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USA TOO GOOD TO BE TRUE

We have been asked to enter into an investment with these people for
 the purpose of saving tax money and wondered what your take might be on
 it. We have heard good things and our financial advisor is doing his due
 diligence on it as I write this.
 www.synergywestcoast.com for tax savings
 and
 www.borealisglobal.com for investing and receiving 12-18% paid quarterly
 on the investment locked in for 2 years.

 It was good visiting with you last week and bringing our taxes up to
 date.
We have both sent in our paperwork for CPP and OAP respectively!

 _________________________________________________________________________________________________ david ingram replies:

Don't touch it with a ten foot pole or a 12 foot Ukrainian. It is a Ponzi or "Prime Lettrer " Scheme.  --

Shane Smith, the president of Borealis International was "indicted" along with a lot of others on Dec 7, 2006 for illegally selling unregistered securities.in Ontario. He is forbidden to deal with any securities or investments until June 14, 2007 under a temporary order (section 127(7) of the Ontario Securities Act) which will undoubtedly be made permanent. Shane is also required to put the cease trading order on his website which he has not done. 

I am forwarding a copy of the following http://www.borealisglobal.com/BorealisGRIC.pdf  - to the Ontario Securities Commission.  It is why Synergy is asking people to sign a non-disclosure document.  If you have a financial advisor seriously looking at this, you need another advisor. 

In my opinion, he or she is
either dishonest, naive or just plain stupid and not someone you should be dealiong with.  Although it took a bit f looking, it was relatively easy to find.  Your advisor should have done their due dil;igence BEFORE presenting it to you. All together Shane Smith and his cohorts have sold $23,000,000 of this junk since 2001.  It is all offshore, unregulated and untraceable and uncollectible. You can find out more about the "type" of deal it is by reading a 1998 explanation on my website at http://www.centa.com/articles/a_scam_that_keeps_on_rolling.htm I spent aboput 90 minutes on this and am charging you for one hour. You can find out a whole lot about the Shane Smith stuff - Remember he is the president of Borealis - at http://search.osc.gov.on.ca/en/query.html?col=osc&charset=iso-8859-1&qt=%22shane+smith%22&oldqt=%22shane+smitjh%22 david
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RRSP and non US accounts


Hello Mr. Ingram:

I understand your rates.  I wish to find out if you have any experience in dealing with the following issue. 

A first-time filer, US citizen by birth only, 42 years old, trying to determine what non US accounts need to be reported to the Treasury Department and what the possibility is of leniency in the case of penalties on RRSP and such accounts, which were never before reported.

As background, I am a dutiful tax payer on the Canadian front, totally by the book.  I was ignorant of the full impact of delaying my US tax returns (I thought real estate would be my only issue).  I intend to renounce my US citizen (and have an appointment to do so) on July 27.  I cannot get an appointment any sooner.

I have a tax preparer in the US who deals with Ex Pat issues, but is not terribly familiar with Canadian situations.  He has prepared ten years' worth of returns for me but when preparing the Treasury Forms and looking into the background, and at Form 8891, he became concerned that I should seek advice from someone more familiar with actual practice in this area.

If you have experience of feel you can substantially guide me, I wiould like to call you and engage your services for the 15-50 minute time period.  I live in Vancouver and will of course provide more of my particulars.

S_____________________________________________________________________________________________
david ingram replies:

With your occupation as a XXXXXXXXXXXX, I can NOT even begin to understand why you  would renounce your US citizenship.

If you ever intend to visit the US again, do NOT renounce your US citizenship.  If you are doing so to avoid having to file Income tax returns, you are banned from entering the US for life AND are still liable to file US tax returns for ten more years PLUS are subject to capital gains tax on your assets as everything is deemed sold upon your relinguishing your citizenship.

The most common and most important ex-pat forms atre the TDF 90-22.1 Treasury forms and the rules for their preparation are the same,  no matter which of the 265 countries you may be living in.  In addition, the rules are the same for any US resident who may have an account in antother country.

If your US preparere has 'any' question about the treasury forms, he or she is NOT an experienced preparer of EX-PAT tax returns.

The form 8891 is a substitute for form 3520 which applies to ex-Pats who live in any other country other than Canada.  An EX-PAT preparer would know how to fill in the 8 page 3520 which applies to retirement accounts in any country.  If he or she has any problem with the one page 8891, the same situation applies.  In my opinion, the person has NO credible ex-pat experience.

We provide the services you require.  If you have not done so already, You should read my Oct 95 newsletter (nothing new) which deals with just what you need to do as a US citizen in Canada (top ;eft hand box at www.cetna.com).

Then you should read the US/Canada Taxation section in the second box down on the right hand side.

Then you should read the Oct 93 newsletter on dual citizenship.

If you would like to talk to me, call Gillian Bryan at (604) 980-0321 Monday to Friday between 10 AM and 4 PM.  If you come to see me, bring in the Dec 31 2005 and Dec 31 2006 year end statements for any RRSP accounts you have and bring in a list of all of your Canadian financial accounts including life insurance poliices, trust company accounts, Credit Union accounts, Bank Accounts, Securities accounts, RRSP accounts and even a girl guide, church, brownie or company account you have signing authority over  I will need the highest balance in 2006 (to the nearest $10,000 or so). 

Rather than just talk, we can likely get the reporting done in the hour.

