However, the method will not be so simple as transferring securities between two Canadian financial institutions. It may take longer to cross the border and there may or will not be a tax profit.
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Tax implications of transferring investments
If your primary reason for transferring your investments, Meranda, is to defer taxes, your tax residency is very important. When you allow Canada and are not any longer a tax resident, you’ve fictitious control over your investments. This signifies that the securities will likely be treated as for those who had sold them at fair market value on the day of your move. Therefore, you don’t save any taxes when transferring to the USA. In fact, it might cost you.
When you immigrate to the United States, your original cost basis for an asset becomes your cost basis for U.S. capital gains tax purposes. This is different from Canada, where the market value of your investments becomes your adjusted cost basis (ACB) if you immigrate. Therefore, for those who have gotten a resident of the US, especially for an prolonged time frame, you could want to think about selling your investments before moving.
This means you could find a way to defer the tax payable in your supposed disposal. To qualify, your tax liability have to be greater than $16,500 (or $13,777.50 for Quebec residents). You may make this election by filing Form T1244, electionunder subsection 220(4.5) of the Income Tax Act to defer payment of income tax in relation to the deemed disposal of property. You must provide the Canada Revenue Agency (CRA) with adequate security for the tax owed in an effort to defer it. The collateral might be a pledge of the assets themselves or a letter of credit from a Canadian financial institution.
As a U.S. citizen, you could be subject to disclosure requirements or antagonistic tax consequences on any non-U.S. resident assets, including Canadian bank accounts, GICs, stocks, bonds, ETFs and/or mutual funds. So this might be one more reason to begin fresh with US investing.
If you might be transferring the investments solely because you desire to hold them with a U.S. brokerage firm, Meranda, and remain a Canadian tax resident, there will likely be no tax implications.
Canadians are taxed on their worldwide income, so investments outside of Canada usually are not tax-free.
As a Canadian resident, you might be generally subject to fifteen% U.S. withholding tax on the American securities you own, whether you hold them with a U.S. broker or a Canadian broker. This withheld tax could be claimed as a foreign tax credit in your Canadian tax return.
