Deemed disposition of Candian property - International non-resident cross border expert income tax & immigration help estate
Subject: Deemed disposition of
Canadian property when getting a green
card
Expert: [email protected]
Date: Monday January 21, 2008
Time: 07:47 AM -0000
QUESTION:
My son is sponsoring me for a US green card - I am a Canadian citizen and have a single family home in Canada. I hope to retain this home in Canada as I will be like a "snowbird", spending a few months in US and a few months in Canada.
How does the "deemed disposition" law in Canada affect me?
If I were to see you at your office, what are your rates - are they for full hours or for portions of an hour? Thank you.
-------------------------------------
david ingram
replies;Expert: [email protected]
Date: Monday January 21, 2008
Time: 07:47 AM -0000
QUESTION:
My son is sponsoring me for a US green card - I am a Canadian citizen and have a single family home in Canada. I hope to retain this home in Canada as I will be like a "snowbird", spending a few months in US and a few months in Canada.
How does the "deemed disposition" law in Canada affect me?
If I were to see you at your office, what are your rates - are they for full hours or for portions of an hour? Thank you.
-------------------------------------
Unless you intend to work in the US, getting a green card is likely a waste of time and money and will just create tax problems for you because you wil have to file two and maybe three tax returns. Anybody can be a snowbird without a green card.
If you are intending to work for all or part of ten years in the US, then getting a green card is the way to go because you will qualify for Social Security MEDICARE which is every bit as good as our own BC Medical.
In the meantime, with a green card, your BC medical will be cancelled and even if not cancelled officially, if you do have a medical emergency requiring a lot of medical expenses, BC medical will not cover you if they find out you have a green card. In fact, if they paid for something in 2009 and in 2015 found out you had a green card in 2009, they (BC medical or Ontario or New Brunswick medical services) will bill you retroactively for up to 10 years. Does this happen? Yep!
I have had clients billed for up to $175,000 by BC Medical when BC Medical found out they were living in the US.
The reason is simple. With the exception of Ontario, every other Province and Territory requires a person to sleep in their province for more than 183 nights to qualify for their medical. Therefore, a person who spent tfour months each in three different provinces would technically not qualify either.
However, to keep your Green card, you are supposed to be Living (sleeping) in the US for more than 183 days. You can fuidge it for a year or two but BCMedical, for one, is very efficient when it comes to tracking down people in this situation. For instance, I am positive that someone goes through the parking garage at Burnaby General looking for US licence plates and turning people in to BC Medical.
If you have to buy Medical in the US, you could find yourself paying anywhere from $300 to $700 a month and even end up buying a medical plan that does not cover a pre-existing condition which leaves you to pay the big bills.
For instance, one lady I know was billed by BC Medical three years later for a kidney transplant even though she worked in Canda and paid all her tax to Canada and was a member of a corporate Extended medical plan. She actually lived in the US and commuted every day to her job in Richmond.
If you are leaving Canada, you must file a departing Canada tax return which would involve filing a T1161, 1243 and 1244.
The US then has some hefty reporting rules regarding your RRSP, etc.
I charge $400.00 an hour and as a minimum for consultations in person or by phone. I am assuming you are in the lower mainland because you suggested coming to see me.
---------------------------
The following about ddeparting Canada might help a little.
QUESTION:
I am a Canadian with an L -1 A inter-company transfer VISA and have sold everything and have moved to the USA. I have purchased a home in Texas where I am working/residing and my daughter attends school. I am being paid and taxed at source in US dollars. Intention is to stay permanently and obtain green card. In the meantime, will I have any tax obligations ?
david ingram replies:
As described, you have no further tax obligations to Canada other than filing a final departing Canada return.
Your final Canadian return should show the date of departure and the exemption amounts on Schedule 1 and 428 should have the amounts pro-rated by the number of days you were physically in Canada. I.e number of days in Canada divided by 365 times the amount on line 300 as an example.
Everything you own is considered to have been sold at the time of departure and if there is a capital gains, there will be departure tax to pay or you will have to post security WITH THE CRA.
If you had left a summer cabin or stock portfolio or other assets worth more than $25,000 behind, you would need to file form 1116
http://www.cra-arc.gc.ca/E/pbg/tf/t1161/t1161-06e.pdf
Complete this form T1161 if you ceased to be a resident of Canada at any time in the year and the fair market value of all the properties you owned when you left Canada was more than $25,000, not including the following properties: i) cash (including bank deposits); ii) pension plans, annuities, registered retirement savings plans, registered retirement income funds, retirement compensation arrangements, employee benefit plans, and certain other deferred benefit plans; iii) property you owned when you last became a resident of Canada, or property you inherited after you last became a resident of Canada, if you were a resident of Canada for 60 months or less during the 10-year period before you emigrated and the property is not taxable Canadian property; and iv) any item of personal-use property (such as your household effects, clothing, cars, collectibles) that has a fair market value of less than $10,000. Attach a completed copy of Form T1161 to your income tax return. File your return by the filing due date. The penalty for failing to file Form T1161 by the due date is $25 a day. There is a minimum penalty of $100, and a maximum penalty of $2,500. List of properties List below all properties and their fair market value, and indicate either (C) for Canadian or (F) for foreign properties (outside of Canada), that you owned on the date you ceased to be resident of Canada. Property includes shares (both public and private), bonds, debentures, promissory notes, treasury bills, interests in trusts, interests in partnerships, personal-use property, business property (including inventory), real estate, and security option benefits. Do not list any property described in (i) to (iv) above. If you need more space, attach a separate sheet of paper. -----------------------------------------------------------------------------------------------------
If you were leaving a cabin, Or stock portfolio or rental house or trust behind or if you had owned a place in Texas for five years and it had gone up in value, then you would have had some deemed sale departure tax,. You would calculate it out on forms 1243 and 1244 and might have to post security with the CRA at the time if you did not have the cash to pay the tax.
However, if you sold everything before you left, you will not have 'departure' tax, but you might have capital gains tax to pay on your final return because of the actual sales as opposed to a deemed sale.
-------------------------------
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Therefore, if an email is not answered in 24 to 36 hours, it
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This is not intended to be definitive but in
general I am quoting $800 to $2,800 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only - no self employment or rentals
or capital gains - you did not move into or out of the country in this
year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no
rental
$1,200 would be the minimum with a move in or out
of the country. These are complicated because of the back and forth foreign tax
credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,500 would be the minimum with a rental or two in
the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,600 would be for two people with income from two countries
$2,800 would be all of the above and you moved in
and out of the country.
This is just a guideline for US / Canadian
returns
We will still prepare Canadian only (lives in
Canada, no US connection period) with two or three slips and no capital
gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely
$450
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate a
couple)
Capital gains *sales) are likely $50.00 for
the first and $20.00 each after that.
Just a guideline not etched in
stone.
This from "ask an income trusts tax and immigration expert"
from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily
basis with expatriate tax returns with multi jurisdictional cross and
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