departure tax - T5, NR4

xiaoice · Post by **xiaoice** » Mon Apr 16, 2018 7:53 pm

I am going to file the departure tax 2017 to CRA. I got one NR4 from Sunlife for PH&N money market. I moved all money from PH&N money market a few weeks after I left Canada. I calculated the gain/loss based on the cash value on sold date and cash value on the date I arrived on USA, and reported to IRS (dual status return). Is that correct? Since income on this NR4 was mainly for the days I was in Canada, so I think I should report it to CRA. This NR4 has 25% withheld tax on it. Should I report the withheld tax to CRA as well ?

I have some T5 and NR4 from bank. I have some T5 and NR4 from bank. Both doesn't have any tax withheld. But they are actually the income after I left Canada. Should I still report it as income to CRA or not? How about the withheld tax deduction?

nelsona · Post by **nelsona** » Mon Apr 16, 2018 9:31 pm

What type of account had 25% withheld.

xiaoice · Post by **xiaoice** » Tue Apr 17, 2018 7:57 am

my previous employer has a saving plan (something like employee contribution + employer contribution). It is actually a non-registered saving account. I sold out all mutual funds and stocks, etc, before I left Canada. the money stayed in PHN money market (that is where this saving account put "cash" money in) for a few days after I called Sunlife and transferred it to my checking account with Bank. By the time I called, I was in USA already... Maybe there is why they issued me the NR4.

nelsona · Post by **nelsona** » Tue Apr 17, 2018 9:36 am

the 25% tax was final Cdn payment on whet is considered a pension. the income and the NR tax should NOT be on your departure return

xiaoice · Post by **xiaoice** » Tue Apr 17, 2018 9:43 am

It is not a pension plan. Employer has another account in Sunlife which is registered pension plan (employer contribution only). This one is called saving account, and just for employee to save money... and invest if like...

Is my way of reporting the income (cash value difference on two dates) to IRS correct? If I am not reporting it to CRA and then I need to report it to IRS??

nelsona · Post by **nelsona** » Tue Apr 17, 2018 9:52 am

Well, it was treated like a pension plan, otherwise 25% would not have been withheld. pension plans can have contribution from both employer and employee, like this one. What was the code on the NR4?

Since it was a pension plan, and you took the money after leaving Canada, it is taxed at 25% in Canada (no return), and would ALL be included on your 1040 (if you file a 1040 for that year), but not on a 1040NR.

xiaoice · Post by **xiaoice** » Tue Apr 17, 2018 9:59 am

income code is 11 (Estate and trust income)

[quote="nelsona"]Well, it was treated like a pension plan, otherwise 25% would not have been withheld. pension plans can have contribution from both employer and employee, like this one. What was the code on the NR4?

Since it was a pension plan, and you took the money after leaving Canada, it is taxed at 25% in Canada (no return), and would ALL be included on your 1040 (if you file a 1040 for that year), but not on a 1040NR.[/quote]

xiaoice · Post by **xiaoice** » Tue Apr 17, 2018 10:09 am

I forgot to mension, 25% withhold tax is on the "gross income" 80 CAD dollars, not the book value of the PHN money market...

If it is pension, then I would be subjected to 25% of the whole money I transferred out, not 80 CAD, right?
[quote="xiaoice"]income code is 11 (Estate and trust income)

nelsona · Post by **nelsona** » Tue Apr 17, 2018 10:34 am

Well that was an important detail.
So, on your Cdn departure return, you need to make the deemed disposition of what you had in the sunlife account on the day you left Canada (since you had not sold yet). You do not report the $80 in Canada, but you do in US.

Then you need to make a special declaration on your 1040, otherwise you are on the hook to US for ALL the gains, since you triggered them after you entered US. You cannot simply declare the post-arrival gains. there is a Rev Proc to follow on this. Happy browsing

xiaoice · Post by **xiaoice** » Tue Apr 17, 2018 10:44 am

Thanks Nelsona.
I am filing "dual-status return". Would that make any difference?
I don't quite understand how to make special declaration. 80 CAD is for the total year. I prepared one PFIC for just this PHN money market using the "market-to-market" election. basically market value on my arrival date, and the date money was transferred out. If I am to report the whole 80 CAD on 1040. I need to specify more details on PFIC, e.g. I sold other mutual fund and the money was transferred to this PHN money market (while I was in Canada)?

xiaoice · Post by **xiaoice** » Tue Apr 17, 2018 11:13 am

Do I need to file PFIC on this since I transferred it (>25K) out to checking before the end of year? My end of year investment in total (besides RSP) is < 10K.

[quote="xiaoice"]Thanks Nelsona.
I am filing "dual-status return". Would that make any difference?
I don't quite understand how to make special declaration. 80 CAD is for the total year. I prepared one PFIC for just this PHN money market using the "market-to-market" election. basically market value on my arrival date, and the date money was transferred out. If I am to report the whole 80 CAD on 1040. I need to specify more details on PFIC, e.g. I sold other mutual fund and the money was transferred to this PHN money market (while I was in Canada)?[/quote]

nelsona · Post by **nelsona** » Tue Apr 17, 2018 11:19 am

I'll leave that for others.

xiaoice · Post by **xiaoice** » Tue Apr 17, 2018 11:26 am

Can you give me more details on "special declaration" on my 1040? I have indicated this is a "dual status return" on top of 1040 form. I will report 80 CAD as other income. But what declaration should I make?

[quote="nelsona"]I'll leave that for others.[/quote]

nelsona · Post by **nelsona** » Tue Apr 17, 2018 11:36 am

When I say "Happy Browsing", it means YOU are to look.

Read my signature...

When I say "I'll leave that for others.", it means exactly that.

January is a good time to start looking at taxes.

nelsona · Post by **nelsona** » Tue Apr 17, 2018 11:47 am

xiaoice,
Clearly you have made your tax situation very complicated, and are dealing with many different accounts and transactions over the past 2 years. included is the nature of this employee savings account.

I would even question your choice of filing dual status, rather tha nfull year 1040, since you are married.

So, I can't undo your timing and decisions, and I won't solve all your problems at this late date in the tax year.