Settlement Funds VS Taxation

[ohmygoditsdhaval]

Dear Senior members,

I don't know where to post it, please alert me if I have posted it in wrong place,

I have a query related to the Funds. I am the PA and my dependents are my spouse and my 2 year old kid. As per CIC-guidelines I am required to carry 18K+ CAD say 20K (for sake of simplifying) as settlement-funds on my first landing. I know that I can carry them in the form of Cash/Traveller’s cheque/Bank-draft. I am also aware that any-funds brought along with yourself at the time of 1st landing qualifies as Settlement-funds and you don’t have to pay any Taxes to the Canadian Government on these funds. Till here everything is clear.



Let us assume a scenario: I carry 30K CAD as settlement funds with me. My first landing happens, I declare the funds, they check my Cash/TC/Draft and I am allowed in the country. I become a PR of Canada.



Now, Apart from these funds, I still have money back in my Native-country, which is invested in the form of Mutual-funds and Bank-Fixed-Deposits. This money may be to the tune of 150K CAD, which I finally intend to bring to Canada and utilize it to purchase a house, etc. Now, the questions:

1. Is there any time limit within which I should bring in the my balance – 150K CAD into Canada to avoid paying any Taxes on it? I am interested in knowing this, since many of my Fixed-deposits are locked for a period of 4-5 years, and I would have to pay a penalty/due if I withdraw them pre-matured. I am looking to maximize my gains.

2. Is there a way where in I can declare my balance –150K CAD, at the time of landing, or may be later (similar to Goods to follow) where in I can prove that these funds belong to me and are currently invested in a Locked instrument, and I shall bring them in Canada after a couple of years? Would I be taxed on that?

3. What is the maximum duration within which you are expected to get your balance-funds in Canada to avoid any Tax-circles?

4. Any suggestions/advices from your first hand experiences on how to handle your funds which you want to bring in Canada….but not all at a time.



I know these are way too many questions….but I am extremely nervous, since I don’t want to end-up paying Taxes on my hard earned-money that I have saved all my life.

Please help me.



Thanks in advance,



Cheers,



Dhaval

 

[steaky]

1) No, there is no time limit. However, you would need to declare your assets (bank deposit + mutual fund) in the T1135 form of your provincial tax return. Any income/gains/losses earned in the assets are subject to taxation.

2) No, no need to declare the assets at landing. Just the T1135.

3) Assume you established residency upon landing, it's before you passes away

4) Hire an accountant to file your tax return!

 

[ohmygoditsdhaval]

1) No, there is no time limit. However, you would need to declare your assets (bank deposit + mutual fund) in the T1135 form of your provincial tax return. Any income/gains/losses earned in the assets are subject to taxation.

2) No, no need to declare the assets at landing. Just the T1135.

3) Assume you established residency upon landing, it's before you passes away

4) Hire an accountant to file your tax return!

Hey Steaky,
Thanks a lot for your quick & bang-on reply. I am a bit relieved now.

However, I did a bit reading online regarding T1135,
Isnt it a form that is to be filled by a Canadian resident individual, corporations and trusts that, at any time during the year, own specified foreign property (SFP) costing more than $100,000 ????

Atleast that is what a lot of Law-firms have mentioned it on their pages.

Somehow I didnt find any reference or mention in any websites which I visited and read, regarding using the T1135 form for declaring the Foreign-funds (apart from the SFP)

If that is the case, then what should be done.

What I understood from your reply is, I dont have to do anything at the time of landing apart from showing my Settlement-funds.
Later-on at the end of the year, while filling the TAX returns, I am supposed to declare the Funds in my home-country in T1135....? Which doesnt tally with the description on the other websites..... Please help dear.... I am a bit relieved but more confused.

Regards,

Shah

 

[ohmygoditsdhaval]

Seniors..... Please reply....I am in a confused state of mind.
:-[ :'(

 

[steaky]

However, I did a bit reading online regarding T1135,
Isnt it a form that is to be filled by a Canadian resident individual, corporations and trusts that, at any time during the year, own specified foreign property (SFP) costing more than $100,000 ????

Isn't that you would be a Canadian resident and you said you would be holding foreign assets (mutual funds and deposits) costing around $150,000? If you are not going to be a Canadian resident, then what's the point of bringing settlement funds to Canada and becoming PR of Canada? You do realize that you need to maintain your residency obligation in order to keep your PR, right?

Yes, you do not have to do anything at the time of landing apart from showing your settlement funds.

 

[ohmygoditsdhaval]

Isn't that you would be a Canadian resident and you said you would be holding foreign assets (mutual funds and deposits) costing around $150,000? If you are not going to be a Canadian resident, then what's the point of bringing settlement funds to Canada and becoming PR of Canada? You do realize that you need to maintain your residency obligation in order to keep your PR, right?

Yes, you do not have to do anything at the time of landing apart from showing your settlement funds.

Thanks Steaky,
I would be surely residing in Canada with my family once i get my PR... after all that's what I have been wanting since looooong. I would be a Canadian Resident aswell....for sure and I would surely maintain my residency obligation to keep my PR,

HOwever my Last question was pertaining to the use of form T1135.

I didnt find any reference or mention in any websites, regarding using the T1135 form for declaring the Foreign-funds (apart from the Specified Foreign Property SFP) In my opinion Property = Land/Apartment/House or similar real-estate.

Is CRA considering Assets (Money in Fixed-deposits and Mutual Funds) as Foreign-PROPERTY ????

T1135 is only for the SFP....right???? can it also be used for Funds????? or CRA terms Funds also as property...??? I think there is something wrong here or we are missing something.... please help dear.

Can I leave my money invested for 3-5 years even after being a PR, and then bring them whenever needed????

I am a bit confused here....Please help.

 

[Lammawitch]

Thanks Steaky,
I would be surely residing in Canada with my family once i get my PR... after all that's what I have been wanting since looooong. I would be a Canadian Resident aswell....for sure and I would surely maintain my residency obligation to keep my PR,

HOwever my Last question was pertaining to the use of form T1135.

I didnt find any reference or mention in any websites, regarding using the T1135 form for declaring the Foreign-funds (apart from the Specified Foreign Property SFP) In my opinion Property = Land/Apartment/House or similar real-estate.

Is CRA considering Assets (Money in Fixed-deposits and Mutual Funds) as Foreign-PROPERTY ????

T1135 is only for the SFP....right???? can it also be used for Funds????? or CRA terms Funds also as property...??? I think there is something wrong here or we are missing something.... please help dear.

Can I leave my money invested for 3-5 years even after being a PR, and then bring them whenever needed????

I am a bit confused here....Please help.

The short answer is Yes. . The long answer is here:
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/frgn/1135-eng.html