Declaring Non-Resident Status in CAD and taxes -

My_question_is: Applicable to both US and Canada
Subject:        Declaring Non-Resident Status in CAD and taxes
Expert:         taxman at
Date:           Wednesday January 03, 2007
Time:           11:57 AM -0500
My wife and I have been living in the US for 3 years now.  She is under a F1
visa and must keep her Canadian resident status.  She is now going to be
starting work and recieving an H1-B visa, therefore she is going to declare
non-resident status in Canada.
She has a sizable asset of mutual funds in Canada that is not in her RRSP
that have appreciated since its inception.
When she declares nonresidency status in Canada does she have to pay capital
gains tax on the asset even if she does not sell the mutual funds?   Is
there another way?  The tax bill could be huge.
david ingram replies:
When she files her last tax return as a resident, she has to file forms
T1161, T1243, and T1244.
The T1161 reports all the assets she owns.
The T1243 calculates the capital gains on those assets
The T1244 calculates the tax owing and provides a method to defer the paying
of that tax.
When you are in the USA, Article IV of the tax treaty means you are only
taxable on your world income in one place although you remain taxable in the
source country for any income from that country.
The following may help as well.
I held 500 shares of Bell South, bought in Nov 03, in the LIRA. In February,
2006 I transferred it to my cash account and transferred the equivalent
value, on that day, in cash to my LIRA. I have since sold these shares for
$42.10 per share. These are recorded as a long term gain in my attached
data, taxing the full gain, as if they were never in the LIRA.
BLS 500 shares bought for $25.60 per share, exchanged at $29.198US, sold for
In October, I transferred a small holding (45 shares) in the Canadian Exxon
subsidiary, which I had bought in 1980 into my LIRA to accumulate with a
larger holding. Again the transfer was made at neutral value based on the
price of the stock on the day. I have assumed this transaction has no tax
consequences as the shares are still held, and will have a full tax when
sold and distributions made from the LIRA.
David ingram replies:
Canada would want to tax any increase in value of the EXXON shares between
1980 and his date of sale but does not tax a non-resident of Canada on
shares of publicly traded shares.  He should have dealt with a profit (or
loss) on his date of departure from Canada by filling in Canadian forms
1161, 1243 and 1244 with his Canadian departure return.
 List of assets
Calculation of deemed disposition
deferral of tax
David Ingram's US / Canada Services
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