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QUESTION:
My husand lives in Canada and works in U.S. He is a U.S. citizen. He was
paying into a 401K which we learned is not tax deductible in Canada.
Therefore, in the year 2002, we paid tax on the investment.
Last year (2003), he cashed the 401K to purchase our home. He received a
statement noting the total amount of the 401K income cashed + interest
withdrawn.
Question: Since he already paid tax on the amount of the 401K in 2002, does
he have to pay tax on it again in 2003?
Thank you.
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david ingram replies:
He should do a detailed accounting of what he put in and deduct that from what he took out.
Although this is not officially stated CRA policy, it seems to be acceptable even though it is in direct confrontation with an official announcement by Paul Martin when he was Finance Minister..
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