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Mortgage interest deductible in Canada

My question is: Applicable to both US and Canada

QUESTION: hello David:

Recently I've been emailed repeatedly by an Australian fellow by the name of Greg Andrews of Nu-Media Marketing.  He markets  a program called "Mortgage Phasing".  It is supposed to be a technique (of his design) that greatly accelerates the speed with which one can pay off one's mortgage.  I wonder if you have heard of this person and/or his technique.  Does it have any legitimacy?  Thanks for your help.

________________________________________________________________________________
david ingram replies:

I have never heard of Greg Andrews but the method he is pushing throuigh the sale of his $67.00 US book "MORTGAGE PHASING SECRETS" is used by up to 60% of Austalians already.

In Canada, the method has been mentioned many times on This Website and on Fred Snyder's  600AM Suinday morning program "IT'S YOUR MONEY"  - In fact, I would bet we have done asome 100 seminars and 100 radio programs on the subject.

In Canada, the method was brought here by Manufacturer;s Life through Manulife Bank.

Envision Credit Union also has it set up through its RED FROG program.

And, after a lot of explanation, we set it up for a lady client at the North Shore Credit Union last Thursday.

If you go to

http://www.manulifebank.ca/canada/mBank.nsf/Public/mone y

ou will find the Manulife Bank calculator and an explanation of the program which will save you $67.00 US.

If you want to talk to a local MANULIFE BANK representative, the local manager of the program is Stu Rodgers and his phone number is (604) 351-6133.

Fred Snyder also does seminars every Thursday and the system is explained there for Free on a fairly regular basis.

Listen to Fred's program on 600AM every Sunday from 9:00 AM to 10:30 AM  or if you are not in Vancouver, you can tune in at www.600am.com and listen over the internet.

And, if you want more ideas on how to make your mortgage deductible in Canada, goto www.centa.com and read the November 2001 newsletter in the top left hand box.  The first page deals with US tax returns and then it has 11 pages of mortgage dedcutible tips. �
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Moving into Rental property in canda


My question is: Canadian-specific

QUESTION: In canada, when you sold your living house you don't need to pay any taxes (e.g. Income tax or Capital Gain).
Currently I own 2 properties, one for my own and one for rent. I wanna sell both of them. Cen I do the following without paying any taxes still?
1) sell my own property first (tax free)
2) I ask my tenant to move out from my second property.
3) I moved into my second property and live there for one year.
4) after one year I sell my second property; does my second property still tax FREE?

---------------------------------------------------------------------------

______________________________________________________________________________
david ingram replies:

Nice try and good thought but IT WILL NOT WORK.

The second you move into the rental house you are considered to have a deemed disposition and owe capital gains tax although you can defer it until actual sale.

Read this older question.


Subject: Buying a house to move into in 4 years -David Ingram expert income tax help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty
From: David Ingram <[email protected]>
Date: Sat, 24 Feb 2007 20:21:54 -0800
To: centapede-ca <[email protected]>

My question is: Canadian-specific

QUESTION: We in the process of purchasing a house in Penticton and will rent it out, retire (in about 4 years)and  move into it ourselves.  If we live there for 2 or more years are we liable for capital gains for the period we collected rental income?  What type of home insurance is best for a rental property?  What are your thoughts re the real estate market in the Okanagan in the next five years - steady growth or a slump after "2010"?  Many thanks, Jacalin

---------------------------------------------------------------------------
david ingram replies:

You are liable for capital gains income tax for the period you rented it out.  In fact "When you move into the house", you will trigger a capital gains tax because of a change in use from a business use to a personal use.
The good news is that you can make an election under Section 45(3) of the income tax act to defer paying the tax until you actually sell the property. To make the calculation, fill in schedule 3 and put the taxable profit on line 127 of your T1.  then deduct the same amount on line 256 under Section 45(3).

I think the Okanagan AND the lower mainland markets are already overheated and think the prognosis is for little or no growth for the next five years but I have been wrong before.

That does not mean you should not buy because if I am wrong, it will cost so much more to buy six or seven years from now that you will be cursing me all the way to the mortgage broker.  If you buy and it goes down a bit, it does not matter because you are buying it to live in and that gives you the property in the future at today's price which is historically lower. �
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avoiding capital gains in Canada

Hello,
May I ask you a quick question ? I bought A limited Partnership Land Investment through Walton International around 4 years ago for around 30,000,it is now ready to be cashed in at around 50,000 for a 20,000 profit.I paid it outright when I bought it and was wondering if there is anything I can do to avoid paying tax on it or atleast limiting the amount I pay.

Thanks for your time,

______________________________________________________________
david ingram replies:

The capital gain may be more than you think if you have received any income in the interim.  You have to look at the T5013 or T3 or other information slips you have received to see if there has been a Box 42 or other notation amount showing 'return of Capital'.  If so, the 'return of capital amounts' have to be deducted from the $30,000 you paid, an action which increases your Capital gain.

After that, one-half of the capital gain is taxable on line 127 of your return.

A simple way of avoiding the capital gains tax on that amount (one-half) would be to buy an RRSP for that amount if you have RRSP room left.  You can determine that by looking at the bottom of one of the pages of your notice of assessment.

Another method which is very popular and which i do not recommend (if you are only buying in to reduce the tax) is to buy Flow Through shares.

