Unlock LIRA – non-resident and NR73

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
Post Reply
MaxwellNR
Newcomer
Newcomer
Posts: 2
Joined: 15 Dec 2016 22:29

Unlock LIRA – non-resident and NR73

Post by MaxwellNR » 15 Dec 2016 22:34

I declared myself as a non-resident of Canada on my 2015 taxes. I severed all ‘significant’ residential ties with Canada and established a permanent residence, job, medicare, etc. in Australia. However, I have retained some important ‘secondary’ ties including Canadian bank accounts / investments, credit cards, and a professional membership. Some of those accounts still have a Canadian mailing address (my parents) for simplicity.

I am now approaching the 2-year point that would qualify me to unlock a LIRA in Alberta. My intent is to convert it into a regular RRSP so there are no tax consequences and I don’t have to wait 20+ years to access it if / when I eventually return to Canada.

Doing so will require a written declaration from the CRA to confirm my non-resident status, which means having to file the dreaded NR73 form. Does anyone have experience with filing an NR73 as a resident of a treaty country? The cost of triggering a fight with CRA outweighs the benefits of unlocking a LIRA, but the tax treaty seems to eliminate any risk of CRA challenging my status despite numerous secondary ties.

Has anyone done this?

MaxwellNR
Newcomer
Newcomer
Posts: 2
Joined: 15 Dec 2016 22:29

Re: Unlock LIRA – non-resident and NR73

Post by MaxwellNR » 08 Jan 2017 22:33

In case it helps anyone else, I've found the law for unlocking a LIRA as a non resident. This appears to confirm that non residents can unlock a LIRA and transfer it directly into an RRSP (therefore avoiding any tax consequences):
EMPLOYMENT PENSION PLANS ACT
Chapter E 8.1
https://www.canlii.org/en/ab/laws/stat/ ... e-8.1.html

(2) If, under a plan text document, it is possible for a lump sum to become payable to a person, the plan text document must provide that, when the lump sum is payable, that sum may, if and to the extent that the Income Tax Act (Canada) allows, be transferred to an RRSP, with or without conditions, at the option of the person to whom the lump sum is payable.

71(4) If a benefit has been transferred to a locked‑in retirement account or a retirement income arrangement, the contract for the locked‑in retirement account or retirement income arrangement must provide the following:

(b) a person who is the owner of the account or arrangement, or his or her surviving pension partner, may, subject to and in accordance with the regulations, withdraw as a lump sum the money held in the account or arrangement on providing to the person who maintains the account or arrangement written evidence that the Canada Revenue Agency has confirmed the status of the owner or his or her surviving pension partner as a non‑resident for the purposes of the Income Tax Act (Canada);
My main question remains - does a tax treaty between Canada and another country override the CRA rules for secondary ties so that I will be deemed a non-resident if I submit form NR73? If anyone can help it would be appreciated.

egc123
Newcomer
Newcomer
Posts: 1
Joined: 31 Aug 2017 06:32

Re: Unlock LIRA – non-resident and NR73

Post by egc123 » 31 Aug 2017 06:36

MaxwellNR did you ever get a useful response on this, or end up submitting your NR73?

Very curious on your experience if you've already submitted, as I'm similarly coming up to 2 years as a non-resident, with only banking secondary ties to Canada, and residency in a tax treaty country. Any comments appreciated.

User avatar
adrian2
Diamond Ring
Diamond Ring
Posts: 11522
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: Unlock LIRA – non-resident and NR73

Post by adrian2 » 31 Aug 2017 13:40

egc123 wrote:
31 Aug 2017 06:36
MaxwellNR did you ever get a useful response on this, or end up submitting your NR73?
FWIW, his last activity timestamp = 08 Jan 2017, 22:37
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]

Post Reply