Non-resident of Canada investments | General comparisons | Discussion forum

I am not a professional. If you want a professional opinion, you should consult a professional accountant or tax lawyer.

That said, the bank may be correct. The criteria for CRA accepting that you are non-resident are extensive. I believe they can be found online.

There is considerable information on that issue in Financial Wisdom Forum and its accompanying financial wiki (finiki) as well as on Canadian Money Forum. There is also much information on the Serbinski tax forum.

Bottom line is mutual funds and ETFs are essentially structured as Trusts and thus considered PFICs (Passive Foreign Investment Company) by the IRS and all the painful associated reporting, never mind the trading issues associated with the SEC. In other words, be prepared for costly tax reporting by a highly knowledgeable cross-border tax accountant.

The bank rep* is wrong about the selling part. One can always sell while a non-resident, but a non-resident cannot buy such securities, at least in a non-registered account. There may be some leeway in RRSPs, i.e. they are recognized as retirement accounts by the IRS and SEC and it is acceptable to hold such securities in them. Forget about a TFSA as well. It is not recognized by the IRS as a tax sheltered account and all income will be taxable in the USA.

Talk to a knowledgeable cross-border tax accountant well before leaving for the USA so that you can structure your accounts and holdings accordingly. Also, be aware that all holdings in a taxable account will be deemed sold at market value on the day one leaves the country for the USA. Capital gains will be taxable whether the securities are actually sold or not. Note it is important regarding the day of exiting the country. If the OP leaves on December 31, 2015, all this cap gains will be payable on the 2015 tax return. If the OP leaves on January 1st or later, the cap gains will most likely not be payable until the 2016 tax return is filed (check with the accountant to be sure). Also, be sure to hold on to the documentation when entering the USA so that date of exit from Canada can be documented.

* Bank reps are not knowledgeable on cross-border taxation and security matters. Brokerage representatives are more familiar with these matters. Cross-border tax accountants even more so.

dot said

I am probably not in the correct section but I am living in England and looking to open a interest bearing account but with instant access as we are currently applying for a work visa. Can you tell me, is there a safeguard with the Canadian banks as with the English banks that if they collapse the first (i think its currently £80,000) of your money is safeguarded by the gov. and if so would it apply being I am not a resident?

Welcome. Yes, there is. It is called CDIC (Canadian Deposit Insurance Corp.) http://www.cdic.ca You should check that any institution you want to deposit with is a member. Canada has 5 big banks (some would argue 6) and they dominate the marketplace. Some smaller banks and trust companies are insured as well by provincial equivalents of the CDIC.

The current limit for CAD deposit accounts is $100,000.00 Most deposits are covered, some aren't. It would be worth 5 minutes of your time to read the website and make sure what you want is. Most chequing and deposit accounts in CAD are.

Cheers.

Dot, you should use BNS/Scotiabank as they have ATM ties with Barclays (along with Deutsche bank and BNP Paribas plus other banks around the world that are also in the Global ATM alliance) which waive ATM usage fee on both end; they still charge for foreign exchange fee of 2%/3% which is include in the exchange rate. You will need to check Scotia's website for details however.