On an individual basis, these are very risky.  If you buy a group, you likely stand to break even or even make a good profit.  However, it is very much a 'buyer beware' set of circumstances. �
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becoming a Canadian citizen - pros and cons

QUESTION: My wife and I have become permanent residents of Canada.  We are U.S. citizens considering citizenship in Canada because it has become our home. 

What are tax benefits/drawbacks to becoming a Canada citizen?   IRS is inescapable as an American you are deemed American no matter where you reside.   So I guess question is:

What tax liabilities/benefits come with dual citizenship versus benefits/liabilities of U.S. citizen as permanent resident of Canada?  

Have had no luck finding answer online...so really appreciate your help. 
Cheers,

______________________________________________________________________________-
david ingram replies:

There are no tax benefits or negatives to becoming a Canadian citizen that I can think of after 43 years in this business.   If you leave Canada as a citizen and return to the US or move to France or Australia , you  do not have to file a Canadian return any more to report your world income, although if you have investments here and a very low income, you may want to file a return under Section 217 to claim larger exemptions and reduce the non-resident withholding tax on dividends, interest and pensions. (these differ according to the country you go to by the way).
====

There 'are' great benefits in that you can go back to the US without fear of losing your Canadian status because you are gone too long.

You can vote.

You qualify easier for the provincial medical plan if you leave and want to come back.

You can find my treatise on dual citizenship at www.centa.com - click on the Oct 93 Newsletter - in the top left hand box.

Then find out about what yo have to do as a US citizen to keep the IRS happy by clicking and reading the Oct 1995 newsletter.  Note that form 8891 is now in use for the RRSP reporting so I better make an amendment to that one.

Last, read the 'US Canada Taxation' section in the second box down on the right hand side. �
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ARE CMHC FEES TAX DEDUCTABLE for rental houses? - YES!

QUESTION:

The CRA booklet regarding rental income and expenses, states on page 11, that mortgage guarentee /insurance fees are tax deductable at 20 % per year over 5 years.

We purchased a rental home in 2006, and would like to deduct the CMHC fee as a legitimate rental expense.

One CA states this is correct.

One CGA says no.

Is the CMHC fee tax deductable at 20 % per year or does it have to be added to you ACB ?

Is the mortgae processing fee deductable in the first year or at 20 % per year. _________________________________________________________________
david ingram replies:

Although all other expenses in a rental house are considered to be on a cash basis and only deductible in the year you actually pay them, the CMHC mortgage fee is usually spread over 5 years at 20% a year.  this is almost strange, because technically you do NOT actually pay it but have it added to the outstanding mortgage.

However, they give you the 20% a year so take it.

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FICA and CPP - do you get both - YES!

QUESTION:

Hi David,

I have been working in USA for last 10 years under TN visa and have been paying FICA etc in US but have not filed return to Canada until 2006.

Can I benefit from all the FICA payments later or should I find a way/if there is any way to transfer it to Canadian retirement?

Thanks

__________________________________________________________________________
david ingram replies:

Answered many times - just last week in fact, and reproduced here with a slight improvement suggested by Andrew Nelson
-----------------------
QUESTION: My apologies if this questions have asked many times before.I coudnt not find right and easy answer for this.
I am a Canadian citizen working in USA under TN visa for last 2 yrs. I wonder what will happen for social security tax i pay in USA.Does it goes to Canadian social security.Is it possible to get refund ?

Thanks in advance.
  __________________________________________________________
david ingram replies;

The US Canada Social security Totalization Agreement means that you will be able to collect Social Security from the US when you retire whether you have 1 year ( technically 6 quarters which can be earned from July to June which is one year but if you started working on Jan 1, you would need to work 1 year and another $2,000 or so to qualify.    Fir 2007, you need $1,000 of earnings to qualify for one qhuarter.)

The actual agreement in all its glory CAN BE FOUND AT:
 http://www.socialsecurity.gov/international/Agreement_Pamphlets/canada.html

AND IS REPRODUCED HERE:  
International Programs Home link to Social Security Online home Totalization Agreement with Canada
(Based on SSA Publication #05-10198, ICN 480199)

 


OMB Approval Number: 0960-0554

Expires 11/30/07







Table of contents
Skip link group


Part I -- Introduction
  • The agreement may help you, your family and your employer
Part II -- Coverage and Social Security taxes
  • Summary of agreement rules
Part III -- Certificate of coverage
  • Certificates for employees
  • Certificates for self-employed people
  • Effective date of coverage exemption
Part IV -- Monthly benefits
  • How benefits can be paid
  • How credits get counted
  • Computation of U.S. benefit under the agreement
Part V -- A CPP/QPP pension may affect your U.S. benefit
Part VI -- What you need to know about Medicare
Part VII -- Claims for benefits
  • Payment of benefits
  • Absence from U.S. territory
  • Appeals
Part VIII -- For more information End of link group


 
Part I -- Introduction An agreement effective August 1, 1984, between the United States and Canada improves Social Security protection for people who work or have worked in both countries. It also helps protect the benefit rights of people who have earned Canadian Social Security credits based on residence and/or contributions in Canada.

Because the Canadian Social Security system includes a special pension plan operated in the Province of Quebec, an additional understanding has been concluded with Quebec to extend the agreement to that province—also effective August 1, 1984. Terms of the U.S.-Canadian agreement and U.S.-Quebec understanding are very similar, and except where otherwise noted, references in this document to the U.S.-Canadian agreement also apply to the U.S.-Quebec understanding.

