Subject: Pre immigration tax
planning
Expert:
[email protected]Date:
Wednesday June 06,
2007
Time: 08:20
PM -0400
QUESTION:
Hello David
I have been granted
permanent residence and will be immigrating to Canada from the UK in mid July
2007.
I am wondering whether there is any point in looking into
establishing a Canadian Immigrant Trust before I arrive in Canada - the theory
sounds good, sheltering income generated outside Canada from Canadian income tax
for the first 5 years as a Canadian resident. However all of the information I
seem to come across appears aimed at high net worth individuals (ie over 1m
canadian dollars). I unfortunately am not in this category. I do
consultancy work in the UK through a limited company, and do have a decent sum
sitting in the UK limited company that I have not yet dividended to myself. My
original thought was to transfer the company into an immigrant trust and then
dividend the money into the immigrant trust. However, I want to use this money
to put toward purchasing a residence in Canada - if the trust pays me money
after I become Canadian resident, am I liable to Canadian income tax on this
because it is counted as income? If this is so, then I might as well dividend
the
money to myself before I leave the UK, pay UK tax on it, and then just
transfer the money over? I cannot seem to find any information on the set up and
administration cost of such a Canadian Immigrant trust.
I also require
some advise on the timing of sale of my UK residence if I decide to sell after
becoming settled in Canada. I am not planning to sell in the UK at present, and
aim to go cheap and cheerful on Canada property for the first few years. I may,
however, after becoming settled, decide to sell in the UK and use the proceeds
to buy a princial Canadian residence. Do I have to pay UK or Canadian capital
gains tax on the property? The UK house will be rented while I am settling in
Canada. Is there any point considering transfering the UK property into a
Canadian Immigrant Trust?
Getting the visa seemed straightforward
compared to looking into tax planning issues.
Thanks for any advice you
may have