Hello good people of desi forum. I think some of you may know that I recently moved to Canada from the U.S. I have this nagging worry about the money I left behind in the U.S. I showed about 200,000 US$ when filing my application for immigration to Canada in skilled worker category. The money has been parked in various investments. Now that I am here, I would like to move it to Canada. Specifically, I would like to put it in GICs for now with the SBI Toronto (they do offer nice interest rates on US funds). I am hoping that somebody out there may have moved similar kind of money between these two countries. Is it advisable to haul all of it (a lil over quarter million) at once as cashier's checks or is it advisable to put it in checking account in the US and keep writing large checks (for 25 grand or so) every week or month to my account in Canada? All your insights are greatly appreciated. Let me thank the good desi people out there beforehand.
Hi,
There are no tax implications on the principal (value of your investments you became a PR / landed in Canada).
However, you are liable for taxation on the income from these investments after you land in canada.
for e.g.
Say you landed on 01 Jan 2007;
You have $1000 in savings account;
You earn $100 in interest after that date; this is the amount that will be taxed at your marginal tax rate. (0% tax in US for non resident aliens)
for stocks, its different
Say you have 100 MSFT & the price is $25 on 01 Jan 2007; this becomes your purchase price for canadian tax purposes (irrespective of what u paid for buying these shares).
if you sell them @ $30; you earn $5 per share and that is taxed as capital gains as per the Canadian tax laws. . (0% tax in US for non resident aliens)
You can submit a Form W-8BEN to these institutions / banks to claim tax witholding according to the special US-Canada tax treaty rates.
You are not required to move all the money to Canada. You can leave it in the US in various forms if you don't need it. You may be able to avail of better interest rates in the US for USD funds than in Canada.
If you want to move the money, check out XE trade - http://www.xe.com" rel="nofollow">LINK They offer better rates and service than most banks. This site also allows you to place a bid on the exchange rate which will be honored when the market exchange rate reaches this amount.
Let me know if you have any other questions.
Ash
My local Canadian banker tells me to write checks and move it the easy way. I have already started doing it. I don't mind paying Canadian taxes on the dividend/interest income but would be incredibly pissed if I have to pay even a nickel on the principal. Afterall, Canada does get the money added to its economy as it is moved to the local banks.
Location: Western Hemisphere
Posted on: 29-06-07 08:21:04
Ash_canada has explained it well. There is no interest on the chunk you move and all the tax implications are on the interest/dividends/cap gains earned on the chunk after it is moved.
Of course, as a Cdn resident for tax purposes, you will have to report earnings on your US investments as well.
Also, there is no need to move the money from US and you can continue to invest in the US based accounts. If the US institution gives you this 18th century grief that they cannot handle canadian address, tell them to shove it up their rear and move the money to institution that thinks globally.
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Dimple2001
Quote:
Originally posted by dimple2001
Ash_canada has explained it well. There is no interest on the chunk you move and all the tax implications are on the interest/dividends/cap gains earned on the chunk after it is moved.
Of course, as a Cdn resident for tax purposes, you will have to report earnings on your US investments as well.
Also, there is no need to move the money from US and you can continue to invest in the US based accounts. If the US institution gives you this 18th century grief that they cannot handle canadian address, tell them to shove it up their rear and move the money to institution that thinks globally.
It might be in his best interest to move the money/assets to Canada. For example, if you earn dividends on your stock (if the money is invested in stocks), then the US brokers have to witheld the NR tax. Then you claim it as your income on ur cdn return and then take foreign tax credit on the dividend witheld in your cdn return and you lose some money in the overall transaction (my own experience). It is a hassle and therefore I figured out it is best to bring the money in the country of your residence.
Banks and other institutions make money on the spread. Online (TD or ETrade) it is 2%, doing it in branch will be higher. Even a 2 cent spread will result in loss of 4000 $ over 200k.
Better deal is to use an interactive dealer or a FX broker who will charge 0.5 cent spread.
Interactive broker will allow you to trade currency, so you will buy CAD and sell USD at current market price and only cost to you will be transaction cost + wire fee etc (<100$).
FX broker fee = 200k * 0.005 = 1000$
