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Collecting USA Social Security later on in Canada

QUESTION:

I am a Canadian citizen who left Canada to work in the USA for 5 years. I have since retuned to Canada where I plan to stay. I was wondering if the money I paid into Social Security while in the states is lost or is there a way to transfer the money back to Canada??
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david ingram replies:

This older Q & A might help

QUESTION:

Hi David,

I have been working in USA for last 10 years under TN visa and have been paying FICA etc in US but have not filed return to Canada until 2006.

Can I benefit from all the FICA payments later or should I find a way/if there is any way to transfer it to Canadian retirement?

Thanks

__________________________________________________________________________
david ingram replies:

Answered many times - just last week in fact, and reproduced here with a slight improvement suggested by Andrew Nelson
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QUESTION: My apologies if this questions have asked many times before.I could not find right and easy answer for this.

I am a Canadian citizen working in USA under TN visa for last 2 yrs. I wonder what will happen for social security tax i pay in USA.Does it goes to Canadian social security.Is it possible to get refund ?

Thanks in advance.
  __________________________________________________________
david ingram replies;

The US Canada Social Security Totalization Agreement means that you will be able to collect Social Security from the US when you retire whether you have 1 year ( technically 6 quarters which can be earned from July to June which is one year but if you started working on Jan 1, you would need to work 1 year and another $2,000 or so in another year to qualify.    For 2007, you need just short of $1,000 of earnings to qualify for one qhuarter.)

The actual agreement in all its glory CAN BE FOUND AT:
 http://www.socialsecurity.gov/international/Agreement_Pamphlets/canada.html

AND IS REPRODUCED HERE: - Happy Reading -

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Inheritances and taxes owed in Ontario

QUESTION:

Ontario, Canada

We've been told that we must pay capital gains tax on the sale of my mother's primary residence (after her death).

I thought inheritances were not included as income in Ontario, Canada.

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david ingram replies:   You asre correct.  In general, if mom died and you sold the house two weeks or two months later, there would be no tax.  However, there are two situations where capital gains tax wouold apply.

A.    There is no tax on her principal residence up to the date of  death.  However, if she passed away two years ago and the house is now being sold and has gone up any amount at all, there will be capital gains tax on the increassed value.

B.    Another possibility is that she also had a summer home which had increased in value more than her actual residence and the executor chose to claim the summer home as the tax free capital gain asset and  pay tax on her actual residence. This situation could also apply where mom sold the cabin the year before she died and decided that the family home would be taxable for the same time period she claimed the cabin tax free. 
Of course, 'A' applies to the cabin in this case as well and there would be tax to pay if there was an increase in value between death and the actual date of sale.
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Something serious and a little humor and a GET OUT and VOTE suggestion

General News Humans originally existed as members of small bands of nomadic hunters/gatherers. They lived on deer in the mountains during the summer and would go to the coast and live on fish and lobster in the winter. The two most important events in all of history were the invention of beer and the invention of the wheel. The wheel was invented to get man to the beer. These were the foundation of modern civilization and together were the catalyst for the splitting of humanity into two distinct subgroups:


1. Liberals
2. Conservatives.


Once beer was discovered, it required grain and that was the beginning of agriculture. Neither the glass bottle nor aluminum can were invented yet, so while our early humans were sitting around waiting for them to be invented, they just stayed close to the brewery. That's how villages were form.


Some men spent their days tracking and killing animals to B-B-Q at night while they were drinking beer. This was the beginning of what is known as the Conservative movement.


Other men who were weaker and less skilled at hunting learned to live off the conservatives by showing up for the nightly B-B-Q's and doing the sewing, fetching, and hair dressing. This was the beginning of the Liberal movement.


Some of these liberal men eventually evolved into women. The rest became known as girlie-men. Some noteworthy liberal achievements include the domestication of cats, the invention of group therapy, group hugs, and the concept of Democratic voting to decide how to divide the meat and beer that conservatives provided.


Over the years Conservatives came to be symbolized by the largest, most powerful land animal on earth, the elephant.  Liberals are symbolized by the jackass.


Modern liberals like imported beer (with lime added), but most prefer white wine or imported bottled water. They eat raw fish but like their beef well done. Sushi, tofu, and French food are standard liberal fare.  Another interesting evolutionary side note: most of their women have higher testosterone levels than their men. Most social workers, personal injury attorneys, journalists, dreamers in Hollywood and group therapists are liberals.  Liberals invented the designated hitter rule because it wasn't fair to make the pitcher also bat.


Conservatives drink domestic beer. They eat red meat and still provide for their women. Conservatives are big-game hunters, rodeo cowboys, lumberjacks, construction workers, firemen, medical doctors, police officers, corporate executives, athletes, Marines, and generally anyone who works productively. Conservatives who own companies hire other conservatives who want to work for a living. Liberals produce little or nothing. They like to govern the producers and decide what to do with the production. Liberals believe Europeans are more enlightened than Americans. That is why most of the liberals remained in Europe when conservatives were coming to America.  They crept in after the Wild West was tamed and created a business of trying to get more for nothing.


Here ends today's lesson in world history: It should be noted that a Liberal may have a momentary urge to angrily respond to the above before forwarding it. A Conservative will simply laugh and be so convinced of the absolute truth of this history that it will be forwarded immediately to other true believers and to more liberals just to piss them off.