The agreement with Canada helps many people who, without the agreement, would not be eligible for monthly retirement, disability or survivors benefits under the Social Security systems of one or both countries. It also helps people who would otherwise have to pay Social Security taxes to both countries on the same earnings.

For the United States, the agreement covers Social Security taxes (including the U.S. Medicare portion) and Social Security retirement, disability and survivors insurance benefits. It does not cover benefits under the U.S. Medicare program or the Supplemental Security Income program. For Canada, the agreement applies to the Old-Age Security program and the Canada Pension Plan. The understanding with Quebec applies to the Quebec Pension Plan.

This document covers highlights of the agreement and explains how it may help you while you work and when you apply for benefits.

 


 
The agreement may help you, your family and your employer
  • While you work––If your work is covered by both the U.S. and Canadian Social Security systems, you (and your employer, if you are employed) would normally have to pay Social Security taxes to both countries for the same work. However, the agreement eliminates this double coverage so you pay taxes to only one system (see Part II).

  • When you apply for benefits––You may have some Social Security credits in both the United States and Canada but not have enough to be eligible for benefits in one country or the other. The agreement makes it easier to qualify for benefits by letting you add together your Social Security credits in both countries. For more details, see the section on "Monthly benefits" in Part IV.


 
Part II -- Coverage and Social Security taxes Before the agreement, employees, employers and self-employed persons could, under certain circumstances, be required to pay Social Security taxes to both the United States and Canada for the same work.

Under the agreement, if you work as an employee in the United States, you normally will be covered by the United States, and you and your employer will pay Social Security taxes only to the United States. If you work as an employee in Canada, you normally will be covered by Canada, and you and your employer will pay Social Security taxes (contributions) only to Canada.

On the other hand, if your employer sends you from one country to work for that employer or an affiliate in the other country for five years or less, you will continue to be covered by your home country and you will be exempt from coverage in the other country. For example, if a U.S. company sends an employee to work for that employer or an affiliate in Canada for no more than five years, the employer and the employee will continue to pay only U.S. Social Security taxes and will not have to pay in Canada. Even if your occupation (such as truck driver or professional athlete) requires you to make frequent short trips from one country to the other over a period of more than five years, each trip can be considered separately so that you remain covered only by the country from which you are sent.

If you are self-employed and residing in the United States or Canada, you generally will be covered and taxed only by the country where you reside.

 


 
Summary of agreement rules The following table shows whether your work is covered under the U.S. or Canadian Social Security system. If you are covered under U.S. Social Security, you and your employer (if you are an employee) must pay U.S. Social Security taxes. If you are covered under the Canadian system, you and your employer (if you are an employee) must pay Canadian Social Security taxes (contributions). Part III explains how to get a form from the country where you are covered that will prove you are exempt in the other country.

 


 
 
Your work status


Coverage and taxes


You are working in Canada/Quebec:


For a U.S. employer who:


  • Sent you to work in Canada/Quebec for five years or less
U.S.


  • Sent you to work in Canada/Quebec for more than five years
Canada/Quebec


  • Hired you in Canada/Quebec
Canada/Quebec


For a non-U.S. employer


Canada/Quebec


For the U.S. government


Write to the U.S. address in Part III.A below for further information.


You are working in the U.S.:


For an employer in Canada/Quebec who:


  • Sent you to work in the U.S. for five years or less
Canada/Quebec


  • Sent you to work in the U.S. for more than five years
U.S.


  • Hired you in the U.S.
U.S.


For a non-Canadian/Quebec employer


U.S.


For the Canadian/Quebec government


Write to the appropriate Canadian address in Part III.A below for further information.


You are self-employed and you:


  • Reside in the U.S.
U.S.


  • Reside in Canada/Quebec
Canada/Quebec


If this table does not seem to describe your situation and you are:


  • Working in the U.S.
Write to the U.S. address in Part III.A below for further information.


  • Working in Canada/Quebec
Write to the appropriate Canadian address in Part III.A below for further information.



NOTE: As the table indicates, a U.S. worker employed in Canada can be covered by U.S. Social Security only if he or she works for a U.S. employer. A U.S. employer includes a corporation organized under the laws of the United States or any state, a partnership if at least two-thirds of the partners are U.S. residents, a person who is a resident of the U.S. or a trust if all the trustees are U.S. residents. The term also includes a foreign affiliate of a U.S. employer if the U.S. employer has entered into an agreement with the Internal Revenue Service (IRS) under section 3121(l) of the Internal Revenue Code to pay Social Security taxes for U.S. citizens and residents employed by the affiliate.

 


 
Part III -- Certificate of coverage A certificate of coverage issued by one country serves as proof of exemption from Social Security taxes on the same earnings in the other country. Generally, you will need a certificate only if you will be working in the other country for more than 183 days in a calendar year. If you will be in the other country for 183 days or less, a certificate will not be needed unless the other country requests that you obtain one.

 




III.A. Certificates for employees To establish an exemption from compulsory coverage and taxes under the Canadian system, your employer must request a certificate of coverage (form USA/CAN 101 or USA/ QUE 101) from the U.S. at this address:

Social Security Administration
Office of International Programs
P.O. Box 17741
Baltimore, Maryland 21235-7741
U.S.A.


