David,
I have been reading your posts for over a year now and find them very
helpful.  In reading this one, you are saying that a foreign pension in
Canada is only taxed at 15%, is this correct?  My husband is a US citizen,
with permanent resident status in Canada.  His income from his US pension,
gets converted to Canadian dollars and added to his Canadian income. So
depending on his Canadian earnings, that is the deciding factor in which tax
bracket he is in. If he only earns $25,000 in Canada, he is taxed much less
on his US pension than if he earns $50,000 in Canada.   I do not think that
his Canadian earning should have any bearing on the amount of tax he is
paying on his US pension.  Please advise how we should be claiming his US
pension, as I feel we are being over taxed.
Thanks
XXXXXXXX
=================================
david ingram replies:
The US pension should be taxed at 15% in the USA as a withholding tax and
then the gross added to his Canadian Income AND TAXED AT WHATEVER HIS TAX
RATE IS IN CANADA.
Then, the tax paid to the US is put on line 431 of the Canadian return and
the gross pension is put on line 433 to claim the foreign tax credit. The
gross pension (converted to Canadian dollars) also goes on line 115.
If he is receiving US Social Security, the situation is a little different.
The gross US social security is reported on line 115 and 15% is deducted on
line 256.
david
----- Original Message -----
From: <centapede at lists.centa.com>
To: "CENTAPEDE" <centapede at lists.centa.com>
Cc: "Webmaster at Jurock. Com" <webmaster at jurock.com>
Sent: Thursday, March 10, 2005 3:47 PM
Subject:  Foreign Tax Credit Canada for US taxes - income
tax,real estate RRSP IRA RESP 401K & immigration expertsdavid ingram &
mutual funds expert Fred Snyder on CKBD 600AMSundays at 9:00 AM
www.600am.com international preparersconsultants preparer con
>
> QUESTION:
>
> I am a recent immigrant to Canada--a US Citizen who is now also a Canadian
> Permanent Resident.  I am trying to develop a personal financial strategy,
> and have one specific question at this point.  I have a large investment
> account in the US with Merrill Lynch, consisting almost exclusively of US
> stocks, bonds, mutual funds, etc.  My understanding is that I will be
taxed
> by the US on the proceeds (dividends, interest, etc.) from that account,
and
> the foreign tax credit that Canada will give me for those taxes I pay to
the
> US will be very limited.  What do I need to do to avoid that almost-double
> taxation (other than renounce my US citizenship)?  Is the issue that the
> investments themselves are US investments, or that the Merrill Lynch
account
> is in the U.S?  In other words, if I were to transfer those same
investments
> to be managed by a Canadian investment company, could I avoid that double
> taxation?
>
> Thanks in advance.
> --------------------
> david ingram replies:
>
> As a US citizen living in Canada, the maximum tax you will pay to the US
on
> interest is 10% and on dividends or pensions or royalties is 15%.
>
> Because you are a US citizen however, M-L will not withhold at the 15% or
> 10% level.  When you calculate your US tax you limit the interest to 10%
and
> the dividends to 15% by filing Form 1116 and recharacterizing the income.
>
> Canada will only allow the credit for the 10% or 15%.  This is a common
> problem and you can refile back three years and of course I would be glad
to
> look after it.
>
> In one case, we got over $45,000 back and $10,000 or $15,000 for
significant
> accounts is not unusual.
> ====================
> Answers to this and other similar  questions can be obtained free on Air
> every Sunday morning.
>
> Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee
Wealth
> Management and I, David Ingram  host a LIVE talk show called "ITS YOUR
> MONEY"
>
> Those outside of the Lower Mainland will be able to listen on the internet
> at
>
> www.600AM.com <http://www.600am.com/>
>
>
> Local calls are taken at (604) 280-0600 and Long Distance calls (BC only)
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