0700
QUESTION:
Hello,
I am a Canadian that will be marrying a US citizen and moving to the US
permanently. I will sever all ties to Canada i.e. cancel my credit card,
sell my home, return my health card etc. However must I sell off my RRSP
investments as well? I understand as a non-resident I can no longer can
contribute to my RRSP since I will no longer file a tax return in Canada.
But I heard that they prefer I liquidate my RRSP investments and that I will
have to claim this in my US income tax return anyway. Also what the heck is
withholding tax???
Help, I am seriously confused because there is no clear information in
regards to our options with RRSPs on the Revenue Canada website or anywhere
on the internet!
Thank you,
-----------------------------------------------
david ingram replies:
There is no onus upon you to sell your RRSP investments. In fact the US
Government has two forms you will need to fill out to satisfy their
requirements. You will need to fill out US Forms 8891 and TDF 90-22.1 to
report the internal earnings of the RRSP accounts and the existence to the
Department of the Treasury. That will be it unless you are in California
which is the only state that does NOT recognize the treaty exemption and
does tax the internal earnings of your Canadian RRSP.
You can find the details of these two forms at www.irs.gov.
I deal with the 8891 and TDF forms every day but very few financial
advisors, mutual fund salespeople or bank employees understand "how" you
keep your RRSP accounts in Canada and what they can do with them for you.
If you wish to keep them you will likely have to transfer them to someone
who understands what has to be done. And, the ruling about what can still
be done depends upon what state you are going to since each state has a
different rule about "who" can deal with the finances of one of their
residents.
I have not kept up with this.
However, I am happy to refer you to someone who has.
Give Sean Rickerby a call.
The following Q & A will help you I am sure.
------------------------------------------
My_question_is: Applicable to both US and Canada
Subject: Investing in Canada while living in the U.S.
Expert: taxman at centa.com
Date: Saturday May 06, 2006
Time: 09:13 AM -0700
QUESTION:
I am a Canadian working in the United States as an expatriate with my
company. As a part of their tax equalization policy my company pays all of
my U.S. tax on Canadian sourced income. Also, all of my compensation is
actually paid into a Canadian bank account. However, if I transfer
investments to the U.S. I pay any U.S. tax on the gains/interest/dividends.
Therefore if it is Canadian sourced income - I only pay the small
withholding tax (10 or 15% depending on interest or dividends.
The catch is that TD Waterhouse in Canada will no longer let me buy any
Canadian securities/mutual funds/etc. since I am a resident of the U.S. My
question is - are there investment houses in Canada that will sell
securities to U.S. residents and do the proper with-holding of non-resident
tax for dividends or interest.
Thanks,
-----------------------------------
david ingram replies:
Whether it fits your company's criteria or not, I do not know but Sean
Rickerby of TD Waterhouse has been working to solve your problem. I believe
that there are fairly substantial minimums however.
You will have to ask him directly. Contact him as follows:
Shaun Rickerby CFP, CIM, FCSI
Associate Portfolio Manager
Snr. Investment Advisor
TD Waterhouse Private Investment Advice
604-482-5188
604-482-5183 Fax
888-955-7255
His email address is: Shaun.Rickerby at td.com
If he can not help you with the answer, he can tell you how to get around
it, if possible.
----------------------------------------------
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