The request may be sent by FAX, if preferred, to (410) 966-1861. Please note this FAX number is only for requesting certificates of coverage.

No special form is required to request a certificate but the request must be in writing and provide the following information:

  • Full name of worker;
  • Date and place of birth;
  • Citizenship;
  • Country of worker’s permanent residence;
  • U.S. Social Security number;
  • Date of hire;
  • Country of hire;
  • Name and address of the employer in the U.S. and Canada; and
  • Date of transfer and anticipated date of return.
In addition, your employer must indicate if you remain an employee of the U.S. company while working in Canada or if you become an employee of the U.S. company’s affiliate in Canada. If you become an employee of an affiliate, your employer must indicate if the U.S. company has an agreement with the IRS under section 3121 (l) of the Internal Revenue Code to pay U.S. Social Security taxes for U.S. citizens and residents employed by the affiliate and, if yes, the effective date of the agreement.

Your employer can also request a certificate of U.S. coverage for you over the Internet using a special online request form available at www.socialsecurity.gov/coc. Only an employer can use the online form to request a certificate of coverage. A self-employed person must submit a request by mail or fax.

To establish your exemption from coverage under the U.S. Social Security system, your employer in Canada must request a certificate of coverage from Canada as follows:

  • If your work will remain covered by the Canada Pension Plan, obtain a certificate (form CPT 56A) from:

       CPP/EI Rulings Department
       Department of National Revenue
       Seventh Floor
       333 Laurier Avenue West
       Ottawa, Ontario
       CANADA K1A OL9


  • If your work will remain covered by the Quebec Pension Plan, obtain a certificate (form QUE/USA 101) from:

    Bureau des ententes de sécurité sociale
    Régie des rentes du Québec
    1055, René-Lévesque Est, 13e étage
    Montréal, Québec
    CANADA H2L 4S5


The same information required for a certificate of coverage from the United States is needed to get a certificate of coverage from Canada or Quebec except that you must show your Canadian social insurance number rather than your U.S. Social Security number.

 


 
III.B. Certificates for self-employed people If you are self-employed and would normally have to pay Social Security taxes to both the U.S. and Canadian systems, you can establish your exemption from one of the taxes.

  • If you reside in the United States, write to the Social Security Administration at the address in Part III.A above; or
  • If you reside in Canada, write to the appropriate Canadian address in Part III.A above.

Be sure to provide the following information in your letter:

  • Full name;
  • Date and place of birth;
  • Citizenship;
  • Country of permanent residence;
  • U.S. and/or Canadian Social Security number;
  • Nature of self-employment activity;
  • Dates the activity was or will be performed; and
  • Name and address of your trade or business in both countries.


III.C. Effective date of coverage exemption The certificate of coverage you receive from one country will show the effective date of your exemption from paying Social Security taxes in the other country. Generally, this will be the date you began working in the other country.

Certificates of coverage issued by either the Department of National Revenue in Ottawa or the Bureau des ententes de sécurité sociale in Montreal should be retained by the employer in the United States in case of an audit by the IRS. No copy should be sent to IRS unless specifically requested by IRS. However, a self-employed person must attach a photocopy of the certificate to his or her income tax return each year as proof of the U.S. exemption.

Copies of certificates of coverage issued by the United States will be provided for both the employee and employer. It will be their responsibility to present the certificate to the Canadian or Quebec authorities when requested to do so. To avoid any difficulties, your employer (or you, if you are self-employed) should request a certificate as early as possible, preferably before your work in the other country begins.

If you or your employer request a certificate of coverage, you should read the Privacy Act and Paperwork Reduction Act Statements below.

 


 
 
Authority to collect information for a certificate of coverage


Privacy Act


The Privacy Act requires us to notify you that we are authorized to collect this information by section 233 of the Social Security Act. While it is not mandatory for you to furnish the information to the Social Security Administration, a certificate of coverage cannot be issued unless a request has been received. The information is needed to enable Social Security to determine if work should be covered only under the U.S. Social Security system in accordance with an international agreement. Without the certificate, work may be subject to taxation under both the U.S. and the foreign Social Security systems.

Paperwork Reduction Act Notice


This information collection meets the clearance requirements of 44 U.S.C. section 3507, as amended by section 2 of the Paperwork Reduction Act of 1995. You are not required to answer these questions unless we display a valid Office of Management and Budget (OMB) control number. We estimate that it will take you about 30 minutes to read the instructions, gather the necessary facts, and write down the information to request a certificate of coverage.




 


 
Part IV -- Monthly benefits The following table shows the various types of Social Security benefits payable under the U.S. and Canadian Social Security systems and briefly describes the eligibility requirements for each type of benefit. If you do not meet the requirements for these benefits, the agreement may help you to qualify (see Part IV.A below).

We should point out that Canada provides old-age, survivors and disability benefits through two different programs. The Old-Age Security (OAS) program pays a flat-rate benefit to people age 65 or older based on periods of residence in Canada. The Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP) pay retirement, survivors and disability pensions based on a worker’s earnings and total years of coverage beginning January 1, 1966 (when CPP and QPP started).

This table is only a general guide. You can get more specific information about U.S. benefits here on our web site, at any U.S. Social Security office or by calling our toll-free number at 1-800-772-1213. More detailed information about the Canadian system may be obtained by writing to the appropriate Canadian address in Part VIII or by visiting the Department of Human Resources Canada or the Régie des rentes de Québec.

