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Immigration to Canada through service - use CSIC or Lawyer

QUESTION: dear sir,
i am a citizen of Nigeria.looking for a green pasture in canada i want to migrate to canada.
i saw this canandian migration expert website and i log on and i fill their form and at the end
of the day they told me to pay $299 is my question when i pay this money does that make
me to get my visa instantly because i am a little bit skeptical.please i will like you to help me
and please send response to my mail address.
david ingram replies:
I do not know who you are dealing with and cannot even comment on the price which sounds very low for the service to deal with a Nigerian Citizen's desire to come to Canada.

Remember, you can do the work yourself. on teh Canadian Immigration website.

Without a job offer, you have to qualify with 67 points on the self-assessing test.

Take this test and see if you qualify.  If you qualify, it is worth pursuing.  If you do not, don't pay anyone anything because they can not likely do anything for you.

The only way you will come then is with a legitimatre job offer.
This is the self-assessment test for an individual to determine his or her
eligibility to immigrate to Canada without being sponsored by a spouse or an employer.

There used to be a lot of people out there taking money for doing little and producing nothing.  Canada, has now established the Canadian Society of Immigration Consultants. 

If you do retain anyone to deal with your paperwork (other than secretarial typing, etc.) your person should be a member of CSIC or a Canadian lawyer who deals with Immigration.
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Canadian witholding tax and estate inheritance for non-residence


My father died in June 2007. My father's Will names me as sole beneficary and executor.
I am currently Canadian non-resident. My question is whether the 25% witholding tax will now apply to ant monies and property  transferred to me from my father's estate...  would I be liable to "lose" 25% of the value of the home? Also, if non-resident would I lose 25% of the value of the funds when  they are transferred (after they have already been 46% taxed as part of my father's final tax bill) , or, would I only lose the witholding tax of 25% on  subsequent  interest earned after transfer (keeping the funds in Canada)?

As the probate process is starting -  I do hope that  you can give me an early response as to whether you can provide a  opinion regarding how the non-resident Witholding Tax would apply given my circumstances. Hope to hear from you soon.

david ingram replies:

Your father's final T1 tax return and / or his estate T3 return should pay tax up to the date of disposition of the assets.  Because of your non-resident status, it is  easier for the estate to pay the tax internally on any interest or dividends or rents earned up to disposition and then the estate just gives you principal which woul dnot have any withholding tax whatsoever.

If, the executor chooses to disperse the internal earnings to the beneficiaries, he or she will have to dedcut 15% of any dividends, rent or interest sent to you.

If, on the other hand, you are in a tax treaty country (US, UK, France, Indonesia, Mexico, Japan, etc) the withholding tax would likley be 10% on any interest and 15% on any dividends with rents remaining at 25%.
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entering usa to work as caregiver for Canadian Family on vacation


I am a caregiver employee here in canada,my employer keeps on travelling and they need me to go with them everywhere they go,i only have single entry working visa,and they are planning to go to usa this coming september,what should i do in able for me to go with them? thanks

david ingram replies:

In general, if you  were a Canadian, you are allowed to accompany your 'family because you are considered part of a family unit  and a three or four week vacation would likely be okay although any Homeland Security Officer 'could' take exception to the situation. 

However, I think you are likely from the Philippines and a Philippine National absolutely requires a B1 (business)  or B2 (vacation) Visa to enter the United States.  Therefore, you are going to have to go to the US Consulate on the 21st floor at 1095 West Pender (corner of Thurlow) in Vancouver. A number that should work for this purpose at the Consulate is (604) 685-4311 ext 246,  You can also check this out at the Airport Office by calling (604) 278-3360.

Your single entry visa to Canada is your real problem because you could end up barred from coming back to Canada.  Your employer should rectify this situation with whatever agency they used to bring you into the country.  If they need help with a professional immigration person on a  fee for service basis, they / you could try Ron McKay at Clark Wilson.  Ron is an ex Canadian Immigration Officer who also teaches the Immigration Practitioners Course at UBC.  His phone number is (604) 687-5700 ext 3148 and his email is [email protected]
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Income Tax Help in USA tax on gift from India question

Hello,   I am sorry for the unsolicited email. I was searching google for tax info and found your address. If possible, please answer my questions about tax on money from India.   I am from India and work in the US. I am planning to buy a house and my parents in India want to send me money to go towards it. My questions are-   1. What is the maximum amount that they can send?

