Emigrant status

[jackalo]

[Sorry for the long post]

I filed my 2006 return last year. CRA made a mistake in calculating my departure date and sent me a big bill. After a appeal and reassessment, they corrected the federal tax bill. I still had to play 450 for Ontario Health Plan!!

Few questions to close the loop on the whole Canadian non-resident deal:

1) On the last reassessment notice, i was classified as Emigrant. Is this the right status for a Canadian citizen now living in US [us resident]? Do i have to file any type of return for 2007 and onwards - my departure date was in 2006.

2) I still can't understand why i was charged Ontario Health plan as i was non-resident for 8 months in 2006. My card has expired in 2005 December and i never renewed. Is that a mistake? Again, I'm assuming, for 2007 and onwards, i don't have to file any return.

3) I had two stocks that i moved to US and i sold them in 2007. To report the loss, should i use the stock price as of my departure date or original date of purchase [i read on the forum that i can use either , specially if original stock price was lower then the one at time of departure].

4) I'm sick of dealing with TD waterhouse for my RRSP portfolio. How can i start withdrawing money without any taxes ?[i have significant joint income in US.] Do i have to pay taxes in Canada and US for the withdrawal? i.e. will i be charged Canadian tax for Canadian income rate and US tax based on my total us income [e.g. Canadian income - 8000 based on withdrawal of 8000 and us income 108 if i have 100k of joint income in US]

5) After a long struggle, I was able to import my two CA cars in US. Do i need to fill out any paperwork in Ontario where cars were originally registered?

6) Any other crazy forms that i i need to fill out with Ontario state or CRA based on my emigrant status?

Thanks.

[nelsona]

1. Emigrant was correct for the year you left. It now means you are non-resident. So, unless you had specific income from canada during a subsequent year, you will not have to fierl a return in canada.

2. You were a resident of ontario in 2006, so were subject to all Ontario taxes.

3. You have the choice. You can either use the 'normal' cost basis (ie. linked to the original purchase price), or the price that was used on your departure retun in 2006. You always have that choice.

4. Any and all RRSP withdrawls made by you, unless you have little significant world income, will be charged 25% flat tax, which cannot be reduced. If you have little world income, you can take out ~$10,000 year with no tax, by filing a 217 return. You would know this by reading your emigrant guide.
How your RRSP withdrawl will be taxed in US is dealt with in other threads. You would essentially be taxed in US only on the growth of the RRSP since becoming US taxpayer. You are familiar with form 8891 of course.

5 & 6. No

[nelsona]

Just to elaborate on #3. Rememebr that your cost and selling price must be expressed in US$ at the time the cost or sale was incurred. So C$10 in 2000 would be US$6, and C$10 in 2006 would be US$8 and C$10 today would be US$10.

So a stock which might have lost money in Cdn terms may have actually gained in USterms over the last few years.

[jackalo]

Hi Nelson

Thanks for your quick reply and clarification.

3) Well the stocks were US stocks. So i won't have to use any conversion. I can simply plug the original US prices and US prices @time of sale.

4) I guess i will be holding on to the RRSP for now. I filed my 8891 last year. Is that something i have to file every year?

Also to add to the list of questions:

7) I read on the forum that few people recommend to keep bank account and credit card. I closed them all but was just wondering whether I need to reopen them.

8) Is there an advantage to contribute to RRSP, if long term i want to move back to Canada? Only advantage I can think is Income growth under RRSP won't be taxed in US. Can I even contribute to RRSP? I still hate TD waterhouse and i hope that they will allow US residents to trade online instead of their stupid phone in service.

[nelsona]

3. Yup
4. yup
7. Don't bother now.
8. No advantage. There are other ways to shelter growth, like buying a house. You are stuck with the phone system, this is a regulaory issue. You can ask them to charge you the same fee as if you did it online, though.

[nelsona]

may I ask what your beef is with TDW?

[jackalo]

Thanks again for your replies.

TDW sucks for many reasons:

- Their web interface is very primitive and CS sucks, i mean Customer No Service.

- I had several bad experience with their Accounts department. Took them 2-3 months to transfer my portfolio from two seperate RRSP accounts held at different banks. I was waiting for securities and cash to transfer. I didn't see anything for 2-3 weeks and when i called them they told me that they had some issue. They could have called me. Worst part it happened twice at both banks!!! Surfing the form reflects that i'm not alone with this issue.

- Recently i asked them to make a change on my account. Once again i had to submit all forms by mail - takes them 5-10 days to process. After followup i found out that the CSR had given me wrong info for mailing and i had to resubmit. This is not the first time either. I have called their CS and based on who you talk to, you get different address for mailing info/department who handles requests.

- Everytime you call their trading number, specially when market is active, expect a long delay. It really sucks that US residents can't do any kind of automated trading.

- They are not diverse in their fixed income portfolio/funds. So you miss out some good offerings.

Sorry for the rant. I have submitted all the problems to their CS dept but it's business as usual for them.

[nelsona]

When you say "they" do not have diverse fixed income funds, what do you mean by "they", Doesn TDW offer 100's of fixed income funds?