returning to canada and investment assets

[homesweethome]

hi,

i have vanguard mutual funds (non-retirement). i know vanguard does not offer services in canada. i am a canadian citizen (and not a US resident). i will be returning home to canada shortly, and i suspect that i cannot legally maintain my vanguard account. if this is true, must i sell all my vanguard assets prior to leaving? is the only way to hold vanguard assets in canada via ETFs?

thanks

[nelsona]

Vanguard cannot legally allow you to trade in their account. You can however sell-only in it for a short time.

As a non-GC, you have an opportunity to avoid some US tax by waiting until you no longer file a US return (ie. next tax year) before selling any 'winning" positions. Gains triggered after you move (or after the tax year, if you elect to file a full year 1040 in the year you leave) are not reportable in US for Cdns.

In canada, you would only be responsible for gains made after errival in Canada.

You should sell your losers before leaving to get cap losses in US, your cap losses prior to arrival in canada cannot be used in canada.

[homesweethome]

hi nelsona,

just to confirm my understanding.

suppose i bought a stock A in the USA for $20. when i move to canada, the price is now $30. you're saying that my cost basis in canada is $30, and when i eventually sell that stock (say in a year's time) i don't need to report anything to the IRS?

similarly, if there is a loss (stock B bought for $20, enter canada when the price is $10) then i can't recoup the capital loss from Revenue Canada if i sell it subsequently?

finally, is my cost basis when i move to canada determined to be the day i enter the country, or the day i become a resident again (or are they the same?).

thank you, this has been very illuminating.

[nelsona]

yes, yes and yes they are the same.

[nelsona]

So the moral of the story is sell your losers while still a US taxpayer, and wait to sell your winners until you are no longer a US taxpayer.