Tax implications of Canadian retiring in Non treaty country

[NewCanadian]

Exploring retirement options in low tax non treaty country. It will take 3 years to get permanent residence of new country to which Canada has tax information exchange agreement but not tax treaty agreement signed yet.

My questions is that if I decide not to take US green card and leave after retirement directly from US to new country as a Canadian citizen, are there any tax issues, I need to be aware of ?
Do I need to sell Canada houses before leaving US?

For first year after leaving, I may meet SPT but for next two years I donot think I will be subject US or Canada taxation.

Any suggestions?

[nelsona]

It will depend if Canada considers you a true non-resident now or not.

Since you appear to be a US tax resident, and not a Cdn resident (even with property in canada) moving to a third country should not trigger Cdn residency.

To be absolutely sure of this, it might be worth your while to submit an NR73 just to get it in writing. I would say the purposes of your houses in canada would be an issue. If they are ALL rental properties, then you should be pure non-resident, but if at least one is a cottage, for example, and you have other minor ties, canada could determine you as a a "deemed" or "treaty non-resident" which would mean that you are a Cdn resident except for the US treaty, which you would not be able to avail yourself of if you left US, with or without Green card.

There is also the matter of long-term US residency, even without green card, so you need to look at expatriate tax. Does this other country have a treaty with US? The rules on expat tax are cahnging all the time, you might want to look into this.

Fianlly, there is the issue of the source of your income. Obviously, incomes like pension, real estate, etc, which are in US or canada would still be taxable there, and perhaps at a less favourable rate than if you retained US or Cdn residncy.

[NewCanadian]

No tax treaty with US or Canada. Only known banks are HSBC and Barclays.

Flat tax rate of 15% for any level of income and year around temperature above 55 F on any day or night is appealing.

Never heard of expatriate tax before this so I need to do some research.

[nelsona]

You didn't say whether you are US resident.

[hector]

"There is also the matter of long-term US residency, even without green card"


If I understood it right, I thought a long term resident was someone who had been a "lawful permanent resident" for a certain amount of time.

Are there situations in which a "long term resident" could be someone who has not had a green card?

[nelsona]

Yes. Please read IRS Pub 519 on this. LRT = long-tem resident, and has little to do with Permanent resident status.

[hector]

Thanks for the fast reply, nelsona.

Under "Long-term Resident defined", Pub 519 says: "You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years, ending with the year your residency ends." (page 22)

[NewCanadian]

I came from Ontario to US about 6 years ago. Started on TN, switched to H1B next year. Many more years to go before retirement. Now exploring options for what do after retirement.

Need to make a decision whether to defer green card or take it in short time.

[nelsona]

NewCdn,
I would get GC. If you lose your job, you would likely move back to Cdn resident, which would jeopardize ever being able to break ties later to go to this Island.


hector,
The LTR rules have changed over the years. Indeed, right now they do not include non-GC holders, but they once did, and could once again. Notice that the expat rules have changed THREE times in 10 years.