2. Is that money taxable here in the US? If yes, will it have only state tax or also federal? 
  Thanks   ----------------------------------
david ingam replies:

Because your parents are not US persons, they can give you any amount of money they want.  However, the money should be in India when they give it to you.  They should NOT have a bank account with $200,000 in it in their name in the United States.

If they did or were in the USA when they gave you more than $12,000 each, they would owe gift tax on it.

They should send you the money by electronic transfer - their bank in India to your bank in the USA - OR, if you are in India, they could give it to you there and you could transfer it yourself.   -

Your bank will then notify FINCEN that the money has arrived but becaue it was snet electonically, there will not likely be any questions. 

If there are questions from the IRS at this point it is easy to prove or show that it was a legal gift,. 
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Income Tax Help in USA PAY FICA or CPP or not

At 01:21 PM 7/27/2007 -0700, you wrote:
There is NO tax advantage to you to have a corporation in the US and a lot more accounting costs for a very dubious hint of personal liability protection with a Subchapter S US corporation.

Hi David,

I have heard you and others say the above statement, although our own experience is a little different. The first year we moved to the US we were not incorporated and the amount of our FICA tax was enormous because we were self-employed. Our local accountant advised us to form an S-Corp. so that we could receive part of our compensation in dividends, thereby avoiding payment of FICA taxes on that amount. It seems to me that this is a common practice here. Have you thought of this aspect?

As always, I love reading your emails ... thanks!


david ingram replies:

I understand the FICA problem but you are missing the point that the FICA is a pension and a form of forced savings.  Avoiding it assures less money in retirement the same as avoiding CPP payments leaves one short in retirement in Canada. 

I was NOT there for the start of the FICA but I was in the middle of the introduction of CPP in Canada and am seeing the aftermath today.  I could likley name 100 people who were well off at one time and have fallen on hard times today because of health, divorce or just plain business disasters. 

I can even use myself as an example because I turn 65 in Sept and have gone through a $5,000,000 bankruptcy and $1,000,000 divorce in the last 5 years.  I will receive a reduced CPP because of  several years of non-contribution when I was literally flying high. 

Every week, I run into someone who is now living on their CPP and OAS or their CPP FICA and OAS mixture and is getting less because they arranged their affairs to pay less into CPP or FICA and today, they have lost all their investments (through illness, divorce or business reversals) and could really use that extra .  $3, 4 or 500.00 per month.  

Strangely, Life Insurance sales people and Realtors, in particular are the worst victims (you notice I did not use the word offenders) because they set themselves up to deduct everything before net income by being self employed whereas they could  have had  full CPP or FICA benefits by being employees and paying CPP or FICA on gross income and then making just about the same income tax deductions as an employee.  (this does require a little manipulation to deduct fax and other machinery but it can be done safely and legally and then the realtor, etc. does not have to rely on welfare in retirement). 

This last statement came to roost just last week when a former West Vancouver realtor wrote me to say that she just couldn't pay a 3 year old bill she had with me because a leaky condominium situation had wiped her out. she has moved to a small town 300 miles away because she does not want to be around her former friends and colleagues as a flat broke retiree getting GIS (guaranteed income supplement which is a politre word for welfare).

Then another recently retired lady called 'today" while I was in teh caribbean Days parade  to ask me to represent her at a strata meeting because she has just been told about a $75,000 leaky condo assessment on her rental condo and that will take $600 a month out of her retirment income for a long long time.
So, I have thought about the "not paying FICA/CPP argument) it but consider it false economy for more reasons than one. 

All sorts of financial people have also shown how much better off you would be if you took the money you have to pay into FICA  or CPP and invested it yourself in "their" product.  Interestingly, two of the high profile Vancouver people who have been pushing that concept for 20 years are living in pure poverty today in Vancouver because of large scale financial reversals.  Knock on wood that I did not become one of them myself.

