Tax on money moved to CA before moving there?

[farrelli]

Hey,

I'm planning to move to CA in the next year or two and the conversion rates are approaching a point where I will want to move a few hundred thousand US dollars into a CA bank account that I've had for years. I know that I'll have to pay tax on the interest I make on that money over time, but is the initial money that I make through the conversion taxable?


Thanks.

 

[haver]

The first you have to understand that US dollars in Canadian bank account are not insured in Canada.
The taxation for non-residents and for residents are different.
NR has to pay withholding taxes from the earned interest. It depends on country of residence and vary 10%-35%.
Resident pays income taxes on anual basis depending on total income earned.

 

[toby]

Besides the issue of taxation, there's the question of timing. The Canadian dollar is high relative to the US dollar right now. It has reached these levels before, only to decline again. With the price of oil going down now, the chances of the CDN dollar declining against the USD are good, so why not wait for a while?

Haver, are you sure that US dollar accounts are not insured? In any case, there's not much risk in one of the major CDN banks.

Yes, there will be tax witheld by the bank if you are resident outside Canada. It will depend on whether there is a tax treaty between Canada and your country. If the USA is where you reside and pay taxes, withholding tax will be 15%; otherwise 25%. A deposit of (say) $500,000 USD would earn about 2% these days = $10,000 interest and attract tax of about $60 if you filed a tax return in Canada. Not too serious.

 

[haver]

Toby, I am sure that US dollar account is not insured. This is part of my job for the last 10 years.You can read about bank deposit insurance in Canada here http://www.cdic.ca/e/index.html

 

[Suin]

but if the transferred money are personal savings, do I still need to pay tax on them?