USA->Canada: Transfer Individual Broker Account to Joint?

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martuzzi
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Joined: Mon Jan 27, 2014 9:54 am

USA->Canada: Transfer Individual Broker Account to Joint?

Post by martuzzi »

I'm a Canadian citizen currently working in the US. I have been here for the past 2.5 years. Later this year I plan to move back to Canada permanently with my family.

I currently have a US brokerage account, 100% in my name. When we move back to Canada, am I allowed to transfer the holdings from this account into a Canadian account jointly held by my wife and me? I would like to do this so that future investment income and capital gains in Canada can be split between the two of us.

Thanks in advance!
nelsona
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Post by nelsona »

Yes, but I might suggest that you make your account joint BEFORE going back to Canada, just to be sure.

You are looking at Canada's attribution rules for couples. In essence, Canada suspends those rules for "newcomer" couples, but only because it is impractical for them to determine the source of any pre-arrival funds. But as soon as you arrive in Canada, your assets held outside Canada are indeed yours. So transferring your assets to a joint account (which would only happen after you returned to Canada) would make the account 100% funded by you, and thus whatever income that falls under the attribution rules would fall to you.

So, it would be best to put your spouse on the account now, and then when you do transfer it, it will be 50-50 beyond a doubt. Plus you will have the deemed acquisition rules which will zero out any gains before arriving.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
martuzzi
Posts: 9
Joined: Mon Jan 27, 2014 9:54 am

Post by martuzzi »

Got it. Thanks very much, Nelsona.
martuzzi
Posts: 9
Joined: Mon Jan 27, 2014 9:54 am

Post by martuzzi »

Nelsona, I was just about to proceed with converting my current US brokerage account to joint with my wife, who is also a Canadian citizen like myself. Doing a bit of Googling and it sounds like converting a personal bank or brokerage account to joint might count as a gift, which is capped at $147,000 for non-citizen spouses (as of 2015).

The account is worth approximately $2mm, so if we were to convert the account to 50/50 joint, would this count as a $1mm gift, of which $853,000 is taxable? Am I understanding that correctly?

Thanks again!
nelsona
Posts: 18678
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Yes.

You will just have to settle for getting the deemed acquisition value for Canada and not pay any tax on the gain in US (as log as you wait until no longer taxable in US).

Remember too, that not all income generated by money given to spouse is attributed back to you (not cap gains, for example), so you might not have to pay tax on gains on future when you give your spouse these funds.

So, looks like you need to sit tight until you move back.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
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