Interestingly, their clients have done better than they did because the advisors  took big time 'flyers' that did not work while their conservative clients stayed safe.

Please do not fall into that same trap.  However, But,  IF you are not paying into FICA or CPP, do invest what you would have been paying into a sound and safe investment and do not waste the tax 'savings' and spend it in a frivilousl manner.

The problem with making the investment, of course, is that with the exception of Saskatchewan and Texas and a couple of other places I do not know about, most of the private retirement plans can be attacked when you are in financial distress. CPP and FICA can NOT be attacked by creditors. Living in BC, I would have lost any RRSP account I might have set up.

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Income Tax Help in USA help needed for move back to the USA with green card

I am a Canadian who will be moving to the US when my Green card process is complete ( sometime in the next 6 months or so). I am currently employed in Canada but will become a consultant ( self employed) at the end of September. Most of my work and income will be Canadian based at least until I establish US clients when I move. I anticipate living in Washington State ( Olympia) and traveling back to Vancouver when necessary to meet clients local and do work. I am seeking some advice on a number of issues

1)       as self employed in Canada and then the US am I best to set up a business entity?

2)         What expenses should I be able to claim as legitimate cost of doing business as I set up and operate the business in Canada and then the US, e.g. immigration costs? Relocation costs?

3)      What strategies do I employ to minimize tax in both jusridictions particularly in light of the upcoming move between jurisdictions?

I was previously a Green card holder. I formally gave that visa up when I was transferred back to the states??, so I had a social insurance number etc and paid taxes in the states when living there.  I do have some rudimentary understanding of the things I need to do to minimize tax such as selling RRSP assets and buyback to raise book value to market prior to relocating but I need some professional advice and guidance.

Do you do this kind of work for individuals? How do you bill and at what cost?


david ingram replies:

Sounds like a marriage to me.

1.   Until you find out how well you are doing, you are likely better off to just keep your position as a self employed consultatnt and file Scheduel T2032 in Canda and schedule C on your US return. There is NO tax advantage to you to have a corporation in the US and a lot more accounting costs for a very dubious hint of personal liability protection with a Subchapter S US corporation.  The reason is that a one person Subchapter S coreporation is run by yourself, the work is done by yourself, and if there is a problem, you are responsible as the person who did it.  So, just as I would sue you, the driver, who had a collision with me and the car was owned by a corporation, I would suse you the operator or worker who did something for the corporation.

2.   Moving expenses are dedcutible if you move  closer to a place of employment.  Your description has you moving further away from Vancouver BC (although closer to Vancouver, WA). Canada does NOT allow moves in or out of the country except for students and members of the Armed forces and since yuo are moving away from the job, there is no relocation fee deductible for Canada.  You can file US form 3903 to claim moving expenses to the US but only against income in the new location. Immigration costs are not deductible in either country.

3.   Beats me, I do not have enough information.  I have sold some 700,000 books on the subject but they are sold out.  Sandy Botklin, a US based CPA and former IRS agent has a  Canadian AND an American audio course on  the subject. They are $249.00 each at.

If that is too rich for your blood, you can buy a 2002 version which statres that it includes Canada and the US on ebay for $114.00 at

What you want is what I do, either in person or 50% of the time by LD phone.  I charge $400.00 Cdn per hour plus GST if you are in canda at the time of the phone consultation or in person.

You will find more pricing information inthe following disclaimer.

I think you got the countries wrong in your question.  I am assuming that you meant Canada where I have enlarged and printed the States in red.
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I am NOT a Tax Protester but the following is interesting and was sent to me by the former leader of a Canadian Political party

Stick this away on your back burner

david ingram

IRS loses challenge to prove tax liability
Lawyer is acquitted after arguing income levy lacks legal foundation

Posted: July 26, 2007
1:00 a.m. Eastern

By Bob Unruh

ゥ 2007

The Internal Revenue Service has lost a lawyer's challenge in front of a jury to prove a constitutional foundation for the nation's income tax, and the victorious attorney now is setting his sights higher.

