My_question_is: Applicable to both US and Canada Subject: Declaring Non-Resident Status in CAD and taxes Expert: taxman at centa.com Date: Wednesday January 03, 2007 Time: 11:57 AM -0500 QUESTION: Hi, Background 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. Situation. She has a sizable asset of mutual funds in Canada that is not in her RRSP that have appreciated since its inception. Questions. 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. Thanks --------------------------------------- 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 $42.10 ***** 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. 1161 List of assets http://www.cra-arc.gc.ca/E/pbg/tf/t1161/t1161-06e.pdf 1243 Calculation of deemed disposition http://www.cra-arc.gc.ca/E/pbg/tf/t1243/t1243-06e.pdf 1244 deferral of tax http://www.cra-arc.gc.ca/E/pbg/tf/t1244/t1244-06e.pdf ------------------ David Ingram's US / Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists My Home office is at: 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://www.david-ingram.com/> Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. 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