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Of course members of the he BC Provincial Liberal party are really Federal Conservatives (even the ones who think they are Federal Liberals are really the far right wing members of that party).

Which brings me to the MMP vote taking place in Ontario on Wed Oct 10, 2007.

In 1993, the popular vote was 41.24% for the Liberals

13.5% for the Bloc Quebecois

18.69% for the Reform

6.8% for the NDP and

16.04% for the Conservatives who has received 42% in trhe 1988 election and who had split apart with meany members joining the BLOC and REFORM parties.

The Liberals got 177 seats for 41.24%

The Bloc got 54 seats for 13.5%

The REFORM gor 52 seats for 18.69% and

the Conservatives got "2" seats for 16.02% of the popular vote, one of the greatest under represented situations if not the greatest in Canadian politics.

The MMP (Mixed Member Proporioal) or a STP (single transferable vote) would have changed that and been more representative. I prefer the STP but almost anything is better than the First past the Post we have now.

Think about  the 2000 US federal election in florida for a second.  If the 5% who voted  for Ralph Nader ahd had their second choice recorded for Gore or Bush, it would likely have been a fairer election with less controversy.

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Movie Review

If you get a chance, go to see "Across the Universe" which is showing now. 

I am not a person who listens to music.  In the car I look for talk radio.  However, I was shocked by how much i loved this movie built around the Beatles and the vietnam war.

What really surprized me was that in a crowded theater that I went to with a 15, 17, and 20 year old at their invitation, there was only one other person close to my age (65).  Everyone else seemed to be under 25.

The movie is all Beatles Music but puts people and events to the JHude Lucy and Pridence.  

The central character is Jude (Hey Jude) and the show goes from the Cavern in Liverpool (where my father was born) to the halls of Princeton University and the riots in Detroit and the assassination of Martin Luther King.

Pridence (dear Prudence) comes to life as a real person.  Lucy (Lucy in the Sky with Diamonds - I am the Walrus- I am the Eggman) also fits the songs.

I sat there stunned at the end having just relived a few years of my life when I supported items like Cool Aid (the northern end of the draft dodger underground railroad) in Vancouver.  Mike harcourt who became the Mayor of Vancouver (I ran against him) and the Premier of BC was the lawyer for the society.  Simon DeJong who became a federal NDP member of Parliament  for Regina East) was a major palayer fdirector of the society and I believe the other major leader whose name I can not remember became the warden or deputy warden of stoney mountain penitentiary in Winnipeg.

Interestingly, Simon served as a MP with Phl Edmunston (author of New and Used car guide LEMONAID - http://www.lemonaidcars.com/ and the founder of the Automotive Protective Association ) who was the only Quebec NDP member for years.  Phil is fun because in the 60's, he was a close associate of Ralp Nader (remember the Florida election above) and involved in the writing of the book "UNSAFE AT ANY SPEED" which resulted in general Motors stopping production of the Corvair.

This, of course started as a spoof (which I did not write but was sent to me by Klondike Kate) on Liberals and Conservative Politicians and ended up with the demise of the Corvair while touching on Viet Nam, Voting Rights and the draft Dodgers of the 70's. 

It was my association with those young American men coming to Canada and the entertainers i was bringing in to my Coffee Houses starting in 1962 (George Carlin as one example) which resulted in my interest in US / Canadian tax and immigration today.

 

So this has gone out to just about everyone.  Will the approxiamately 500 readers in Ontario get out and vote pro or con MMP but do pay attention.  It will shape the way our politics go.  For those 6,000 readers in the US, pay attention to how we vote.  It will change the way you live and by that, also change the rest of the world.    

david ingram

 
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ROTHS and other U.S. tax sheltered vehicles

QUESTION:

Hi...

As an American citizen living in Vancouver (I also have Canadian citizenship) am I allowed to open and contribute to retirement tax sheltered vehicles such as a ROTH or IRA in the States?... I am debt free and annually max out my RRSP...

Thank you,
xcxxx from New York

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david ingram replies:

Don't even think about it unless you have US earned (wages or self-employment) income which was earned in the US and therefore is taxable in the US first.  (Money paid to you in Canada from a US employer for work performed in CANADA does NOT count.)

Then it might be acceptable.  Acceptable depends on  "IF".  It appears that a US IRA will be deductible for Canadian Tax proposes in the new US/Canada Income Tax Treaty (signed Sept 21, 2007).  However, I have not had a chance to discuss this with anyone yet and am not prepared to make a go for it decision.

You are our typical client.

Get more information about deductions and investments by going  to Fred Snyder's seminars at 1764 West 7th on Thursday Nights at 7 PM (there is also one at noon the same day).

These are free and you have absolutely nothing to lose by attending.  Fred is one of the few financial consultants in Vancouver who has any idea of the reporting rules for US citizens living in Canada. �
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US CANADA Questions & Advice/councelling

Hi,
I have read and listened to David Ingram on the radio and internet. So now I am writing with a few questions, as I am confident that you are the expert in this field. I have been very impressed by your skills and professinalism as well as attitude.