"I think now people are beginning to realize that this has got to be the largest fraud, backed up by intimidation and extortion and by the sheer force of taking peoples property and hard-earned money without any lawful authorization whatsoever," lawyer Tom Cryer told WND just days after a jury in Louisiana acquitted him of two criminal tax counts.

And before you consign him to the legions of "tin foil hat brigades" who argue against paying taxes, and then want payment to explain how to do that, he addresses the issue up front.

"These snake oil peddlers have conned millions of dollars out of many well-intended patriots and left a trail of broken lives in their wake. ・These charlatans should be avoided, not only because they will lead you to bankruptcy and prison, but because by association they discredit those who are telling the truth," he said.

The truth, he said, is where he comes in, with the launch of a new Truth Attack website that is intended to build on his victory, and create a coalition of resources to defeat ・ultimately ・the income tax in the United States.

Although the legal citations in the case tend to run the length of paragraphs, Cryer told WND the underlying issue is not that complicated. Essentially, he argued that income is not necessarily any money that comes to a person, but rather categories such as profit and interest.

He said the free exchange of labor for compensation has been upheld as a right by the Supreme Court, but that doesn't necessarily make the compensation income.

If ever such an argument were to be presented widely, Cryer said, the income to the federal government would plummet. But not to worry, he said, the expenses could be reduced equally by eliminating programs, departments and agencies that also have no foundation in the Constitution.

"The Founding Fathers intentionally restricted the taxing powers of the new federal government as a measure of restraint on its size. By exceeding that limited taxing authority the federal government has been able to obtain resources beyond its intended reach, and that money has enabled the federal government to exceed its authority," he said.

For example, he said, the Constitution does not empower the federal government to regulate education, or employment, and agriculture, yet it does so.

The jury in U.S. District Court in Louisiana voted 12-0 to find Cryer, of Shreveport, not guilty of failure to file income taxes for two years. He had been indicted in 2006 on charges of failing to pay $73,000 to the IRS in 2000 and 2001. The next step in his personal case will be up to the IRS and prosecutors, if they choose to continue the issue, he said.

But for the rest of the nation, he's working with Save-a-Patriot, the Free Enterprise Society, Live Free Now and his own Lie Free Zone to spread the message of the truth.

"There are three points that are important," he told WND. "There's no law making the average working man liable [for income taxes], there's no law or regulation that allows the IRS to contend that earnings are 100 percent profit received in exchange for nothing, and the right to earn a living through any lawful occupation is a constitutionally protected fundamental right, and it is exempt from taxation."

Spokesman Robert Marvin in Washington's IRS office told WND the Internal Revenue Code provides for taxation on salaries or wages, but when pressed for a specific citation, or constitutional provision, he said, "I can't comment."

Cryer's encounter with tax law began more than a decade ago when a friend told him the income tax was sham. Cryer started researching, hoping to keep his friend out of trouble. But his conclusions, after years of research, were exactly what his friend told him.

He researched not only tax laws, but also the documents pertaining to the drafting of the U.S. Constitution as well as the first income tax.

He said throughout his battle, he's offered at every turn to pay taxes if the IRS could show him the authorization, and that never has happened.

"The Criminal Investigation Division and Department of Justice both responded only with 'your position is frivolous.' I had never stated a position, so how could they know whether it was frivolous?" he said. "Imagine my sending you a bill for $1,000 and when you call me and ask what the bill was for I simply said, 'that position is frivolous, just write the check and send it in.'"

His acquittal, he said, was a precedent because it means "people can see and recognize the truth."

He said multiple Supreme Court opinions have affirmed an individual's ownership of his or her own labor, and "exercising your fundamental rights" is not taxable. "It is definitely a trade. What most people receive in the form of wages, salaries or in my case fees that they personally earned for their labor is not received in exchange for nothing."

He said there might be a profit that should be taxable, but there might not.

"The IRS lets Wal-Mart sell a trillion dollars worth of goods, but they can back out their cost of goods [before being taxed,]" he said. "The IRS considers, in the case of a Wal-Mart wage earner, 100 percent of what he takes in is profit."

"But he's using his life, energy and work lifespan, and depleting it as he goes," Cryer told WND. "[Working] is a God-given fundamental right that is protected under the Constitution and can't be taxed any more than exercising freedom of speech."

