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Tax Implications of Investing In the United States

With Canada representing only a small percentage of the world's economy, more and more Canadians are investing in the U.S to diversify their portfolio

When you are investing in foreign securities, including those from the U.S., you may be subject to non-resident withholding tax.

A reduced rate of withholding tax is generally available to Canadians under the Canada-U.S Treaty. In order to qualify for the preferential withholding tax rate, you will need to provide proper documentation. Without appropriate documentation, income from U.S. investments may be subject to the U.S domestic tax rate which is generally a flat 30% U.S non-resident withholding tax rate.

Work with us to ensure you are taking advantage of such preferential tax rates to maximize your returns.

Canadian Non-Resident Withholding Tax

There are various reasons why many Canadians consider moving to another country, including enticing employment prospects, retirement destinations, potentially lower taxes and sunny weather.

What are the tax implication of creasing Canadian residency? What should I do with my registered and non-registered accounts in Canada? Are my Canadian Will and power of attorney valid in the other country?

Moving to Canada from Another Country

Your liability for Canadian tax depends on your residency status in Canada. If you are considered a resident of Canada you will be taxed on your worldwide income regardless of whether your income was earned in another country or you remitted that income in Canada.

Immigration Trust Planning

One of the most common planning techniques used by high net worth individuals who move to Canada to shelter tax is the formation of an immigrant trust in a tax-haven jurisdiction. An immigration trust is simply a non-resident trust, established in a foreign tax jurisdiction, whhich holds investment assets. Generally, where the value of the trust property exceeds $1 million, the tax saving can be expected to exceed the costs of setting up and maintaining the offshore structure.

If properly structured, this trust will allow investment income and capital gains you earned during the first 6- months of your Canadian residency to be exempt from Canadian taxation for you and family members who moved to Canada and are beneficiaries of the trust.

In addition to the tax savings, immigration trusts can provide other benefits, including creditor protection for trust assets, reduction of taxes and probate fees on death, and privacy and confidentiality of personal financial information.

Immigrant Investors Program

If you are an immigrant who wants to gain permanent residence in Canada, the federal government offers an Immigrant Investor Program. Under the current program, immigrant investors with 1.6 million in personal net worth can gain permanent residence in Canada by making a five- year investment to the government of $800,000

Royal Bank of Canada is one of the financial institutions that can be a conduit for immigrants wanting to participate in this program.