[ad_1]
Kim Moody: Local weather, location of family and friends, well being care, value of residing and extra all play a task
Evaluations and suggestions are unbiased and merchandise are independently chosen. Postmedia could earn an affiliate fee from purchases made by hyperlinks on this web page.
Article content material
Canadian personal tax rates could also be too excessive, don’t evaluate favourably with these in america and are driving lots of our successful people out of the country, however to be honest, there are lots of issues aside from excessive taxes that go into a call to depart and grow to be a non-resident for income-tax functions.
As I typically inform lots of my purchasers and colleagues: “Don’t let the tax tail wag the canine.” In different phrases, tax will not be often the only driver behind necessary selections resembling leaving Canada. There are various different components together with: Canada’s chilly local weather; the place household and buddies are positioned; the standard and price of medical companies within the new location; the price of residing — together with housing; the language spoken and general tradition enchantment; political stability/local weather; the flexibility to legally reside within the new location; and the general high quality of life as in comparison with Canada.
Commercial 2
Article content material
Article content material
In additional than 90 per cent of the instances I’ve labored on in recent times — and that’s a variety of instances — purchasers want to stay within the U.S. That’s not a shock to me. The U.S. is actually — for many of the points talked about above — very comparable. It has a hotter and gentler local weather. Medical companies are world class. The languages spoken within the U.S. are nearly the identical as in Canada.
At any time when I converse or write concerning the above, I inevitably get individuals who say Canada’s health-care system is superior to that of the U.S. Sure, I get it, the U.S. doesn’t have common well being care and as an alternative depends on a mixture of public, non-public, for-profit and non-profit insurers and suppliers.
The U.S. does, nevertheless, fund the nationwide Medicare program for individuals 65 and older (and different individuals who require help). However that, non-public for-profit insurance coverage is the dominant type of well being protection within the U.S. and it may be costly in comparison with the associated fee in Canada, which is basically nil in most provinces.
However I don’t assume it’s in dispute that wait occasions in Canada for routine procedures and referrals to specialists are very lengthy as in comparison with that of the U.S. In different phrases, each international locations’ medical techniques have their professionals and cons and have to be thought of fastidiously quite than ideologically.
Article content material
Commercial 3
Article content material
I typically get comparable feedback from some concerning the U.S. political system, with some opining that the U.S. is extra racist than Canada (an assertion that, for my part, is extra grounded in ideology quite than reality) or that their politics are worse. Individuals can actually have their very own opinions — and beliefs — on these issues, however it’s often a minor issue after I’m coping with people who find themselves planning to depart Canada.
From a tax perspective, it takes cautious planning to grow to be a non-resident of Canada. There isn’t any definition of “resident” within the Revenue Tax Act. As a substitute, the Supreme Court docket of Canada — in its 1946 landmark resolution in Thompson v. Minister of National Revenue — decided what the components are that have to be thought of (and nearly each subsequent courtroom resolution to this present day nonetheless considers Thompson).
The Canada Revenue Agency in its folio on the topic has properly summarized the components specified by Thompson and needs to be reviewed for those who’re contemplating turning into a non-resident of Canada. Overly simplified, one should “reduce their ties” with Canada if they’re to grow to be a non-resident of Canada for income-tax functions. In some instances, that’s simpler stated than finished.
Commercial 4
Article content material
The details, not the intention, will decide if an individual has certainly grow to be a non-resident of Canada. For instance, one can’t merely say “I’m leaving Canada to go stay in my cottage within the U.S. and I’m now a non-resident of Canada” in the event that they nonetheless have a house out there to them in Canada, robust financial ties to the nation and different secondary ties.
But when an individual does grow to be a non-resident of Canada for tax functions, that individual will typically be deemed to have disposed of all their worldwide belongings at honest market worth on the date they grow to be a non-resident. To the extent this deemed disposition of worldwide belongings leads to features, then the ensuing tax legal responsibility will have to be paid (or ample safety supplied) for the taxation yr that they “depart.”
Within the tax neighborhood, these deemed disposition guidelines are typically known as the “departure tax” guidelines. What precisely the non-residency date is and figuring out the honest market worth of the worldwide belongings may be difficult.
There are a number of exceptions to the deemed disposition guidelines, with two of the biggest classes being Canadian actual property held personally and registered belongings, resembling registered retirement financial savings plans (RRSPs), registered retirement earnings funds (RRIFs) and tax-free financial savings accounts.
Commercial 5
Article content material
The logic of those exceptions is that Canada nonetheless has a proper to tax you as a non-resident of the nation sooner or later do you have to ever eliminate your Canadian actual property (or be deemed to have disposed of, resembling on demise) and on future withdrawals out of your RRSP or RRIF.
Associated Tales
Accordingly, managing the departure tax publicity and cost could be a very difficult concern — and infrequently costly — for individuals who wish to grow to be non-residents of Canada. Don’t enterprise into this space with out specialised recommendation from a tax skilled who has numerous expertise on this tough space.
Taxes will not be often on the prime of the listing of things for eager to grow to be a non-resident of Canada, however they’re nonetheless an important consideration for the ever-increasing variety of Canadians eager to or contemplating leaving. And, in recent times, this nation’s excessive private tax charges are certainly inflicting many to depart for greener pastures.
Kim Moody, FCPA, FCA, TEP, is the founding father of Moodys Tax/Moodys Non-public Consumer, a former chair of the Canadian Tax Basis, former chair of the Society of Property Practitioners (Canada) and has held many different management positions within the Canadian tax neighborhood. He may be reached at [email protected] and his LinkedIn profile is www.linkedin.com/in/kimmoody.
When you appreciated this story, join extra within the FP Investor e-newsletter.
Article content material
[ad_2]
Source link