While he waits to see what, if anything, the IRS and Justice Department will do next in his case, he's working to coordinate the groups that are battling taxation as unconstitutional.

"I have started a campaign to unify [the work] and we've got a number of organizations that are sponsoring and supporting this campaign," he said. The goal is to get everyone "who is aware of the truth" organized so they can spread the word.

He warned without a restoration of constitutional basics, the nation is lost.

"Read your Constitution and you will see that the federal role does not include ANY authority to regulate or tax any citizen directly and that WE expressly reserved the right to rule and govern ourselves as States, not as mere political subdivisions," his website says.

"The Constitution does not allow the government to run your lives, but the money it is stealing from millions of Americans is the fuel for its over-reaching and kibitzing. Take the money back and we and our states and communities can again be free," he said.

The fight is over "our FREEDOM from rule by a DISTANT RULER, just as we fought to free ourselves of a distant England over 200 years ago," he said.
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US residents buying rental condo in Toronto NR6 NR4

Hello David!
My partner and I are thinking of buying a condo in Toronto (cost around $240,000).  We were married in Toronto, but currently live in the US (California).  He is a US citizen, and I am a Canadian citizen (and US Permanent Resident).  I last filed a Canadian tax return in 2003.
We would like to move to Toronto (timeline anywhere between very soon and in a few years), and think that a condo may be worth buying at this point.  However, I'm not sure how much of a down payment we are required to make.  Do we need 35%, as often required for non-residents?  Is 5% acceptable?  Many banks offer mortgages allowing a 5% or lower down payment, but it is unclear whether those mortgages are available to everyone.
Also, I am not sure what the term "net rental income" means, and I've seen it repeatedly in discussions of the tax implications of renting out Canadian property by nonresidents.  Would we have to pay tax on our rental income if we rent the unit out for a while?  There are obviously expenses in addition to the mortgage payment (maintenance fees, property tax, etc.), and the rent collected would likely be just shy of the mortgage payment.
Can we get a mortgage with 5% or less down, and what would the resident/non-resident status and tax requirements for us be?
  -------------------------------------------------------------------- david ingram replies:   In general, you will require 35% down unless you have some sort fo family tie to a Canadian Bank from your past.   Buying a place to live in the future at today's price is a highly commendable thing to do as long as you are prepared for its going down in value in the short term.   However, it is better to buy and have it go down for a couop,le of years than it is to wait for it to go down (before buying) amnd have it go up another 20 or 50%.   Since I assume you will be renting it out, you will be needing a Canadian Tax agent (which might be a rental agent or could be your brother).   These older questions might help   Subject:        US citizen buying canadian vacation property
Expert:         [email protected]
Date:           Thursday September 16, 2004
Time:           06:02 PM -0700


My wife and I have vacationed in Baddeck, Cape Breton numerious times, and want to buy a vacation home there, likely next year.  I've read your "Border book" excerpt on
I tried to find "Border Book" by David Ingram on, but wasn't sucessful.  If I could find it, I'd buy it.

