Resident in USA, Online Trading account in Canada-?

Deepsharma · Post by **Deepsharma** » Wed Aug 08, 2012 12:56 pm

I left Canada at the end of 2008, to reside permanently in the US. I had a RBC Direct Trading Account which I still traded during 2009 and 2010 while I was residing in the US. I made capital gains for both years, and this was my only income for both years. I declared my worldwide income in the USA and paid taxes for both 2009 and 1010 to the IRS. I also filed tax returns in Canda declaring my worldwide income and claiming deductions for the foreign tax credits paid in the US for 2009 and 2010. CRA is claiming that I have to pay full taxes on al my gains for 2009 and 2010. What are my options to avoid double taxation.

Thanks.

nelsona · Post by **nelsona** » Wed Aug 08, 2012 2:43 pm

That is the mistake you made by not correctly declaring non-residency from canada when you left.

If you call yourself Cdn resident (which you do by filing a tax return), then you owe canada tax FIRST of any cap gains, not US.

You need to pay the Cdn tax, and then try to get credit from US.

Perfect example of why you should (a) declare non-residency properly, and (b) get rid of Cdn incvestment account when doding so.

Deepsharma · Post by **Deepsharma** » Thu Aug 09, 2012 9:48 am

Thanks for your reply. I had to file a Canadian tax return, because I didnt want to be in violation of any laws as the CRA would have had a record of my trading activities, and I thought with the Tax Treaty I would only have to pay taxes on my worldwide income in the country in which I am resident, USA. I guess there is much more to Non-residency than simply leaving and taking up residence in another country. Would my capital gains be taxed in Canada as capital gains or regular income for 2009 and 2010, as I was not a resident??

nelsona · Post by **nelsona** » Thu Aug 09, 2012 9:53 am

trading laws are based on PHYSICAL position at the time, as well as residence. spoofing a Cdn addrss doesn't make it better, it makes it worse.

Lesson learned chum.

JGCA · Post by **JGCA** » Thu Aug 16, 2012 3:18 pm

Try Amending your 2008 return to show the departure in 2008, then amend teh 2009 and 2010 returns in Canada to show no cap gains in Canada since you are non resifdent with those refunds you now will owe more tax to IRS however with interest and penalties, you need to see if this is worth it.

nelsona · Post by **nelsona** » Thu Aug 16, 2012 3:43 pm

From his original post, it appears that he paid his US tax correctly, since he filed a s a resident and took not foreign tax crediy on his 1040. He tried to get the credit on his cdn return, which CRA rejected for the Cdn-sourced cap gains

JGCA · Post by **JGCA** » Thu Aug 16, 2012 5:45 pm

Then he should try to amend his cnd returns to avoid being taxed as a resident when in fact he was not, I see no downside then since no credi was claimed in the US

nelsona · Post by **nelsona** » Thu Aug 16, 2012 7:50 pm

Exactly. However back-claiming non-residency is not always accepted.

JGCA · Post by **JGCA** » Fri Aug 17, 2012 12:19 pm

yes, that is true but he can also try under the fairness provision this seems like a case where it may work.