born in Canada, move back to Canada Dual Country tax help.


QUESTION:

Hi,
I was born in Canada in 1954.  Parents always were US citizens, living in Toronto for 7 years in the 1950s.  Family moved to Ohio in 1957 and we stayed in USA ever since.

I have a Canada birth cert.  I have USA passport.  Aside from signing passport, I never made any official statement.

Last I inquired, I could apply for Can. passport.

Questions:
1) Can I move back to Canada now with the intention of living there for many years?
2) What status would I have?
3) Would I need employment or other demonstrable income?
4) Would I be entitled to any government benefits (same as other Can. citizens)?

Thank you very much.
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david ingram replies

Assuming that neither your father or mother was in Canada on a diplomatic passport, You are a Canadian citizen.  If one of them was a diplomat at the US Consulate. You are NOT a Canadian citizen.  If they were just here working at whatever;

1.    yes - apply for a Canadian passport first
2.   you would be a Canadian Citizen
3.   No
4.   Yes.  You would ALSO be able to claim your US Social Security when the time comes.  Your OAS would be pro-rated b y the number of years divided by 40 after you turned 18  and before ager 65.  Your Canada Pension Plan would also be pro-rated to cover the years you contributed as would the US Social Security.

You would also qualify for a provincial medical plan within 90 days (or less) after coming to Canada.  Make sure you fill it in the first day you are here, particularly if you come on the last day of the month.  That last day can count as a whole month.


You should go to www.centa.com and read the October 1993 newsletter on Dual citizenship in the top left hand box and then read the Oct 1995 newsletter on the Income Tax duties of a US citizen living outside the US.

Then read the following which has not taken affect yet and does not really apply to you because you were born in Canada  but will apply to many readers of this who were born before Jan 1, 1947 and may have lost their Canadian
citizenship under the old rules.

President Clinton did much the same on October 20, 1994 when he gave US citizenship retroactively to children born to US mothers before May 24, 1934.

Perhaps like John Wycliffe who "Though a scholar living a life of privilege, he nevertheless felt a special empathy for the poor and the uneducated, those multitudes in feudal servitude whose lives were "short, nasty, and brutish", President Clinton and Our own Prime Minister Stephen Harper decided to make life less nasty and brutish.

And although this old stuff seems so old, I have just spent a couple of days going through a box of my mother's things and reading the love letters from my father to my mother form 1937 to 1976.

I see that you have an interest in John Wycliffe.  I don't but at the time of the first love letter  in 1937, King Edward VIII  had just abdicated the throne of England on
Dec 11, 1936 and become the Duke of Windsor on Mar 8, 1937.  My father's Uncle, his father's brother) was Lord Winnington Ingram Bishop of London from 1901 to 1939 and the (a) religious advisor to the now Duke of Windsor.

It was a different time then, the language was more formal and flowery and one of the great scandal romances was taking place as Edward abandoned the throne of England to marry the American Divorcee Wallis Simpson.

Anyway, enough of that.  Welcome back to Canada and of course, when you have that first two country tax return to deal with you know where I am.  half of our business arrives by mail, fax, courier or email (multi-page pdf files only please).

However,  just in case you land in Halifax or Toronto or Kelowna or Victoria, these other names can help you as well.  I have included them after the new rules which are taking place on or before (but not yet) April 17, 2009 to restore Canadian Citizenship to more than 1,000,000 people. 

New citizenship rules

A new law will come into effect no later than April 17, 2009, which amends the Citizenship Act. The new law will give Canadian citizenship to certain individuals who lost it and to others who will be recognized as citizens for the first time. Citizenship will be automatic and retroactive to the date of loss or date of birth, depending on the situation. Also, all individuals who are Canadian citizens at the time the law comes into effect will keep their citizenship.

Until the new law comes into effect, the current law still applies.

  • This means that people who will become citizens under the new law but wish to move to Canada before it comes into effect must contact CIC to find out what steps they must take to come to Canada legally.
  • Also, people born outside Canada who are subject to the retention rules and who turn 28 before the law comes into effect must still take action to retain citizenship.

Who will become a citizen

The law restores citizenship to the following individuals who lost it due to rules in previous laws:

  • People who became citizens when the first citizenship act took effect on January 1, 1947, including people born in Canada prior to 1947, war brides, and other British subjects who had lived in Canada for at least five years before 1947;
  • People who were born in Canada or became a Canadian citizen on or after January 1, 1947, and who then lost citizenship; and
  • People who were born outside Canada, on or after January 1, 1947, in the first generation born abroad, to a parent who was a Canadian citizen at the time of the birth.

The law gives citizenship to the following individuals who have never been citizens:

  • People who did not take the steps necessary to become a citizen and who were born outside Canada on or after January 1, 1947, in the first generation born abroad to a parent who was a Canadian citizen at the time of the birth.