We'd like to rent the Baddeck home out mostly for the next 10-15 years, then reside there up to 3 months / year (under the magic 131 days).
Are there any special USA+Canada tax consequences to the following:
1. take a mortgage to purchase, then offset interest expense vs rental income.
2. take a 2nd mortgage on my USA home, and pay cash for the Canadian home. =======================================   david ingram replies:   The border book is out of print and not likely to be republished in the near future.  Most of the good stuff has been put on the web and you are free to download and print from   Beddeck is a marvelous place, home of the Alexander Graham Bell museum and the birthplace of many of Bell's inventions.  Also, just down the road from Rita McNeil's coffee house at Big Pond, and around the corner (relatively speaking) from the Marconi towers, Fort Louisburg and a whole lot of North American history.   However, enough of the history lesson.   1.    If you rent the place out in Canada, you are wise to have a mortgage or line of credit which will generate enough interest expense to offset the income when added to the property taxes, management fees, utilities,  and repairs and maintenance.    This will create a neutral tax return for Canada and you "HAVE to file an annual return.  If you do not file an annual return and the Canadian Income Tax department finds out, you will be taxed 25% of the "gross" rent received with no allowance for any expenses more than two years old.   One new client (H & P XXX) just found this out to their amazement.  They were just assessed over $50,000 for taxes interest and penalties back to 1995 for a place that rented out for an average of $16,500 a year but lost money.  They had been told (they say) by a Canadian Accountant that they did NOT have to file a Canadian return if they lost money. ----------------------- And just in case you think Canada is unreasonable, the US in reverse has a 30% of Gross rent penalty plus $1,000 to $10,000 a year penalty for failing to file.   Remember that the tax and penalties are then subject to late "paying" interest for the years so a 1995 tax penalty of $4,125  (25% of $16,500) plus a 17% late filing penalty plus late paying interest from 1995 to 1004 is over $8,000 by itself. ----------------------------- 2.    If you have a paper trail showing that you borrowed money in the US to buy the Canadian property, the interest is still deductible on your Canadian return.   Of course, you will be caught up in the personal use rules.  for the US, they are that you cannot use the rental vacation house as a tax deduction if you stay in it more than 14 days or 10% of the days it was rented at fair market value.  So to use it for 20 days without penalty, you would have to rent it out for 200 days at a fair market value to strangers.   It is important not to file your Canadian return with a rental loss because rental losses can NOT be carried forward or saved up against future capital gains.  If you do see a loss coming, you can capitalize repairs and interest expense to raise the adjusted cost base (ACB) provided you make the election in writing the first year of rental.   Hope this helps.  If you have any more questions, I am available for private consultation by phone or in person for $400 Cdn for up to an hour or you can phone the radio program on Sunday mornings for "free".    It is long distance from the US. ------------

QUESTION: I am an American citizen who is purchasing a new townhouse in
Vancouver.  I plan to maintain my primary residence in the US and rent the
house near the UBC campus 9-10 months a year.  I plan to treat the house as
a second home under US tax law which requires me to be in residence 10% of
the rental days and I will not exceed 6 weeks in any year while I work.  I
have downloaded information on landlord/tenant responsibilities in UBC.  My
questions relate to tax issues: (1) what do I need to do to comply with
Canadian tax law on the rental income; (2) do I need to file a Canadian tax
return; and (3) are my closing costs deductible on my US return?

david ingram replies:

Before you rent it the first day, you need a "tax" agent who may or may not
be the actual rental agent.

You and the tax agent have to sign and submit Canadian form NR-6 which
guarantees that the agent will file your Canadian Section 216(4) income tax
return if you fail to do so.

Your closing costs are added to the ACB - Adjusted cost Base - of the unit
and depreciated over 27 1/2 years on schedule 4562 and schedule E of your US

Any tax paid to
Canada will be deducted by means of US form 1116 attached to your 1040.

Glad to look after most of this for you.
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Canadian Employee receiving US Stock Option

I get employee stock options form the company I work for in Canada.
It is a multinational company publicly trading in the NY Stock Exchange.
This year I exercised the options. No US tax was withheld.
Do I report this in 2007 as capital gain ?
Thanks for the response
david ingram replies:

Your employer will report it on your T4 slip at the end of the year.

Check with your payroll department but that is what is supposed to happen.

Sounds like Electronic Arts (ERTS) to me and they always put the stock option on your T4 slip.

When you do get your T4 slip, look in the footnotes.   There should be a note stating a figure of one half of the amount of tjhe stock option.

This amount is a DEDUCTION which you put on line 249 on page 3 of your Canadian T1-return

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Rolling a 401(k) into an RRSP


I have recently moved back to Canada from the US and I have a couple
questions about rolling a 401(k) into an RRSP (I know in general
this is not the best financial practice, but it looks like this
would be the best way for me to get access to the funds to use as
a down payment on a property).

1. I know it's possible to roll and IRA into an RRSP. Is it
possible to do so with a 401(k). From everybody I have talked to
so far I am getting mixed signals as to whether this is possible,
or I have to roll the 401(k) into an IRA first.

2. What documentation, if any, do I need to show that I am rolling
the 401(k), or the IRA, into an RRSP, so that it simply does
not look like a contribution.

david ingram replies:

I am including a prior reply as an answer.

