Emigrating to Japan; Holding RRSPs in Canada -


Dear David,

My wife and I will emigrate to Japan before the end of 
2008. I understand all the residency issues and Judge 
Teskey rulings, etc. I understand the tax requirements in 
Japan and pretty much how things would work per the tax 
treaty. However, we plan to keep the RRSPs we have 
established. Not a huge amount (about $40K each) but I 
understand we can simply pay 25% on the funds we 
withdraw once we hit retirement. If we lived in Canada we 
could continue to make capital gains, dividends and 
interest on the RRSP investments without any tax 
consequences. I think I can hold these through non-
resident investment accounts and continue to make god 
gains on them. But would we be required to report such 
gains on our Japanese tax returns?

It seems unfair but I cannot find anything specifying this 
in the tax treaty or on any blogs, etc.

Appreciate any guidance you could give on any policies 
that may exist.

david ingram replies:

Judge Teskey's rulings have more import in Japan than other tax treaty counties because residency is not dealt with in detail. in the treaty.   When in Japan, you have to deal with Article IV of the Japan - Canada income Tax Treaty which reads as follows:

Article 4

1.  For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of head or main office, place of management or any other criterion of a similar nature.

2.  Where by reason of the provisions of paragraph 1 a person is a resident of both Contracting States, then the competent authorities of the Contracting States shall determine by mutual agreement the Contracting State of which that person shall be deemed to be a resident for the purposes of this Convention.

Most of the treaties break Article 4(2) into 4 further subsections, the one  with Japan does not do that so intent, lifestyle and number of days in either country become important.  Spending more than 183 days in either country likely (but not for sure) makes you a resident of that country for that year for tax on your world income.

You do not need to do anything special with your RRSP accounts except make sure that you leave them with someone who understands out of country accounts and wants to deal with them.  Leaving them with your local credit union or bank is not a good idea. You need an out of country

Pensions are not dealt with in the treaty for some unknown reason and are taxable in both countries.  You can elect to have 25% Canadian tax taken as a non-resident at any time.  You do not need to wait for retirement.  AND, you can also file a section 217 return afterwards which may reduce the Canadian tax below 25% if you took out lesser amounts of money at a time..  However, since Japan will tax the pension as well if you are treated as a resident of Japan, you can use the 25% paid to Canada as a credit against your Japanese tax of a likely 30% and just pay Japan and the local tax authority the difference.

However, with your membership in ACCA, it seems to me that you should send me the answer if and when you get it officially.  You will only know that from the actual Japan Tax Code.  The United States, for instance, officially taxes the internal earnings in a Canadian RRSP but exempts them unitl actual withdrawal by filling in their form 8891 for the last four years and before that they had three other methods of exempting the internal earnings of an RRSP.  Japan may well have the same type of form.

Realize that there are a lot of income and other taxes in Japan and depending upon your circumstances, some of the income taxes can even be paid at a convenience store.

To my knowledge, the internal earnings of your Canadian RRSP are not taxed in Japan. Someone would have mentioned it to me by now.  However, even thought there is a federal exemption (form 8891) in the US and 49 out of the 50 states hono(u)r that exemption, they ARE taxed in the State of California.  Therefore, I leave it to you to check further.  Without its being addressed in the treaty, it could be a problem in Japan or even the city you live and work in.  I have never heard of its being a problem but one member of this newsletter had a bad experience in Australia over his RRSP internal earnings back around 1987.

You should check  when you arrive. 

Japan only has five or six Social Security Agreements but one of them is with Canada.  You should read it at:


to clear up any misunderstandings before you get into the Japanese system.

Do any other readers have any comments on this?



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This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no rental
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to $700
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.


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