Moving Canadian Assets after moving to US.

[Jay416]

I am a Canadian citizen who was working in Toronto up to the end of June 2012. My companay arranged an intercompany transfer and I was issued an L1-A work visa on June 5th. I started working in our New Jersey office on July 1st. I have since sold my condo in Toronto and have received the proceeds in CND in my Canadian bank account. Transaction closed today. In addition to these cash proceeds, I also have a few brokerage accounts at TD Waterhouse. They are, USD short account, a USD margin account, a CND short account, and a CND margin account. These accounts hold a combination of short securities, long securities as well as cash balances. My understand is that I can not activly manage my Canadian assets now that I am in the US. I want to avoid triggering any additional tax liablities in Canada and need some advice on how best to transfer my assets from Canada to the US.

To convert my CND cash balance to USD cash balances I would typically use my TD Waterhouse accounts to buy an interlisted security on the Toronto stock exchange (settling in CND) and immediately sell the same security on the New York Stock exchange (settling in USD). This has proven to be a very cost effective way to convert CND to USD using my brokerage accounts without paying the huge spreads banks and brokerages charge for FX transactions. Cost is typically ~5 bps vs the 50 - 200 bps charged.

So my question is. Should I be selling and covering all my postions in my Canadian brokerage account via internet based trades and using the above strategy to convert the Canadian balances to USD and wiring the money to my US bank account. Or should I do an in-kind transfer from my Canadian brokerage account to a US brokerage account? Is that even possible? Or is there another approach I should be using. I probably should have dealt with all this before I left but if anyone has any advice on the most tax efficeint course of action, it would be much appreciated.

Thanks in Advance.

[newbie12345]

Hi There,

Really not expert on this. I was in the same situation like you 7 years ago. I am experiencing a painful progress and more that half of my canadian asset to clean up the mess. I am still suffering it right now.

What I could tell is if you want to live in U.S. permenately:

1. It is better to be treated as resident Canada for whole year this year
2. It is better to be treated as non-resident tax to U.S. for this year. (You might travel back to canada for several weeks so that you would not live in U.S. for more than 183 days? check with your accountant or IRS to see how to qualify for non-resident to IRS)

Do this before you need to report tax to U.S. as a resident:
Sell all the stocks, mutual fund, convert all the cash in CND in your hand into U.S. dollar before you become non resident of canada and become resident of U.S.

Open RRSP account with a dealer that would allow you to do mutual fund/stock trading while you are living in U.S.

Sell all the holding in your current RRSPs/ (yes sell them so that the gain you get so far will not be taxable to U.S. in case you retired in U.S.) and transfer the money to the new RRSP account.

If you have DPSP, close it, transfer the balance of them into your RRSP( Nelsona, does the DPSP merge in part taxable to U.S. later if the balance is transfered into RRSP BEFORE become U.S. resident?)

If you have stock purchase plan, sell them .

Keep all the transaction records especially the New RRSP account( the statement for new RRSP opened this year should be kept until you withdraw all of them) for this year.

Don't forget to report to CRA your america financial account if total value is more than 100 k.

Not sure the right way or right time to wire in your money to U.S.:
If I were you, I would go back to canada during the christmas time, spend 3 weeks there to make myself not stay enough time in U.S. to qualify file tax as resident, at the end of the year, close all my financial accounts, turn them into a big money order or bank draft and deposit it into my U.S. account the next year. If IRS questioning about the source of this one big money deposit, show them your canadian records for this year. (Don't forget to keep the copy of your passport so that they have stamp on it to prove you did not live in u.s. for more than 183 days this year. Also, it would track your stay in canada days for future pension calculation

An alternative is: find yourself a really professional international tax expert who does not charge your heavenly high bill :-)

[nelsona]

You have left canada, so you are now resposible for deemed departure tax, which is "as if" you sold your assets anyways, so i would not worry about incurring tax on selling these insruments: its already taxable as of july 1.

You cannot be treated a Cdn residnt fo whole year if you leave mid-year. newbie is wrong on that. the 183 days does not apply when you leave. It is NOT necesarily better to be considere non-resident of US when you are living and working in US.
It woukld have ben better to handle this before you left, but do ing so now is not a problem. Newbiwe spreakls from his own experience of waiting 5-6 YEARS to do what he shhould have done when leaving.


You can transfer stock to a US brokerage, but not Cdn mutual funds.