QUESTION: I have recently bought a mutual fund and put it under a Roth IRA. I am a Canadian living in the US for a few years, i am not sure yet if I plan to move back to Canada. What happens if I do move back to Canada-will i be taxed on the money in the Roth? Any advice would be greatly appreciated. Thank you --- david ingram replies: The internal earnings in the ROTH are tax free until you withdraw the money in the US but are taxable in Canada under Current rules. You can find Paul Marin's entire address on the subject at: http://www.fin.gc.ca/news98/98-129e.html The relative passage by Paul Martin when he was finance minister is reproduced here, the bad part in red: Ottawa, December 18, 1998 1998-129 - Paul Martin, Finance Minister of Canada Qualified RRSP Investments and IRAs Finance Minister Paul Martin today announced that he will propose changes to the Income Tax Act and the Income Tax Regulations to address two issues that have been recently raised with the Department of Finance, in the context of retirement savings decisions currently being made by individuals. The changes to the Code have established a new type of IRA, known as a Roth IRA. Under the Code, contributions to a Roth IRA are not deductible, but investment income accrues tax-free and distributions are generally not taxable. Under certain circumstances, an individual may convert an ordinary IRA into a Roth IRA, but is required to include in computing income for the year of conversion the value of the ordinary IRA at the time of conversion. If the conversion is made in 1998, the income inclusion may be spread out over a four-year period. The proposed amendment to the Act would affect Canadian residents who convert ordinary IRAs into Roth IRAs. It would require that the individual include in income for Canadian tax purposes any amount that must be included in income for U.S. tax purposes. This would ensure that the conversion amount is taxed in Canada, even where the IRA is converted simply by amending its terms. It would also ensure that the amount and timing of the inclusion in Canada matches the amount and timing in the U.S., thus allowing individuals to maximize the use of U.S. taxes paid on conversion as foreign tax credits in computing Canadian income tax payable. Mr. Martin noted that the deferral opportunities in the U.S. for Roth IRAs are far more generous than the deferral opportunities in the U.S. for ordinary IRAs and the deferral opportunities in Canada for tax-assisted retirement savings. In particular, contributions can be made to a Roth IRA at any age, and there is no requirement for payments under a Roth IRA to begin by a certain age. Accordingly, there are no plans to provide tax assistance by way of an exemption from or deferral of taxation in Canada on earnings within a Roth IRA. ___________________ This is a good Sunday morning radio program question 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 will be hosting an INFOMERCIAL but 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 Local calls are taken at (604) 280-0600 and Long Distance calls are taken at 1( 866) 778-0600 I do not know how far the LD line reaches. ========================================= This from "ask an income tax and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. 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