I am a xxxxxxxxx citizen, temporary resident in Canada. I work in xxxxxxxxxxxxx for the xxxxxxxx Ministry of Defence. I work in an international setup with DND Canada, training a mix of international student military pilots at xxxxxxxxxxxxx. I have been here on a ’Visiting Forces Act’ Visa for 3 years. I have just been extended in my job for at least another 3 years. I have a xxxxxxxx wife and 1 xxxxxxxxxxxxxxxxx child  and 2 canadian kids (1 and 2½ years).

I have just aquired a temporary SIN number.

My considerations are that we might decide to stay in Canada to raise our kids, after my contract ends, if we can.

I pay tax from my pay check to the xxxxxxxxxxxx government. I have extensive experience with investing in equity and bonds from xxxxxxxxxxxx.

Now, I have come to a point (after many years of thoughts and talk) where I want to invest for the future on a more professional level, for the benefit of my family.

My first question to you is:

How do I make investing the most profitable in relation to tax ? I assume that I will pay canadian tax of the money I invest here in Canada. At least I think that would be more desireable for me J .
  • I have a friend (another xxxxxxxxxxxxdane working in xxxxxxxxxxxx in a similar situation) who I talked about making the investment company together. The advantages would be that you have something together and can encourage each other vice doing everything yourself. Some advice would be appreciated.

In xxxxxxxxxxxxxxxxx I know how to setup an investment company for my self, enabling to limit risks and to be compensated for office supplies and other expenses. I don’t know how that works in Canada. Therefore I also don’t know if it is an advantage to invest as a ’private person’ or as a ’company’ in some form. It is gonna be a part time ’job’ for me as I will still keep my job as a flight instructor with the military. I have previously attempted to make a xxxxxxxxxx company, but due to me livng in Canada they wouldn’t allow me to do that. Generally in xxxxxxxxxxxx you pay 40 % in tax on the profit you make on capital (stocks) gain, while a company pays up to 30 %.

 
If I succeed in setting up an investment company or arrive with a good plan for making investments on my own after your advice I anticipate an ongoing business relationship.

My pay check from the xxxxxxxxxxx government is app 220.000 can$/year. I pay tax on most of it, up to 60 %. I have some funds (cash) available for investments and my long term goal is to be able to live of off those investments in hopefully 5-8 years.  I am 48 years old.

I hope I have provided enough information to get us started and I hope that you would ask for more information to be able to give the best advice and information back to me.

In much anticipation,

All the best and thanks for your nice program on the radio.


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david ingram replies:


As an employee of a foreign govermnment, you are exempt fropm tax under Article XIX of the Canada Denmark Income Tax Treaty.

There is an exception which would have you taxable in Canada if it was determined that you were working for a 'business' set up by the danish government.

If you and your friend were to set up a Canadian company to make investments, the tax on a non-resident foreign owned holding company is about the highest you can pay in Canada.

In general, I would not recommend that you have a holding comapny

If you own shares or investments in your own name, any profits would be taxable in Denmark which would give you a foreign tax credit for the taxes you woul dhave to pay first to Canada.

Interest would be taxable first in Canad at 10% under artuicle XI of the Treaty

Dividends would be taxable at 15% under article X of the Treaty unless you own more than 25% of the shares in which case Canada would tax 50% of the profit (see Article XIII.)

You should have received a 'too many to answer reply before'

In reality, your question is too specific to apply to many people and I would usually only deal with it on a paid consultation basis. �
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Canada Leaving for Tax purposes. Sid Ireland - Charitable Gift Expert - Judge Teskey

Hello,
 
I am about to move to the Caribbean to semi retire and I will continue to undertakes some international business investments and consulting from a non-tax jurisdiction. The consulting and investments will not be in the country where I will be relocating but rather in Europe, Brazil and China. My concern is to make sure I cannot be taxed in Canada so I will provide the following information:
 
I am Canadian and have resided in Canada my entire life;
 
I am married and my wife would be moving with  me;
 
I have averaged between 3 and 6 months per year outside of Canada over the last 6 years;
 
I plan on selling my home and all possessions;
 
I will have family in Canada but my Children are all over 21 and independent;
 
I plan on visiting family in Canada every year for a few weeks per year;
 
I plan on moving before the end of the existing calendar year;
 
I do not plan on returning to Canada to live;
 
I have some private interests with other parties in Canada but I do not receive any income from the business;
 
I would encounter resistence from partners and tax problems if I tried to dispose of my interests in the companies;
 
The companies do not distribute any monetary benefit to me directly or indirectly and have not for several years;
 
 
My questions are as follows:
 
If I intend on conducting business on a part time basis from the Caribbean, does it matter if I establish the corporation before or after I depart Canada? I am asking this question because of the reporting requirement for the current tax year tax return! I am not trying to hide anything but I would prefer not to provide any linkage for the Canada Tax Authorities because I don't feel it is any of the Canadian Tax Department's Business as I will no longer be in Canada?
 
With respect to the private corporations where I have personal and corporate private share holdings, is it possible for me to contribute the shares to a charitable foundation? The assets are basically loans to the corporations that hold assets in the millions and the corporations have not been particularily active over the last few years. I feel if a charitable organization took over my position it would inspire the remaining parties to be responsible and utilize the assets for more humanitarian purposes. The cash flow that is possible could easily generate in the 7 figures per year. I have no interest in the companies, the existing partners and I do not want to cause a tax problem for myself by selling the shares, I believe the shares would be more appropriate for a Charitable Organization because they are patient and could appeal to the other shareholders humanitarian righteousness to utilize the assets in a more appropriate manner. 
 
