Taxation for a non resident before being a resident

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Wing
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Taxation for a non resident before being a resident

Post by Wing »

Will be moving to Canada in a month.

I've sent some USD into my non resident bank account last month and they are sitting in the HISA savings account since. Wondering if I need to report any taxes to account for the non-residency period.

Qs:

1. Is the interest so earned taxable? How is it being reported?
2. Do I need to report the FX change as a capital gain, up to the date I formally enter Canada?
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Norbert Schlenker
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Re: Taxation for a non resident before being a resident

Post by Norbert Schlenker »

Wing wrote:Will be moving to Canada in a month. [q/uote]
From where?
I've sent some USD into my non resident bank account last month and they are sitting in the HISA savings account since. Wondering if I need to report any taxes to account for the non-residency period.
Does your current domicile have a tax treaty with Canada? That will govern.
Qs:

1. Is the interest so earned taxable?
Depends on the tax treaty. If there is none, then it's taxable.
How is it being reported?
A "high interest" USD savings account? Earning 0.05% per year? Unless you've parked multi-millions, it isn't going to be reported because there's a de minimis $50/account/year reporting limit.
2. Do I need to report the FX change as a capital gain, up to the date I formally enter Canada?
Not to Canada, because you're not taxable as a non-resident.
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GrowthGeorge
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Re: Taxation for a non resident before being a resident

Post by GrowthGeorge »

Im also planing to move to Canada but not until September. If i understand it correctly, as per you answer Norbert, I would still get taxed in my home country (Sweden) until i become a resident for a high yield savings account? I will look into if we have a treaty or not.
Wing
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Re: Taxation for a non resident before being a resident

Post by Wing »

Norbert Schlenker wrote:
Wing wrote:Will be moving to Canada in a month. [q/uote]
From where?
I've sent some USD into my non resident bank account last month and they are sitting in the HISA savings account since. Wondering if I need to report any taxes to account for the non-residency period.
Does your current domicile have a tax treaty with Canada? That will govern.
Qs:

1. Is the interest so earned taxable?
Depends on the tax treaty. If there is none, then it's taxable.
How is it being reported?
A "high interest" USD savings account? Earning 0.05% per year? Unless you've parked multi-millions, it isn't going to be reported because there's a de minimis $50/account/year reporting limit.
2. Do I need to report the FX change as a capital gain, up to the date I formally enter Canada?
Not to Canada, because you're not taxable as a non-resident.
There's no tax treaty. You're right that the interest will be minimal but I'm afraid it just passed the $50 mark, the bank is offering 0.25% return. I read on different sites that interest income will be withheld by the bank but my bank rep told me they won't. So, just wondering how to go about reporting it. I know, it's a hassle, but trying to be a good citizen here. If they withhold it, then I don't need to do anything and in my case, better.

Good that the cap gains not reportable in Canada while being a non-resident. With the strong CAD since beginning of the year, no gain indeed.
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Norbert Schlenker
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Re: Taxation for a non resident before being a resident

Post by Norbert Schlenker »

I was mistaken. :oops:

There's no longer any Canadian tax payable on interest paid by a Canadian party to an arms length non-resident. (A tax treaty could modify this, but the current model treaty language has the same effect. There are unlikely to be many treaties left that contradict this treatment of interest.) So a Canadian bank isn't going to withhold anything from the interest they pay, nor are you on the hook (to Canada) for anything as long as you're non-resident. There may of course be a tax effect in your current country of residence.

When you become a resident of Canada, let the bank know. They're still not going to withhold, but they are required to report interest paid to you. You will be liable for Canadian tax on any interest earned post-settlement in Canada.
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AltaRed
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Re: Taxation for a non resident before being a resident

Post by AltaRed »

GrowthGeorge wrote:Im also planing to move to Canada but not until September. If i understand it correctly, as per you answer Norbert, I would still get taxed in my home country (Sweden) until i become a resident for a high yield savings account? I will look into if we have a treaty or not.
Until you become a non-resident of Sweden, I imagine Sweden would tax on worldwide income.....so yes. Check what the income tax rules are. Any tax treaty would not affect what Sweden does until you move, but Canada is not likely to withhold any taxes on a Canadian domiciled HISA until you become a tax resident of Canada and have to file Canadian income tax forms.
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Re: Taxation for a non resident before being a resident

Post by scorpionman »

I believe sweden and Finland have a law that when you leave, you are still considered resident for like two or three years after departure year . Quit a few countries are starting to do this , it's a form of departure tax in various forms.
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Re: Taxation for a non resident before being a resident

Post by GrowthGeorge »

scorpionman wrote: 19 Feb 2017 14:08 I believe sweden and Finland have a law that when you leave, you are still considered resident for like two or three years after departure year . Quit a few countries are starting to do this , it's a form of departure tax in various forms.
Yes I believe at least Sweden have it!


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