Dear Sir,

I have been working in California for the 5 years on H1 visa  and have 401 plan(about 40K)
What should I do with this plan , when I will move to Canada ( I'm a PR.)
Move it to IRA or other option .
Thank you very much


david ingram replies:



In the US since 2001 and there is a 50-50 chance I will move back to Canada
in 2007 or beginning of 2008. What should I do with the following:

1.401K : I have a 50K+. Should I let it grow? Rollover in a IRA? should I
withdraw when I know for sure that I will move back? (I heard you can
rollover an IRA or 401K into a RRSP) what are the tax implications?

2. In the event I move to Canada, can I use my 401k or IRA toward the
purchase of my first home and not be taxed on my withdrawal.(I currently
rent in the US and never bought a property in Canada) Will the US recognize
a property bought in Canada as eligible for the first time home buyer

3. We wanted to contribute to a Coverdell education saving account this year
for our first child. Will Canada tax me upon distribution?

4. Is there a best time to move back to Canada, (late 2007 or beginning of

Thank you for your time
david ingram replies:

Your 401(K) can be rolled to an IRA.  Your IRA can then be rolled into an
RRSP but the US will not recognize it as a rollover and want to penalize you
10% for early withdrawal if you have not yet reached the exalted age of 59
1/2 at the time of withdrawal.

By buying a house, you can exempt up to $10,000 of the withdrawal from the
10% penalty.

Rolling it into the RRSP involves reporting the IRA as income on your
Canadian return and then claiming the deduction for the rollover. Because
the tax paid to the is a foreign tax credit in Canada, you get to claim the
tax paid to the USA against other income in Canada.

Therefore, it is necessary to have significant other income in Canada for
you to get the equivalent of a tax free rollover.  In other words, do NOT
move to Canada at the end of a year.  You should move at the start of a
year, i.e. Jan 15 to May 15 or so that you can get a lower tax rate on your
IRA withdrawal in the USA and maximum benefit for the foreign tax credit in

The alternate if you do move at the end of a year is to wait until the next year to do the rollover.

Done properly, and with the RRSP money in the account long enough in Canada,
you can then withdraw up to $20,000 Canadian (tax deferred) to use as a down
payment on your Canadian house.

the following previous email talks about it as well.


worked in CA for 4 yrs. returned to BC in Apr.'04.  Need to transfer my
retirement fund but having difficulties with bank and credit union.  US
specifies that I must roll it over to IRA accounts (Individual retirement
account.  I do not want to be subject to the 20% withholding fee for IRS.
What would be the best way to get the funds to me here in Canada.
david ingram replies:

1.  move it to an IRA and leave it there in one of the world's strongest
economies.  Most financial advisors are trying to get "more" of their
clients' money into US funds.

2.    If you just have to have it in Canada, you have to cash it in in the
US and pay your tax to the US.  take what is left, add the amount (even if
borrowed) of the tax you paid to the US and buy your Canadian RRSP.  That
will give you a tax deduction which should be larger than the tax you paid
to the US.

When you get the refund, pay back the loan.  You will have transferred the
money quite handily.

The amount you took out is also taxable on your Canadian return.  Pay that
tax with the tax you paid to the US as a foreign tax credit.

You will likely need help.

Don Walkow of Seabank Capital Management in Surrey, BC is one Canadian who
can help you with the process while you are still in the United States.  His
licensing allows him to deal with 401(K) plans, IRA's, RRSP's and straight
securities in any state in the US - He is one of two people I know of who
can do this. - His North American telephone number is 1-800-541-9952 and you
can find out more at

Darrell Thompson of Blackmont Securities is the other person and is located
in Toronto.  His phone number is 866-775-7704

If you are in Canada and in BC in particular, Fred Snyder, host of "Its Your
Money" every Sunday Morning from 9:00 to 10:30 AM Vancouver Time can also
look after you but can NOT talk to you if you are in the US. (999 out of
1,000 other Representatives in Canada can NOT talk to you either).  You can
listen to this Canadian Program (I am a guest on the fourth Sunday of every
month) live at