Under U.S. Social Security, you may earn up to four credits each year depending on the amount of your covered earnings. For example, in 2005, you get one credit for each $920 of your covered annual earnings up to a maximum of four credits for the year. Under the Canadian system, credits are measured in years. To simplify the information in the table, U.S. requirements are shown in years of credits.

 


 
Monthly benefits and eligibility requirements
Retirement or old-age benefits
United States Canada
Full benefit at full retirement age, or reduced benefit as early as age 62.  Required work credits range from one and one-half to 10 years (10 years if 62 in 1991 or later). OAS-An Old-Age Security pension is paid to anyone in Canada who is at least 65 and has been a resident of Canada for at least 10 years after age 18. This benefit is payable outside Canada for only 6 months following the month of departure from Canada unless the person has at least 20 years of Canadian residence after age 18. No work credits are required.


A supplementary benefit called Guaranteed Income Supplement (GIS) is paid to OAS beneficiaries living in Canada who have little or no income beyond the OAS benefit. GIS is payable outside Canada for only 6 months following the month of departure from Canada.

CPP-Worker can get full pension at age 65 or reduced pension as early as age 60. Only one contribution (1 year coverage) required.

QPP-Same as CPP.


Disability benefits
United States Canada
Under full retirement age can get benefit if unable to do any substantial gainful work for at least a year. One and one-half to 10 years credit required depending on age at date of onset. Some recent credits also needed unless worker is blind. OAS-No provision.

CPP-Worker under 65 must have a physical or mental disability which prevents any substantial gainful work and will be of long and indefinite duration or result in death. Worker must have contributions in four of the last six years.

QPP-Definition of disability same as CPP. Worker must have contributions in:
  • 1/2 the years in the contributory period with a 2-year minimum; or
  • 5 of the last 10 years in the contributory period; or
  • 2 of the last 3 years in the contributory period, or 2 years if the contributory period is 2 years.
Family benefits to dependents of retired or disabled people
United States Canada
Spouse-Full benefit at full retirement age or at any age if caring for worker's entitled child under age 16 (or disabled before age 22). Reduced benefit as early as age 62 if not caring for a child. Spouse-

OAS-An allowance is paid to the spouse or common-law partner (whether of the same or different sex who have lived together for at least one year) of an OAS pensioner when the couple has little or no income. The spouse or common-law partner must be age 60-64 and the OAS beneficiary must also be receiving GIS. The allowance is payable outside Canada for only 6 months following the month of departure from Canada.

CPP-No provision for benefits. However, under certain conditions, retirement pensions can be shared by married spouses if they are not legally separated.

QPP-Same as CPP.
Divorced spouse-Full benefit at full retirement age. Reduced benefit as early as age 62. Must be unmarried and have been married to worker for at least 10 years. Divorced spouse-

OAS-No provision.

CPP-No provision for benefits. However, total earnings credited to the couple during the marriage (while they lived together) may be split equally upon a divorce or legal annulment which occurred after 1977.

QPP-No provision for benefits. Provision on earnings splitting similar to CPP.
Children-If unmarried, up to age 18 (age 19 if in an elementary or secondary school full time) or any age if disabled before age 22. Children-

OAS-No provision.

CPP-No provision for children of retired worker. Children of disabled worker up to age 18 (or age 25 if in school full time).

QPP-No provision for children of retired worker. Children of disabled worker up to age 18 (or age 25 if in school full time and worker died or became disabled prior to 1/1/94).
Survivors benefits
United States Canada
Widow or widower-Full benefit at full retirement age or at any age if caring for the deceased's entitled child under age 16 (or disabled before age 22). Reduced benefit as early as age 60 (or age 50 if disabled) if not caring for child. Benefits may be continued if remarriage occurs after age 60 (or age 50 if disabled). Widow or widower-

OAS-An allowance is payable to widowed spouses or common-law partners (whether of the same or different sex) age 60-64 with little or no income. The common-law partner must have lived with the deceased for at least one year. The allowance is payable outside Canada for only 6 months following the month of departure from Canada.

CPP-Age 35 or older, or under age 35 if disabled or maintaining dependent child of the deceased spouse or common-law partner (whether of the same or different sex). In addition, a same-sex common-law partner can qualify for benefit only if the worker's death occurred on or after January 1, 1998. The deceased worker must have credits for at least one-third of the years in the contributory period for a minimum of three years up to a maximum of 10 years. Remarriage will not affect entitlement.

QPP-Same as CPP, except no age requirement.
Divorced widow or widower-Same as widow or widower if marriage lasted at least 10 years. Divorced widow or widower-

OAS-No provision.

CPP-No provision.
However, see note under divorced spouse.

QPP-No provision.
However, see note under divorced spouse.
Surviving children- Same as children of retired or disabled worker. Surviving children-

OAS-No provision.

CPP-Same as children of disabled worker. Same contributory requirements as for widow/widower.

QPP-Same as children of disabled worker. Same contributory requirements as for widow/widower.


Lump-sum death benefit-A one-time payment not to exceed $255 payable on the death of an insured worker. Lump-sum death benefit-

OAS-No provision.

CPP-Same minimum contributory requirements as for other survivor benefits. One-time payment equal to six times the monthly retirement pension of the deceased worker to a maximum of CDN $2,500.