If I cannot contribute the shares to a Charitable Organization, could I move the shares into some type of blind trust and pledge the benefits to a Charitable Organization or the Governement of Canada and thereby, avoid any taxation regarding the value of the shares or the income that would be generated?
 
The questions regarding the shareholdings are relevant with respect to avoiding any linkage to Canada so I do not compromise my residency and potential earningw when I relocate out of Canada?
 
Thank you!
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david ingram replies:

I am niot going to try and answer this because the 'what if's' are endless.

And, indeed, I have three people coming in this week who are returning from Caribbean islands after 5 10 and 12 years and are suffereing because they now cannot afford to buy a decent house when they sold a good one to leave.

The answer to all your questions is likely.

Whether you should or not is another question.

Sid Ireland of the Salvation Army is a very good Charitable Gifts Expert. give him a call at (604) 681-9311.  In general, if you give publicly traded shares, there is NO capital gains tax to pay and you get a charitable tax credit for the full amount.

As for residency, you can leave a $2,000,000 house behind and as long as it is rented at arm's length, it does not make you a resident of Canada. 

However, with no house, frequent visits to Canada by yourself or your spouse, can easily make you a taxable resident of Canada when you are not in your supposed country of residence for more than six months.

If you spend 6 weeks in Canada, 3 months in the Bahamas, two months in Switzerland, a couple of months in New Zealand, and three months in the United states, you are still a taxable resident of Canada.

I wrote most of the following 20 years ago and it was downloaded an average of 35 times a day in so far in 2007. If it, or any part was incorrect, someone should have told me by now.

You can get some of your answers from this.  However, I suggest that you need a personal consultation with someone like myself and maybe tqwo of us to deal with any conflicting opinions.

A major suggestion is that if you are truly trying to escape Canadian taxation, that you do not return to Canada for two years at least for any visit.   Pull into Bellingham, or Minot or Fargo or Niagara Falls(NY), or Plattsburg or any other US border town and invite the kids and friends down to visit you in the US.

Read the following which can be found in full at www.centa.com, click on US Canada Taxation in the second box down.

----------------------------
QUESTION:

Hi David

We are currently living & working in Dubai and to the best of my knowledge, I have a non-resident status in Canada. I have been out for 6.5 years now and we are planning to come back within the next 3 years. I was employed for 3 years of this tenure. I have a canadian licence (which I needed in order to get a licence in the UAE) and I have a canadian visa card and a non-resident bank account. Otherwise, we have no other ties to Canada. Furthermore, my husband is not a Canadian citizen. Will maintaining any of the above effect my status as a non-resident with regards to being taxable?
Hope you can help...
--------------------------------------------------------------------------- david ingram replies:
Five years ago, I would have suggested that the driver's licence was an absolute no-no but today, because of  the World Trade Center Disaster, many of the countries in your area are suspicious of a carrier of a Canadian Passport who do not have a Canadian driver's licence to match.  Still, having a Canadian Visa card ABD a driver's licence could be enough to make them look at you because there is no reason to keep a Canadian visa card for 6.5 years. 

A non-Canadian husband is only a bit of a help.  Read the following and decide if you should get rid of the licence (you do have a Dubai licence now) and credit card.  Dennis Lee was taxed even though immigration would not let him into Canada.

The following was my answer to someone wanting to move to Dubai. 
My_question_is: Canadian-specific
Subject:        Thinking of moving to Dubai to work for government from Canada
Expert:         taxman@centa.com
Date:           Saturday March 31, 2007
Time:           11:25 AM -0500

QUESTION:

Hi,

I have been bantering back and forth with a possible offer to work for the government of Dubai.. if I do accept the offer and go, I want to keep my condo and my car here in Canada... I will establish a residence there as well.. my question is how much tax will I have to pay out of my income from over there.. I do not wish to sell everything and put it in storage... the car maybe, but it is a lease and I don't currently own it.. but Dubai is ready to take care of my obligations here, so I say keep it.

Thanks for your time

_______________________________________________________________
david ingram replies:

If you keep a car and home here and return for visits, you will be taxable at full rates on whatever you earn in Dubai.

read the following:
So what are the rules?


Well, to leave Canada for tax purposes, you must give up clubs, bank accounts, memberships, driving licences, provincial health care plans, family allowance payments (if you are a returning resident, you can continue to get Family Allowance out of the country), your car, and furniture. You can keep a house here as an investment and rent it out, but it must be rented on lease terms of a year or more. And you MUST have an agent sign an NR6 for you (see example). This NR6 has the Canadian Resident AGENT ** guarantee the Canadian Government that if YOU do not pay your tax to Canada, the AGENT WILL. Even after fulfilling the foregoing, the Canadian government can still tax you or "try" to tax you on your income out of the country. If you are being paid by a Canadian Company, they can quite often succeed.

