Moving to canada - what to do with investments

[rajaijah]

I got my permanent residency in canada and planning to move from USA to Canada summer 2010. I have investment account with

fidelity and scottrade (regular)
vanguard (ROTH IRA)

I know its best to leave the roth IRA untouched (if not needed now) since one can withdraw tax free during retirement even when in canada (correct me if I am wrong)


most of the stocks i own in regular investment accounts will be sold this year to take advantage of the 0% long term capital gains tax rate in USA for 2010.

what is the best way to move the investment assets? can i do a account transfer or do i have to cash out, transfer the money to CAD and open an account there.

The total investment asset worth is declared when i first crossed the border.

Hopefully there are some folks who have some experience, idea , suggestions.

 

[OrangeCounty]

As far as I know one doesn't need to declare ALL assets when landing. Only the cash/cash-equivalents like CDs or cashier's check need to be declared. When these assets are brought into Canada at a later stage, then one needs to show source of income.

Probably some experts like PMM/Toby/Karl will be able to confirm.

 

[jckdry]

i have the same dilemma
i have investments in stocks at sogotrade and they ask me to close the account as canadian resident is not eligible for it
also, the retirement money - whether to cash it out paying the tax or to continue it in canada????

 

[toby]

You must be prepared to show the fair market value of your investments when you establish residence in Canada. So, run a statement the day of entry. You may never have to show CRA, but it's better to be prepared if they ask.

That value becomes the Ajdjusted Cost base (ACB), and any gains above the ACB will be taxable at some point:
(1) when cashed for capital gains (low tax rate),

(2) when cashed or received for dividends (higher tax rate unless received via a Canadian Controlled Private Corporation, which dos not aPply to immigrants);

(3) when accrued (whether received or not) for interest income (highest tax rate).

You can have offshore investments when living n Canada. If they are taxed in a tax-treaty country (like the USA), there is a bit of bother about showing Canada the tax already paid, so Canada doesn't tax you a second time. But it can be done.

The Roth is something different. I know that some Canadians with similar Canadian plans (RRSPs) went to the USA, and while they were there they could not make changes to their RRSPs (left back in Canada). Check the situation on your side of the border, and maybe switch out of any aggressive investments that might plummet while you watch helplessly from Canada.

 

[ngopal]

With the usual disclaimers (ie - just an opinion, always consult with a professional) here are some basics:

Toby is correct - be prepared to show all (fair market value) FMV of all assets at the time of your crossborder move.

1. You have to declare the FMV of your accounts when you switch sides (or declare thus for your tax residency purposes).

2. Roth is currently treated similarly to a foreign investment account in Canada (conversely the TFSA gets similar treatment in the USA) You will pay taxes as if it were foreign income (pls verify w/ tax professional).


3. Without sounding solicitous, there are dually-licensed (Canada & USA) firms like mine (Pacifica Partners Capital Management) who specialize in this arena (crossborder investment management/financial services). For example, we commonly manage IRAs for Americans in Canada and RRSPs for Americans in the USA - whereas they are "locked" elsewhere. I can recommend a tax professional(s) if you wish.

As always please make sure you do the appropriate research to deal with someone who meets your needs best.


Naveen

 

[toby]

I re-read the comments above, and when it is said that Scottrade (USA) wants you to close out the US-side account, I am guessing that the person ar Scottrade did not advise you thoroughly. It sometimes happens that people manning telephones have an incomplete knowledge of solutions.

I am almost certain that you can open a Scottrade account when in Canada. So surely you could convert your USA Scottrade account into a Canada Scottrade account without too much trouble, and perhaps simply "transfer" the holdings (stocks, ETFs, etc) over to the new account without actually having to sell and buy.

 

[niwrrehs]

Ca i ask y are you moving from US to canada?

 

[KarenCee]

Ok...let me see if I can write this out without being confusing:

I have an account with Edward Jones here in the States. I did some searching and I know there is a branch of Edward Jones in Yarmouth NS. I am considering taking an early retirement before I am allowed to cross the border and have my retirement benefits deposited into my EJ account. Would this be something I have to declare at the border in terms of investments? My long range plan is to open a mutual fund and start contributing to it before retirement and then have my retirement benefits put in there as well. Retirement is just a consideration because either way I am going to have to quit my teaching job before I move anyway and because it is required of the state where I work, I have retirement funds automatically deducted from my pay. I will have to do something with this lump sum and rather than cash it out and pay a penalty I thought putting it in a mutual fund would be better. I have plans to discuss all this hopefully next week with an EJ rep. Seeing this thread I though I'd ask and then have something to take with me when I do speak with him.

Did I make any sense?