However, the process may not be as simple as transferring securities between two Canadian financial institutions. It may take a long time to cross the border, and there may or may not be a tax benefit.
MoneySense’s ETF Screener tool
Tax implications of transferring investments
If your main reason for transferring your investments, Meranda, is to avoid tax, your tax stay will be important. If you leave Canada and cease to be a tax resident, you will have the opportunity to invest your money. This means that the securities will be treated as if you sold them at fair market value on the day you removed them. As a result, transferring them to the US will not save you tax. In fact, it may cost you.
When you move to the US, your actual cost basis becomes your cost basis for US capital gains tax purposes. This differs from Canada, where the market value of your investment when you immigrate becomes your adjusted cost base (ACB). As a result, if you become a US citizen, especially for a long time, you may want to consider selling your investments before you move.
That said, you may be able to deduct the tax payable in the situation you are considering. To do this, your tax liability must be more than $16,500 (or $13,777.50 for Quebec residents). You can make this election by filing Form T1244, Election, under Subsection 220(4.5) of the Income Tax Act, to Defer the Payment of Tax on Income Related to a Real Estate. You must provide adequate protection to the Canada Revenue Agency (CRA) for the tax you owe in order to defer it. Security may include a pledge of the goods themselves or a letter of credit from a Canadian financial institution.
As a US resident, you may have disclosure requirements or negative tax implications of any non-US assets, including Canadian bank accounts, GICs, stocks, bonds, ETFs and/or mutual funds. So, this may be another reason to start over with US investments.
If you transfer the investment simply because you want to hold a US retail company, Meranda, and you remain a Canadian tax resident, there will not be any tax implications.
Canadians are taxed on their worldwide income, so holding their money outside of Canada will not make them tax-free.
As a Canadian resident, you will generally be subject to a 15% US withholding tax on US securities you own, whether you hold them in the US or at a Canadian brokerage. This withholding tax can be claimed on your Canadian tax return as a foreign tax credit.
Source link