Even though you can collect family allowance out of the country, don't! One client's wife found out that she could get family allowance out of the country if she said they were coming back to Canada. She got some $3,000 of family allowance and cost the family some $80,000 in income tax when they came back to Canada from Brazil. I will never forget the husband's expression when he found out why he had been reassessed and I will never forget his wife's explanation. She said he was a skinflint and never gave her any money. The total episode cost them their house.

** The "agent" referred to above can be a friend, relative, or a business such as ours. We charge a minimum of $40.00 per month to be an "AGENT" for an NR-6 filing. This $480 per year is "in addition" to any other fees but "well worth it" of course. It stops your mother, father, brother, next door neighbour or ex-best-friend from being plagued by paperwork they do not understand.

OUT OF CANADA AND RESIDENT - IN CANADA AND NON-RESIDENT


It is possible to be physically "in Canada" and be treated as a Non-Resident and it is possible to be out of the country for seven years, or never have even lived in Canada, but wanted to, and be taxed as a Canadian resident as the following three cases show. In case you missed it, the reason for the different rulings is the "INTENT" of the parties involved.  Wolf Bergelt intended to leave Canada.  David MacLean was only working out of the country.  He still maintained a residence and could not ever become a resident of Saudi Arabia anyway. Dennis Lee "wanted" to live in Canada.

In 1986, Wolf Bergelt won non-resident status before Judge Collier of the Federal Court, even though he was only out of the country for four months and his family stayed behind to sell his house. He had given up his memberships, kept only one bank account and rented an apartment in California until his house in Canada was sold. Four months after his move, his company advised him that he was being transferred back to Canada. Judge Collier said his move was a permanent (although short) move and he was a non-resident for tax purposes for those four months.

In 1985, David MacLean lost his claim for non-residence status even though he was gone for seven years. He kept a house and investments in Canada and returned a couple of times a year to visit parents. He had even been to the Tax Office and received a letter on January 29, 1980 stating that his Canadian Employer could waive tax deductions because he was a non-resident. However, he did not advise his banks, etc. that he was a non-resident so that they would withhold tax, he did not rent his house out on a long term lease and he did not do any of the things that makes a person a "NON-RESIDENT". Judge Brule of the Tax court of Canada said that he thought Mr. MacLean had stumbled on the non-resident status by chance rather than by design. In other words, to become a non-resident of Canada, you must become a bone fide resident of another country.  As a rule, only a Muslim born in Saudi Arabia to Saudi Arabian parents can become a Saudi Arabian citizen.  The best that David MacLean can hope for is that he has a Saudi Arabian temporary work permit.

In other words, when a person leaves a place, they usually leave and establish a new identity where they are because the "new place" is where they live now. Trying to "look" like a non-resident is not the same as "BEING" a non-resident - think about it.

In 1989, Denis Lee won part but lost most of his claim for non-resident status. He was a British Subject who worked on offshore oil rigs. He maintained a room at his parents house in England and held a mortgage on his ex-wife's house in England. For the years 1981, 82 and 83 he did not pay income tax anywhere. in 1981 he married a Canadian and she bought a house in Canada in June of 1981. On September 13, 1981, he guaranteed her mortgage at the bank and swore an affidavit that he was "not" a non-resident of Canada. [As I have said in the capital gains section of this book, bank documents will get you every time.] During this time he had a Royal Bank account in Canada and the Caribbean but no Canadian driver's licences or club memberships, etc.

Judge Teskey said:

"The question of residency is one of fact and depends on the specific facts of each case. The following is a list of some of the indicia relevant in determining whether an individual is resident in Canada for Canadian income tax purposes. It should be noted that no one of any group of two or three items will in themselves establish that the individual is resident in Canada. However, a number of the following factors considered together could establish that the individual is a resident of Canada for Canadian income tax purposes":

  • - past and present habits of life;

  • - regularity and length of visits in the jurisdiction asserting residence;

  • - ties within the jurisdiction;

  • - ties elsewhere;

  • - permanence or otherwise of purposes of stay;

  • - ownership of a dwelling in Canada or rental of a dwelling on a long-term basis (for example, a lease of one or more years);

  • - residence of spouse, children and other dependent family members in a dwelling maintained by the individual in Canada;

  • - memberships with Canadian churches, or synagogues, recreational and social clubs, unions and professional organizations (left out mosques);

  • - registration and maintenance of automobiles, boats and airplanes in Canada;

  • - holding credit cards issued by Canadian financial institutions and other commercial entities including stores, car rental agencies, etc.;

  • - local newspaper subscriptions sent to a Canadian address;

  • - rental of Canadian safety deposit box or post office box;

  • - subscriptions for life or general insurance including health insurance through a Canadian insurance company;

  • - mailing address in Canada;

  • - telephone listing in Canada;

  • - stationery including business cards showing a Canadian address;

  • - magazine and other periodical subscriptions sent to a Canadian address;

  • - Canadian bank accounts other than a non-resident account;

  • - active securities accounts with Canadian brokers;

  • - Canadian drivers licence;

  • - membership in a Canadian pension plan;

  • - holding directorships of Canadian corporations;

  • - membership in Canadian partnerships;

  • - frequent visits to Canada for social or business purposes;

  • - burial plot in Canada;

  • - legal documentation indicating Canadian residence;

  • - filing a Canadian income tax return as a Canadian resident;

  • - ownership of a Canadian vacation property;

  • - active involvement with business activities in Canada;

  • - employment in Canada;

  • - maintenance or storage in Canada of personal belongings including clothing, furniture, family pets, etc.;

  • - obtaining landed immigrant status or appropriate work permits in Canada;

  • - severing substantially all ties with former country of residence.