QPP-Same minimum contributory requirements as for other survivor benefits. One-time payment of CDN $2,500.






 


 
IV.A. How benefits can be paid If you have Social Security credits in both the United States and Canada, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country’s system, you will get a regular benefit from that country. If you do not meet the basic requirements, the agreement may help you qualify for a benefit as explained below.

 


 
IV.A.1. Benefits from the U.S If you do not have enough work credits under the U.S. system to qualify for regular benefits, you may be able to qualify for a partial benefit from the United States based on both U.S. and Canadian (CPP/ QPP) credits. However, to be eligible to have your Canadian credits counted, you must have earned at least six credits (generally one and one-half years of work) under the U.S. system. If you already have enough credits under the U.S. system to qualify for a benefit, the United States cannot count your Canadian credits.

 




IV.A.2. Benefits from Canada Canada provides retirement, survivors and disability benefits through two separate programs.

  1. Old-Age Security (OAS) Program

    To get OAS benefits, you must be 65 or older and must have been a resident of Canada for at least 10 years after age 18 (or 20 years after age 18 to have benefits paid outside Canada).

    Under the agreement, Canada will consider your U.S. Social Security credits earned after 1951 and after age 18, along with periods of residence in Canada after 1951 and after age 18, to meet the OAS residence requirements. However, to be eligible to have your U.S. credits counted, you must have resided in Canada for at least one year after 1951 and after age 18.

  2. Canada Pension Plan and Quebec Pension Plan

    The Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP) pay retirement, survivors and disability pensions based on your covered work performed on or after January 1, 1966 (when CPP and QPP started), and the amount of your earnings. The CPP operates throughout Canada, except in the Province of Quebec. Both plans require a minimum amount of work credits to qualify for benefits. People who have contributed to both CPP and QPP receive one benefit based on their total contributions to both plans.

Under the agreement, U.S. Social Security credits completed after 1965 may be considered along with CPP or QPP work credits, if necessary, to meet the minimum requirements for CPP or QPP disability or survivors benefits. However, to be eligible to have your U.S. credits counted, you must have earned at least one year of credit under the CPP or QPP. It is not necessary to consider U.S. Social Security credits in determining eligibility for CPP or QPP retirement benefits since anyone who has made at least one contribution to either plan can qualify for a retirement benefit at 65 or a reduced retirement benefit as early as 60.


 


 
IV.B. How credits get counted You do not have to do anything to have your credits in one country counted by the other country. If we need to count your credits under the Canadian system to help you qualify for a U.S. benefit, we will get a copy of your Canadian record directly from Canada when you apply for benefits. If Canadian officials need to count your U.S. credits to help you qualify for a Canadian benefit, they will get a copy of your U.S. record directly from the Social Security Administration when you apply for the Canadian benefit.

Although each country may count your credits in the other country, your credits are not actually transferred from one country to the other. They remain on your record in the country where you earned them and can also be used to qualify for benefits there.

 


 
IV.C. Computation of U.S. benefit Under the agreement When a U.S. benefit becomes payable as a result of counting both U.S. and Canadian Social Security credits, an initial benefit is determined based on your U.S. earnings as if your entire career had been completed under the U.S. system. This initial benefit is then reduced to reflect the fact that Canadian credits helped to make the benefit payable. The amount of the reduction will depend on the number of U.S. credits: the more U.S. credits, the smaller the reduction; and the fewer U.S. credits, the larger the reduction.

 


 
Part V -- A CPP/QPP pension may affect your U.S. benefit If you qualify for Social Security benefits from the United States based only on U.S. credits and a CPP/QPP benefit from Canada, the amount of your U.S. benefit will be reduced. This is a result of a provision in U.S. law which can affect the way your benefit is figured if you also receive a pension based on work that was not covered by U.S. Social Security. Receipt of a Canadian Old-Age Security pension, which is based on residence in Canada, will not affect the way your benefit is figured. For more information, call our toll-free number, 1-800-772-1213, and ask for the publication, Windfall Elimination Provision (Publication No. 05-10045). If you are outside the United States, you may write to us at the address in Part VIII.


 
Part VI -- What you need to know about Medicare   Medicare is the U.S. national health insurance system for people age 65 or older or who are disabled. Medicare has two parts: hospital insurance (also called "Part A" Medicare) and medical insurance (called "Part B" Medicare). You are eligible for free hospital insurance at age 65 if you have worked long enough under U.S. Social Security to qualify for a retirement benefit. People born in 1929 or later need 40 credits (about 10 years of covered work) to qualify for retirement benefits.

Although the agreement between the United States and Canada and the understanding between the United States and Quebec allows the Social Security Administration to count your CPP or QPP credits to help you qualify for U.S. retirement, disability or survivor benefits, the agreement does not cover Medicare benefits. As a result, we cannot count your credits in Canada or Quebec to establish entitlement to free Medicare hospital insurance.

For more information about Medicare, call our toll-free number, 1-800-772-1213, and ask for the publication, Medicare (Publication No. 05-10043) or visit Medicare’s website at www.medicare.gov.

 


 
Part VII --Claims for benefits   If you live in the United States and wish to apply for U.S. or Canadian benefits:

  • Visit or write any U.S. Social Security office; or
  • Phone our toll-free number, 1-800-772-1213, 7 a.m. to 7 p.m. any business day. People who are deaf or hard of hearing may call our toll-free TTY number, 1-800-325-0778.


