Newcomer Tax Question

[aempath]

Dear All,

I would like to learn from the experience of some of the senior members on here. If I land in Canada and post landing open a bank account there, then return to my country to transfer my savings to that account (around 1 month after landing), will that money be taxable?

I tried to look into the option of demand drafts but they are not really offered here in CAD. I would lose a lot on the change if I use travelers cheques. I will be carrying my Proof of Funds with me as cash and will declare it at the airport but my question is for my remaining savings. If i show my bank statement from my home country, can I then declare the savings too to be tax free?

Thanks.

 

[torontosm]

Dear All,

I would like to learn from the experience of some of the senior members on here. If I land in Canada and post landing open a bank account there, then return to my country to transfer my savings to that account (around 1 month after landing), will that money be taxable?

I tried to look into the option of demand drafts but they are not really offered here in CAD. I would lose a lot on the change if I use travelers cheques. I will be carrying my Proof of Funds with me as cash and will declare it at the airport but my question is for my remaining savings. If i show my bank statement from my home country, can I then declare the savings too to be tax free?

Thanks.

No, the funds transferred to Canada will not be subject to tax, even if they aren't declared at landing.

 

[Investocrat]

Hi there!

No, the money you transfer into Canada from your savings abroad will not be taxable. However, when that money gets into your bank account here (savings account), any interest earned on the amount going forward will be taxable. The financial institution will provide you with a T5 return of investment slip at the end of the year which will indicate how much interest you earned on your income and you will have to declare when filing your tax return by April next year. In your first year in Canada, you can open a Tax-Free Savings Account and save up to $5,500 for 2017. Interest earned on funds invested in a TFSA are not taxable. You can read more here: https://www.savvynewcanadians.com/understanding-tax-free-savings-account/
and https://www.savvynewcanadians.com/tfsa-overcontribution-penalty/ for overcontribution penalties.

Also note in case you plan to bring cash:
According to the CBSA, There are no restrictions on the amount of money you can bring into or take out of Canada, nor is it illegal to do so.
However, any time you cross the border, you must declare any currency or monetary instruments you have in your possession that are valued at CAN$10,000 or more. The CAN$10,000 can be any combination of Canadian or foreign currency and monetary instruments, such as stocks, bonds, bank drafts, cheques and traveller's cheques. This requirement applies to you whether you are travelling on business, pleasure or if you are carrying money on behalf of someone else.
When you arrive in Canada with currency or monetary instruments valued at CAN$10,000 or more in your possession, you must report it on Form E311, the CBSA Declaration Card (if one was provided to you), on an Automated Border Clearance kiosk or a Primary Inspection Kiosk, or in the verbal declaration made to a border services officer.

 

[aempath]

Dear Investocrat.

Thank you so much for your detailed answer. It has really cleared things up for me!
+1

I have another query regarding the best method to bring in my savings. I have found that I can get a demand draft made from a family member's bank (as my bank does not make demand drafts). Would this be acceptable as it will not be made from my bank but will be in my name? Could I have issues later proving that these were my savings? The only reason I was thinking of this option is that I can declare my savings at the airport on entry.

Or should I transfer the money directly from my current bank to the new Canadian bank account after opening it (around 1 month post entry)?

Thanks!

 

[Investocrat]

You're welcome!

From what I understand, it shouldn't matter how you bring in the funds into Canada.... via Demand draft or direct bank transfer. Just note that if you bring it in when flying in, you have to declare it to customs. I would probably go with the demand draft option if I could bring that in when coming into Canada. I'm not sure how much it costs to purchase demand drafts, but it's likely to save you in bank transfer fees later.

 

[steaky]

You're welcome!

From what I understand, it shouldn't matter how you bring in the funds into Canada.... via Demand draft or direct bank transfer. Just note that if you bring it in when flying in, you have to declare it to customs. I would probably go with the demand draft option if I could bring that in when coming into Canada. I'm not sure how much it costs to purchase demand drafts, but it's likely to save you in bank transfer fees later.

If the monies are in HSBC in my other countries, I would have move them to my local HSBC instantly and free of charges.

 

[aempath]

Thanks guys! I do not have an HSBC bank account. I might need to get the demand draft made by a family member. I hope I don't face issues later as the demand draft will not have been made through my bank account.

 

[steaky]

There should be no issues, except:

1) not able to cash out instantly,
2) penalty if returned to the issuing bank