"The Appellant claims that he did not want to be a resident of Canada during the years in question. Intention or free choice is an essential element in domicile, but is  entirely absent in residence."

Even though Dennis Lee was denied residency by immigration until 1985 (his passport was stamped and limited the number of days he could stay in the country) and he did not purchase a car until 1984, or get a drivers licence until 1985, Judge Teskey ruled that he was a non-resident until September 13, 1981 (the day he guaranteed the mortgage and signed the bank guarantee) and a resident thereafter.

My point is made. Residency for "TAX PURPOSES" has nothing to do with legal presence in the country claiming the tax. It is a question of fact. My thanks to Judge Teskey for an excellent list. The italics are mine and refer to the items which I usually see people trying to "hold on to" after they leave and are trying to become non-residents. No single item will make you a resident, but there is a point where the preponderance of "numbers" leap out and say, "He / She is a resident of Canada, no matter what he / she says." 

The case above is not unusual in any way. It is a fairly typical situation in my office.

In 1990, John Hale was taxed as a resident on $25,000 of directors fees he had received from his Canadian Employer and on $125,000 he received for exercising a share stock option given to him when he had been a resident of Canada (the option, not the stock). Judge Rouleau of the Federal Court ruled that section 15(1) of the Great Britain / Canada Tax Convention did not protect the $125,000 as it was not "salaries, wages, and other remuneration". It was, however a benefit received by virtue of employment within the meaning of section 7(1)(b) of the act.

Even a car you do not own can make you a resident as the next sailor found out.

In 1988, FrederickReed was claimed by the Canadian Government as one of their own. He lived on board ship and shared an apartment with a friend in Bermuda but only occasionally. He also stayed with his parents in Canada when visiting his employer in Halifax. Judge Bonner of the Tax court ruled that he could not claim his place of employ or the ship as his residence and just because he did not have a fixed abode, did not make him a non-resident. He was also the beneficial owner of a car in Canada which even though of minor consequence, served to add to his Canadian Residency. He had in fact borrowed money from a credit union to buy the car, even though it was registered in his father's name. He had maintained his Canadian Driver's licence as well.

An interesting case in June, 1989 involved Deborah and James Provias who left Canada in October of 1984. They had sold a multiple unit building to James' father on September 21, 1984 but the statement of adjustments did not take place until December 1, 1984. They tried to write off rental losses and a terminal loss against other income as `departing Canadians'. Judge Christie of the Tax Court ruled that they had left before the sale and were not entitled to the terminal loss or another capital loss as these could only be applied against income earned in Canada from October 13, 1984 (the day they left) to November 30, 1984 (the day before the sale) and there was no income, only a rental loss.

But June, 1989 was a good month for Henry Hewitt. He had been a non-resident living in Libya for four years and received some back pay after returning to Canada. DNR tried to tax him on the money but Judge Mogan of the Tax Court came to the rescue. He ruled that although Canadians were usually taxable on money when received, that assumed that the money itself was taxable in Canada, which was not true in this case.

In 1989, James Ferguson lost his claim for non-residency status but from the information, it didn't stand a chance anyway. He had been in Saudi Arabia on a series of one year contracts for four years. His wife remained employed in Canada, and he kept his house, car, driver's licence, union membership, and master plumber's licence. Judge Sarchuk ruled that he had always intended to return to Canada and was a resident.

A similar situation involved John and Johnnie M. Eubanks in the United States. He was working on an offshore oil rig in Nigeria with a Nigerian work permit and attempted to claim non-resident status for the purposes of exempting the foreign earned income exclusion. His wife was in the United States at all times and because he worked 28 days on and 28 days off, he returned to the U.S. for his rest periods using 4 days for travel and 24 days for rest with his family. He did not spend any 330 day period (out of a year) in Nigeria and only had a residency permit for the purposes of working in Nigeria. Judge Scott ruled he was a resident of the U.S. and taxed him some $20,000 with another $6,000 penalties and interest.

The Tax departments in Canada and the U.S. issue Interpretation Bulletins and Information Circulars and Guidance Pamphlets. These documents sometimes get people in trouble because the individual reads the good part and doesn't pay any attention to the exceptions. The following case ran contrary to a Guidance Pamphlet issued by the IRS.

On and Off-shore Oil rigs were involved with William and Margaret Mount and Jesse and Mary Wells. William and Jesse worked in the United Arab Emirates. However, they kept their homes and families in Louisiana and kept their driver's licences in Louisiana and voted in Louisiana. No evidence was shown that they had tried to settle in The United Arab Emirates. Judge Jacobs turned down claimed exclusions of approximately $75,000 each.

There isn't any question about what oil rig people talk about on oil rigs. It has to be "how to beat the tax man". Unfortunately, they all seem to think it is easy. Another such story follows.