You can apply for Canadian benefits (OAS, CPP or QPP) at any U.S. Social Security office by completing application form CDN-USA 1 (for OAS and CPP benefits) or QUE/USA-1 (for QPP benefits).

If you live in Canada and wish to apply for U.S. benefits:

  • Visit or write any U.S. Social Security office located along the U.S.-Canadian border; or
  • Contact any Canadian or Quebec Social Security office.
If you live in Canada and wish to apply for Canadian or Quebec benefits, contact any Canadian or Quebec Social Security office.

You can apply with one country and ask to have your application considered as a claim for benefits from the other country. In that case, your application will be sent to the other country. Each country will process the claim under its own laws––counting credits from the other country when appropriate––and notify you of its decision.

If you have not applied for benefits before, you may need to provide certain information and documents when you apply. These include the worker’s U.S. and Canadian Social Security numbers, proof of age for all claimants, evidence of the worker’s U.S. earnings in the past 24 months and information about the worker’s coverage under the Canadian system. You may wish to call the Social Security office before you go there to see if any other information is needed.

 


 
VII.A. Payment of benefits Each country pays its own benefits. U.S. payments are made by the U.S. Department of Treasury each month and cover benefits for the preceding month. Benefits under Canada’s OAS and CPP systems and Quebec’s QPP system are paid near the end of each month and represent payment for that month.

 


 
VII.B Absence from U.S. territory Normally, people who are not U.S. citizens may receive U.S. Social Security benefits while outside the U.S. only if they meet certain requirements. Under the agreement, however, you may receive benefits as long as you reside in Canada, regardless of your nationality. If you are not a U.S. or Canadian citizen and live in another country, you may not be able to receive benefits. The restrictions on U.S. benefits are explained in the publication, "Your Payments While You Are Outside The United States" (Publication #05-10137).

 


 
VII.C Appeals If you disagree with the decision made on your claim for benefits under the agreement, contact any U.S. or Canadian Social Security office. The people there can tell you what you need to do to appeal the decision.

The appropriate Canadian Social Security authorities (i.e., OAS, CPP or QPP) will review your appeal if it affects your rights under the Canadian system, while U.S. Social Security authorities will review your appeal if it affects your rights under the U.S. system. Since each country’s decisions are made independently of the other, a decision by one country on a particular issue may not always conform with the decision made by the other country on the same issue.

 


 
Part VIII -- For more information To file a claim for U.S. or Canadian benefits under the agreement, follow the instructions in Part VII.

To find out more about U.S. Social Security benefits or for information about a claim for benefits, contact any U.S. Social Security office. If you live outside the United States, write to:

Social Security Administration
OIO—Totalization
P.O. Box 17049
Baltimore, Maryland 21235-7049
U.S.A.


For more information about the Old-Age Security program or the Canada Pension Plan, contact any office of the Department of Human Resources Development, Income Security Programs, or write to:

International Operations Directorate
Income Security Programs Branch
Department of Human Resources Development
Ottawa, Ontario
CANADA K1A OL4


For more information on the Quebec Pension Plan, contact any office of the Régie des rentes de Québec or write to:

Régie des rentes de Québec
Case Postale 5200
Québec City, Québec
CANADA G1K 7S9


If you do not wish to file a claim for benefits, but would like more information about the agreement, write to:

Social Security Administration
Office of International Programs
P.O. Box 17741
Baltimore, Maryland 21235-7741
U.S.A.

 






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Last reviewed or modified Tuesday Dec 27, 2005

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US Resident Canadian Employed

QUESTION:

My husband is US citizen, I am Canadian. Can we save on taxes by living in US and keeping our jobs in Canada.  Also understand that mtg int. is tax ded. in US. Thx. ______________________________________________-
david ingram replies:

Living in the US and working in Canada will cost you a lot more in expense although you may make up for it with a cheaper house, gas for your car and some groceries.

For instance, living in Washington State and working in BC will not save you any tax on your wages.  It may save you a little if you have large investment income but it would have to be over $10,000 a year to be meaningful.

The biggest problem is that you would no longer qualify for BC (or other province) medical and it would cost you anywhere from $300 to $1,500 a month to buy your own medical.

The US mortgage interest deduction is of no use to you  if you are working in Canada because you will still pay full Canadian taxes first.

And it is possible for most Canadians to arrange their affairs to make their Candian mortgage deductible.   Goto www.centa.com  and read the  November 2001 newsletter in the top left hand box. �
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buying / selling a divided lot - GST or not?

QUESTION: i bought a .5 lot to build on . it was a 1acre lot that the owner had owned for 20 years and about 3 years ago he subdivided it in half and built on his half . his lawyer said we have to pay gst and mine said he does not think we should half  too . the lawyer are holding the money for gst in trust . how do i find out if i have to pay gst or not.


  _________________________________________
DAVID INGRAM REPLIES:

If the lot was divided into three, the two extra lots are subject to GST.

If there is only one extra lot created and the vendor has not previously subdivided a lot, yours is tax free.  However, if he started with 2 acres and subdivided off an acre 15 years ago and yours now, you 'ARE' subject to paying GST.

Reading the following technical ruling will give you something to give your lawyer and the vendor's lawyer.

http://www.cra-arc.gc.ca/E/pub/gi/gi-003/gi-003-e.html