Which Canadian account types must close after leaving Canada

[ChromiumDioxide]

Hello

I moved from Canada to the US and have several Canadian bank accounts, TFSAs and RRSPs.

Its my understanding that I have to close the TFSA, is that correct?

I also thought it was permitted for Canadian bank accounts to remain while no longer being a resident, and indeed HSBC are aware I am no longer a resident and there's no problem keeping all my accounts with them (checking and savings).

However I have an account with People's Trust and they say as I am no longer a resident the account must be closed down. I asked them what type of account it and they say its a regular savings account (http://www.peoplestrust.com/high-intere ... e-savings/).
I don't understand why its ok for my HSBC savings account to continue but its not permitted for my People's Trust savings account to continue.
Do banks etc. have their own set of rules regarding what they allow or don't or must they all follow whatever the government rules are?

TIA

[nelsona]

There are 3 issues: What is legal, what is wise, and what activities are permitted in a legal account.

No account is ILLEGAL to hold. However any brokerage account, regardless of RRSP,RRIF, RESP, TFSA which is not licensed to operate in your state of residence is NOT permitted to carry out brokerage orders, including buys of stock, mutual funds, ETFs, etc. That is a regulatory issue. And EACH firm is quite allowed to make a business decision to not have US resident customers, like People's has obviously done.

TFSA's and RESP's are unwise to be held by US persons because neither is tax-sheltered in US. Moreover, the type of investments held, even if not bought or sold, give rise to PFIC reporting.

[atye13-mohan]

Does it mean that one can no longer contribute to RRSP in the year that one becomes a non-resident? One may want to contribute to RRSP in the same tax year to reduce income taxes, is that not possible after leaving Canada. Aside from reducing taxes one also needs to pay back HBP withdrawal, so brokerages shut you out? One has to wait for the T4 the following year to determine the appropriate level of RRSP contribution.

Also, what will are the consequences of trading in one`s RRSP as a non-resident until much later after leaving Canada (breaking ties)

Appreciate your insight.

[nelsona]

Whether one can contribute to an RRSP after departure is up to the brokerage firm.

Trading in an account in which the broker is not licensed in US is an SEC offense. All brokers want to stay on the good side of SEC, and if they found out that you were a US-resident and had not informed them, would likely want to sever their relationship with you for having put them in jeopardy.

as to repayment of HBP you only have 60 days from departure to do this, and a broker would permit a cash deposit which would not be used for stock purchase (assuming the broker was not licensed)

as far as knowing what you can contribute to RRSP, this is already known early in the year. Your 2014 limit, for example, is already known now.

What one should do, of course, if prior to departure, find a brokrgae that will deal with you after you move, and move all your business there.

[ND]

such as

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Thank you
I extend a thank you to all clients who have introduced friends and colleagues to me over the years. My business practice continues to grow primarily through these introductions. I appreciate your confidence and trust that we have developed in our relationship.

IAN MORRISON
Financial Advisor

RAYMOND JAMES LTD.
Eighth Avenue Place, Suite 4100 525 – 8th Avenue SW, Calgary, Alberta T2P 1G1
Tel: 403.221.0396
Toll Free: 1-877-264-0333
Fax: 403.221.0430
ian.morrison@raymondjames.ca
www.raymondjames.ca

RAYMOND JAMES (USA) LTD. Member FINRA/SIPC
Eighth Avenue Place, Suite 4100 525 – 8th Avenue SW, Calgary, Alberta T2P 1G1
Financial Advisor
Tel: 403.221.0396
Toll Free: 1-877-264-0333
Fax: 403.221.0430
Ian.morrison@rjlu.com
www.rjlu.com

[atye13-mohan]

Hello Nelsona

I contacted a few brokers and TD Waterhouse and Questrade seem like the best options. Each will allow you to hold on to your RRSP and continue trading as well with some restrictions ( e.g. no mutual funds, no GIC's, no online-trading only through a broker).

I made the HBP repayment within the 60 day time frame but will only be captured in my tax return for next year.

True, I know my 2014 tax limit but wondering how much of a contribution makes sense. I have room enough to contribute that will bring the taxable income below the upper limit of the lowest tax bracket, and yet I am averaging around 30% refund for the RRSP contributions (30% for the 1st 10k and then around 25% thereafter up to the limit allowed). I have read you mention a few places that it does not make sense to contribute to bring the taxable income below the upper limit of the lowest tax bracket. I simulated this using Turbo Tax, what am I missing.

Finally, do I need to call/ write to CRA to let them know when I am NR later this year or simply file a NR return next year indicating the date when I left.

Thanks again.

[nelsona]

The lowest tax bracket ends at 43k (15% federal), as you will potentilly pay more tax to get that money out (25%) than what you get putting it in. there is variance with respect to Provincial taxartes and brackets.

besides, you want to statrt funding your tax-advantaged US accounts.

You only need to advise Cdns who potential pay you that you are US resident, so banks, renters, etc. You only need to tell the governmenrt if you get payments from them (GST/CCTB/UI. CPP etc), or if you subsequentl;y sell some taxable Cdn property. Otherwise, the departure tax return next spring is sufficient.

[nelsona]

Remember, next year will NOT be an NR return, it will be a deaprting return for your province.

[atye13-mohan]

Hello nelsona

Thanks for your prompt reply. Need a bit more clarification with regards to your statement about filing a departing return for your province and not a NR return. I simulated my 2013 return in a tax software and went through the series of questions answering the residency question with a non-resident status.

Q: Select the province or territory you were a resident of on December 31, 2013.
Choices : Non-resident, Deemed resident, Non-resident S216 and S217

Q: Information About Your Residency Status
Choices: I was a non-resident of Canada
I was a deemed non-resident of Canada
I was a deemed resident because I stayed more than 183 days in Canada
I was a deemed resident of Canada for other reasons


On the provincial side (Ontario) , the questions were simply about world income.

Are there some other forms that one should be looking at that the tax software is not guiding through.

Thanks again.

[nelsona]

You are not using the software correctly. In the controls, you should be putting a departure date, and stating that you are a resident of Ontario, not claiming that you left in a previous year (which is what leads you where you are). You are not anything other than departing resident (of Ontaro) in your departure year.

In a departure year, your departure date, replaces all references to December 31.

Please read the emigrant guide from CRA. it outlines all the steps and filing procedures that are involve during and after your departure.