Moving back to Canada from the US

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can1975
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Moving back to Canada from the US

Post by can1975 »

We are dual Canadian/US citizens moving back to Canada after 10 yrs in the US. Advice is much appreciated re:

#1- if our home in the US is not sold prior to us moving back and reestablishing residency in Canada (for work), will the proceeds, when the house gets sold, become taxable income in Canada, and will it then be subject to US non-resident withholding tax?

#2- are there papers to file to declare that we are no longer US residents? Can we be both Canadian and US residents for tax purposes?

#3- can we keep our assets in US investment accounts as is? If our house is sold and we do not have an US address anymore, will that become a problem? Can we open a Canadian investment account prior to becoming a Canadian resident so that we can transfer the assets?

#4- declaring goods on the BSF186 form when we move back to Canada - are personal items over $10,000 (piano, car) taxable.

Thank you in advance.
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kcowan
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Re: Moving back to Canada from the US

Post by kcowan »

I would suggest that you find a cross border tax consultant asap. All your questions are good ones. You will be paying US taxes until you declare yourselves non-citizens (renunciation). You should decide on a brokerage and then ask them what they need. Your residence can be a rental.
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AltaRed
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Re: Moving back to Canada from the US

Post by AltaRed »

I agree that a cross-border tax accountant should be engaged. There is also information on our own finiki (if you have not read) and there is information on the Serbinski tax forum that may help as well answer your questions. My take:

#1 - Don't believe there will be Canadian income tax on your US residence sale if it has been your principal residence. Am pretty sure Uncle Sam will tax it in some way though.

#2 - as noted... Yes. A US citizen is a US citzen whereever s/he is... forever, until renunciation can be declared. Other dual citizens on this forum can comment better. The US-Can tax treaty though can eliminate most dual taxation through 'foreign tax credits'. Don't know if it applies to dual citizens but returning Canadians should (used to/supposed to) file a 'sailing permit' with the IRS, i.e. a tax return that makes sure all US tax obligations are paid before physically leaving the USA. I am not a US citizen but it is what I did when I physically returned to Canada in April 2006.

#3 - AFAIK, no US investment firm will allow a non-resident of the USA to continue to operate (trade) a taxable (non-registered) account. It would be sales only. You'd have to ask your investment company what they would do for US citizens not resident in the USA. I doubt a Canadian investment firm would let you open an investment account before you have a Canadian physical address. TD DI might. FWIW, transferring actual assets between a US brokerage account and a Canadian brokerage account may be near to physically impossible. I've read a bit of anecdotal information that suggests it might be possible, but I do not know for sure. It may be easier to do between TD Ameritrade (USA) and TD Direct Investing (Canada).

#4 - I am not aware of any personal goods purchased while a resident of the USA (more than I think one year in advance) being taxable when entering Canada. It would be only GST and/or potentially duty if it was anyway. I have never heard of a $10k threshold and I have returned to Canada 4 times over the last 30 years from ex-pat assignments.

You do have to make special provisions though for a car. Go to the Transport Canada site for the paperwork you need to have in place. One of them is clear title (no liens/loans against the vehicle) and the paperwork has to be cleared at the border crossing a few days (I think) in advance of the actual physical import. Depending on the vehicle make, model and year, it will have to be modified to meet Canadian standards, e.g. daytime running lamps. It may not be worth your while trying to import a vehicle, especially if under warranty (some manufacturerers do not accept cross-border warranties). Research carefully.
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kcowan
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Re: Moving back to Canada from the US

Post by kcowan »

We brought a car back from Texas. The border folks accepted my bill of sale (for one third the retail) for GST. I then had to install the running lights and the pay PST on the imported price to get the license at DMV. (This was before HST.)

Principal residence is granted as 1031? to repurchase within 18 months. An out-of-country move might be covered by the tax treaty.
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Re: Moving back to Canada from the US

Post by brucecohen »

AltaRed wrote: 10 Oct 2017 11:01 #2 - as noted... Yes. A US citizen is a US citzen whereever s/he is... forever, until renunciation can be declared. Other dual citizens on this forum can comment better. The US-Can tax treaty though can eliminate most dual taxation through 'foreign tax credits'.
Get professional assistance, as others have suggested. In addition to cross-border tax accountants there are a few firms that specialize in helping Canadians and Americans move across the border.

As a US citizen you will remain in the IRS tax net no matter where you live. As Alta says, the US-Canada tax treaty will eliminate most double taxation and the foreign earned income exclusion will offset US tax due on just over US$100,000 of earned income. BUT various changes since you left have created a number of potential pitfalls. For example, US citizens living in Canada are not advised to open TFSAs or RESPs. Canadian domiciled mutual funds and ETFs are also problematic for those who don't want to risk any problems with the IRS. Renouncing US citizenship is costly: a US$2,300 consular fee plus some minor expenses and a little bit of hassle. Still, consider that if you have no plans at all to move back to the US unless you own or earn enough to get classed as a covered expatriate. There are HUGE ramifications to renouncing as a covered expatriate.

BTW, I think all of the provincial medicare plans kick in only after three months so you and spouse will need private insurance to cover that period. Verify that with the province where you're moving.
can1975
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Re: Moving back to Canada from the US

Post by can1975 »

Thank you all, much appreciated.
Does anyone have a good cross border tax consultant to suggest? We've talked to/looked at a few (cbta.net - will not provide consulting unless they manage our investments; Serbinski - bad reviews; skltax - has not returned my call; pwc - won't take new individual "walk-in" business; .....).
Thanks.
planB
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Re: Moving back to Canada from the US

Post by planB »

can1975 wrote:Does anyone have a good cross border tax consultant to suggest?
I have used both KPMG and PWC, but they were through corp contacts.

4. For your car I believe that you will pay tax/duty on the value above $10,000. (Canadian residents who buy a car in the US to import pay tax on the full purchase price). Note that you will have to get daytime running lights set up on your car to meet Canadian regs (as kcowan mentioned) and get the car inspected.

AltaRed wrote:Don't know if it applies to dual citizens but returning Canadians should (used to/supposed to) file a 'sailing permit' with the IRS, i.e. a tax return that makes sure all US tax obligations are paid before physically leaving the USA.
I had to do this for a past assignment in the US, but KMPG recently advised that this process is no longer required (for expats anyway). Just submit a final US resident return as usual covering income up to your moving date.
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