymore in taxes.

<i>nelsona non grata... and non pro</i>

[nelsona]

Capital Gains tax in Canada is based on your 'normal' taxrate, which varies by province and income. Capital gains are only 50% includable as incoe, so whatever your overall Provincial tax rtae would be: divide by 2.

So it will be anywhere from 15 to 25%. Canada does not differentiate between short and long tem gains, so short-term gains are almoast always treated more favourably in canad than in US.
There are some sites out there that list the various rates by province and income level. I'll (or someone else) can try to dig one up.
to wit:

http://www.kpmg.ca/en/services/tax/docu ... le2005.pdf


<i>nelsona non grata... and non pro</i>