In 1989, Clarence Ritchie found out that bona fide residence means just what it says. You cannot be a non-resident of the U.S. for tax purposes if you are not a bona fide resident of another country. He was working on the Mobil Oil Pipeline in Saudi Arabia and although when he left he was married with a couple of kids, by the time he returned permanently, he was a happily divorced man. Judge Scott ruled that though he did not have an abode in the United States, he had not established one in Saudi Arabia and therefore was not entitled to the foreign earned income exclusion which requires you to be away for 330 days out of 365. He had worked a 42 days on, 21 days off schedule and usually returned to the U.S. for his days off although he did spend time in Tunisia, England, Italy and Greece.

On a final note, as explained on page 143 of the "PINK" 17th edition of my ULTIMATE TAX BOOK, it is possible to have three countries after you for tax. If you are thinking of taking a job because a recruiter told you the money is tax free, think twice and check three times with competent individuals about what the rules "really are". No government likes giving up the right to tax its citizens.

DEBT SECURITIES - BANK ACCOUNTS


Non-residents of Canada with investments in Canada are subject to a 25% non-resident withholding tax on any money paid to them while they are out of the Canada. Therefore, if they have $10,000 in the Bank of Montreal and they live in Argentina, The Bank of Montreal must withhold 25 cents out of every dollar of interest paid to the account. Most tax treaty countries such as Great Britain, Germany, the United States, and Australia have a reciprocal agreement with Canada that limits the withholding to 15%.


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Dormant inactive or unclaimed financial accounts TD F 90-22.1

David,

I thoroughly enjoyed meeting with you earlier this week. My father-in-law has been keeping me updated on your correspondence with him. My wife and I had another question concerning the TDF 90 and foreign accounts. Over the years we had been living in Canada, we accumulated accounts that we stopped using, but had left $5 here and $10 there. I assume these accounts are inactive, but were never formally closed by us. What action should we take for these accounts assuming we can remember their details? And what if we can't remember the details such as account numbers, PINs, etc? Thanks,

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david ingram replies:

Just about everyone has an inactive forgotten acount somewhere.

It was always a joke with my family because we would be driving down a street in some small town and I would suddenly stop the motorhome and go in a bank and come out with anything from $50.00 to $2,700.  It was because I had 700 offices in 30 statres and five provinces. when they closed, almost all had something left which was usually not worth bothering about.

Four years ago, the Financial Post listed me as having an unclaimed $2,200 in the Bank of Nova Scotia in Toronto.  I just checked  at http://ucbswww.bank-banque-canada.ca/scripts/search_english.cfm and found another one. (The Pitney Bowes acount is mine,  it coincides with my closing an office in Toronto in 1982.)  I also think I found one for my sister and  an old one for my deceased mother.

I can not find any that looks like it belongs to your in-laws or yourself.

However, it takes ten years for them to transfer an outstanding balance so you have to look every year.

If you do not remember its existence, I do not think it matters.  Certainly $5.00 or $20.00 has likely been eaten up in service charges and the account has been closed by the institution.

Take a look.  If you just type in your surname, you will find that there are 32 possiblities for yours, none for your father in law, and 58 for 'ingram'.  Weibe has 60, while Roberts, Jones and Smith show the best 300 of whatever number actually exist with the specific name 'John Smith' having 37 all to itself.

By the way, there are dormant account searches for Swiss Bank accounts, English Bank Accounts and US accounts.

The US is a dog's breakfast because each state has its own set of rules.  Yo9u can get a start looking for a dormant or inactive accouint in the US at: http://www.unclaimed.org/

BUT, Canada has the same problem with credit unions where every province has a different set of rules and registry for dormant credit union accounts.  BC rewuires you to write to their offiee.

If the deposit was transferred on or after / since Sept 15, 1990, use

Unclaimed Property Office
Office of the Comptroller General
Ministry of Finance
P.O. Box 9413 Stn Prov Govt
Victoria, British Columbia V8W 9V1
e-mail: unclaimedmoney@gems2.gov.bc.ca
Contact: Michelle McBride 250-387-8793


If deposits were transferred to Credit Union Deposit Insurance Corporation/Financial
Institutions Commission prior to September 15, 1990, direct enquiries to the following
address:
Financial Institutions Commission
1900 – 1050 West Pender Street
Vancouver, B.C. V6E 3S7
Attention: Controller
Telephone: 604-660-2947
Fax: 604-660-3170
e-mail: FICOM@gems9.gov.bc.ca

Hope this helps.  I would forget about any account you can't remember. 

Although in doing my search of names, I did come up with a lady in Massachusetts who had a $39,000 dormant account in Canada.  For that much she is likley dead and there are heirs that would like. it.  There ae several organizations who search for heirs and claim a finder's fee.

Type in "Confederation trust" and you will find thousands of hits from $3.00 up from the settlement of the banruptcy of confeeration trust which took place in August, 1994.  finally, the unclaimed balances were transferred  to the Bank of Canada on Dec 31, 2005 as shown by the following in which you will see that they can claim their $95.43 -- anyone know Dean?