Who will not become a citizen

The following individuals will not become citizens under the new law:

  • People who did not become citizens when the first citizenship act took effect on January 1, 1947;
  • People born in Canada who are not citizens because at the time of their birth one of their parents was a foreign diplomat;
  • People who were born outside Canada to a Canadian parent, who are not already citizens, and who were born in the second or subsequent generation abroad;
  • People who were born outside Canada to a Canadian parent, in the second or subsequent generation abroad and who lost citizenship because they did not take the steps needed to retain their citizenship;
  • People who renounced their citizenship, as an adult, with Canadian government;
  • People whose citizenship was revoked by the government because it was obtained by fraud.

Adoption

The rules that came into effect in December 2007 that allow children born outside Canada and adopted after February 14, 1977 to become Canadian citizens without having to become permanent residents will be extended to persons adopted on or after January 1, 1947. For the adopted person to be eligible for citizenship, certain requirements must be met, including the submission of an application. This also includes persons adopted by someone who will reacquire Canadian citizenship under the new law.

Persons born or adopted outside Canada after the new law comes into effect

The new law changes the rules for people born outside Canada. Individuals born outside Canada to a parent, who was a Canadian citizen at the time of the birth, will only be Canadians at birth if:

  • the parent was born in Canada;
  • the parent became a Canadian citizen; that is, by immigrating to Canada and being granted citizenship.

This means that children born in another country after the new law comes into effect will not be a Canadian citizen by birth if they were born outside Canada to a Canadian parent who was also born outside Canada to a Canadian parent.

This limitation will also apply to foreign-born persons adopted by a Canadian parent. Adopted children of Canadian citizens will be considered to be the first generation born abroad. This means that:

  • if a person adopted by a Canadian parent has a child outside Canada, that child is not a citizen by birth;
  • if a person adopted by a Canadian parent adopts a child outside Canada, that child will not be eligible to apply for citizenship under the adoption provisions in the Citizenship Act;
  • if a person born outside to a Canadian parent, in the first generation born abroad, adopts a foreign-born child, that adopted child will not be eligible to apply for citizenship under the adoption provisions in the Citizenship Act.

Children who are not eligible for citizenship under the Citizenship Act may be sponsored as permanent residents.

How to prove you are a Canadian citizen

For most purposes, people who were born in Canada may use their provincial or territorial birth certificate to prove their Canadian citizenship. Individuals who were born in Canada, lost citizenship in the past, and either resumed citizenship in the past or reacquire it under the new law should be able to use their birth certificate as proof of citizenship.

People who were born outside Canada require a citizenship certificate to prove their Canadian citizenship. Find out how to apply for a citizenship certificate.

Getting ready for the new law

CIC is preparing for the new law by:

  • writing regulations to support the amendments;
  • writing information sheets to explain the changes;
  • updating applications and other forms;
  • training staff;
  • working with stakeholders and partners to ensure they know about the changes and can inform others about them.
The following provide INCOME TAX HELP for US / Canada situations.  they do NOT provide Immigration help.

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Gary Gauvin is absolutely qualified to deal with you.  He is an old business partner of mine from Ottawa.  He now practices outside of Dallas Texas as a one or 1 1/2 person office.  If you deal with Gary, you will deal with Gary.  He is a US enrolled agent.  You can find his website easily.  Type - income Tax Expert -  into
google.  Gary will come up as number one or two.  Why, because he is.  If I am looking for a first or second opinion, I call Gary. Disadvantage -

Gary is a one and a half  person office.  Advantage - You will always get to talk to Gary.

Gary likes corporations.  I  and my four associates do not like them. I like dealing with individuals who deal cross-border withOUT corporations.

OR   KPMG in Vancouver. The last time  I checked they had 22 people in their US/Canada department.  call (604) 691-3025.  Advantage - Lots of Backup.  Disadvantage - It will be hard to get the same person to deal with you three times in a row.

OR   Steve Peters with KPMG in Halifax (902) 492-6011

OR    Kevin Nightingale in Toronto (416) 733-9595

OR     Len Vandenberg with BDO Dunwoody in Kelowna, BC.  (250) 763-7600

OR     Steve Katz in Vancouver at (604) 732-1515

OR    Brad Howland in Victoria at (250) 598-6258

Whoever you choose, you would likely do well to consult with me for one or two hours a year.  If I have a suggestion, it will be worth it.  If I can't come up with anything, you will know that what you are doing is likely the best track.  I will compare it to my dentist.  When I went in the fall of 2005, I ended  up with $16,000 to $18,000 of dental bills, a root canal, a bunch of pain, and a lot of nice new caps, etc. 

When I went for an inspection on Jan 29th, he could not find anything wrong except that I was not flossing.  Which one did i appreciate more?

Well both - the first time was expensive but dealt with years of neglect.  The second said I am on the right track.

Good luck.

Looking at the California Non-resident Adjustment Form CA(NR) will give you an idea of how this leaving the country stuff works.  http://www.ftb.ca.gov/forms/07_forms/07_540nrca.pdf

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SUGGESTED PRICE GUIDELINES - May 17, 2008

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) expert  US Canada Canadian American  Mexican Income Tax  service help.
pert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
 
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST for in person or if you are on the telephone in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
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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