 
Unclaimed Balance Information
Name: PRICEWATERHOUSECOOPERS INC LIQUIDATOR OF CONFEDERATION TRUST
Payee: BROWNING DEAN
Address: PAYEE: 1463 ACADIA DRIVE S.E.  CALGARY AB
Official Cheque: 046854 Transferred to Bank of Canada: $95.43
Last Transaction Date: 1995/12/31 Transfer Date: 2005/12/31
Status: UNCLAIMED Outstanding Balance: $95.43
Originating Bank: CONFEDERATION TRUST , 321 BLOOR STREET EAST 7TH FLOOR , TORONTO , ON, M4W1H1

To claim this account, please contact us
Or how about the Bev Longstaff  re-election campaign which can collect a cool clean $118.68.
   
Unclaimed Balance Information
Name: PRICEWATERHOUSECOOPERS INC LIQUIDATOR OF CONFEDERATION TRUST
Payee: BEV LONGSTAF RE-ELECTION CAMPAIGN
Address: PAYEE: 450 407 2 STREET S.W.  CALGARY AB
Official Cheque: 046934 Transferred to Bank of Canada: $118.68
Last Transaction Date: 1995/12/31 Transfer Date: 2005/12/31
Status: UNCLAIMED Outstanding Balance: $118.68
Originating Bank: CONFEDERATION TRUST , 321 BLOOR STREET EAST 7TH FLOOR , TORONTO , ON, M4W1H1

To claim this account, please contact us
She was not hard to find


SAIT honours Bev Longstaff - 2006 Distinguished Alumnus

On March 12, 2007, family, friends and colleagues joined together in Macdonald Hall to celebrate and honour our 2006 Distinguished Alumnus, Bev Longstaff, EGT ’78. Bev was honoured for her years as a passionate community leader and dedicated SAIT supporter. She was not only a student of SAIT, but a former instructor as well. After 10 years at SAIT, Bev successfully ran for office and became a City Alderman and served in that capacity for four terms.

Bev was the Calgary Director for the G8 Conference in 2002, and continues to be an ardent community leader and volunteer by serving for organizations such as: The Salvation Army Community Service Board, Calgary Homefront and SAIT's Board of Governors. She is well sought after for her advice and expertise, particularly in issues regarding Calgary's underpriviledged population.

Speakers at the event commented on Bev’s love for her family and the community, as well as, her immense contributions to the City of Calgary, and of course to SAIT.

I am just making thepoint that there are thousands of accounts out there and I can NOT imagine the US Dept of Treasury going after you or your spouse for an unreported $5.00 although the law  certainly gives them the right to do so once you have the oblifgation.  If you know where it is, report the account and then formally close it to be sure..
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US CANADA Part II - Collecting CPP early

A client wrote an addendum

On Tue, 2007-09-25 at 23:30 -0700, US / Canada Income Tax Help -
CEN-TAPEDE wrote:

david ingram replies:

You may apply to collect your Canadian CPP at age 60 whether youlive
in the US or Canada You will receive 30% less than if you started at
65. That workls out to about 6% less per year that you collect the
pension early.


Of course in the case of my dad, who unfortunately passed away at 63, if
he'd have waited until 65, he'd have received 100% less.

Cheers,
d.


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david ingram replies

I am alive past where I expected to be and have paid in for five more years than I had to and if I dropped dead tiomorrow, my 15 year old daughter will get up to 9 years of orphan's benefits if she continues in school and college.

My 20 year old will get four years if he stays in college.

They will get more than if i had taken it out sooner.

I still intend to pay in for the next three or four years and take a higher amount.  If I live a long time, I will get more.  If i live a short time, I will clearly get none or less and have paid a lot more in.

However, since I do not need it now, I owuld rather have a larger amount when i am not working or can not work.

Another big argument vcan be made for taking it early and investing the money.

That way you do receive something if you die first.

Hey, maybe I will change my mind.  where's that application again?
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US CANADA Transferring money between Canada and US - E667 E677 104 105 - FINTRAC - FINCEN

QUESTION:

I saw your recent email answer about reporting moneies transferred between Canada and US.  I am in almost a similar situation.  However, if I still have a Canadian bank account (which I report on the TDF form), would I need to report a one time transfer of over $15K if I just wrote a check from my Canadian account and deposited into my US account?  And  if I do need to report it what form and where would I report this transfer to?
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david ingram replies:

I have had 4 enquiries by email and one by phone today about this topic.  It seems that everyone is loading up on cash to go down tot he US to buy a car with the great sale prices there.

In your case, if you just write a cheque, the Canadian bank will fillout Canadian FINTRAC form E667 and the US bank will fill out form FINCEN104 and you do not need to do anything.
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US CANADA Collecting CPP early

i was wondering if you knew if i could apply now to start my cpp as i will be turning 60 in nov/07-- i am now presently living in washington and working there.  i stopped working in canada in dec /2000. thanks you for your reply

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david ingram replies:

You may apply to collect your Canadian CPP at age 60 whether youlive in the US or Canada   You will receive 30% less than if you started at 65. That workls out o about 6% less per year that you collect the pension early.

Apply online at http://www1.servicecanada.gc.ca/en/isp/common/rtrinfo.shtml

Personally, I elected not to take early CPP and have not applied now that I am 65.  My reasoning is that I do not need it now so if I can keep on contributing, it will only get larger and i can apply any time in teh next five years.  When i am not working, I owuld rather have the  larger amount than a smaller amount now for life.  If I die early, that is my loss but i would rather have 30% more five years from now tahn 30% less for the same ten years and then life.  I am going to live to 145 after all. �