# Are you able to give up Cdn citizenship, retire elsewhere and pay less income tax?



## Addy (Mar 12, 2010)

I've read a bit about this and it's intriguing. I'm not sure i would ever 'give up' my Canadian citizenship, but I would still like to know if there are options out there to have pension income (with or without CPP) and pay a lot less income tax. I know there are countries out there where you can do this, some even paying no income tax, but I'm sure there are more out there than I have heard of.


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## Addy (Mar 12, 2010)

I realize that was a stupid question, of course you can! http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html

I'm looking more for info on what countries may we want to consider "hanging our hat in" as far as tax reduction purposes?


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## fatcat (Nov 11, 2009)

this is a case for sovereign man: http://www.sovereignman.com/


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## m3s (Apr 3, 2010)

When you are talking about taxes, it is a question of residency. You can sever residency in Canada and maintain Canadian citizenship. Depending on your income in retirement, it may not even be worthwhile because you have to pay a departure tax, close your RRSP/TFSAs, trigger capital gains etc. I think a better strategy might be to keep income low in retirement, and take advantage of personal tax credits and other benefits of Canadian residency


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## Addy (Mar 12, 2010)

fatcat said:


> this is a case for sovereign man: http://www.sovereignman.com/


Fatcat at first glance that site appears to be a lot of sensationalist b.s.? Am I missing something, I don't want to insult you if the link was serious.

And Ms3 I wouldn't cry a river over having to sever all ties, close all rrsp/tfsas etc, but at the same time this whole idea isn't necessarily for me, just a curiosity at this point, hoping more for info from those with experience.


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## wendi1 (Oct 2, 2013)

http://andrewhallam.com/category/living-retiring-abroad/

Moneysense does articles on this subject, from time to time... Ecuador, Costa Rica, Mexico - Andrew Hallam above is living in Singapore. No need to give up your citizenship.


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## marina628 (Dec 14, 2010)

If Canada ever makes playing poker Online illegal I am gone on the next flight , in fact I think they could follow suit as USA has done in next decade so we are seriously looking now.Don't care about income taxes but don't take my poker away from me lol


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## Charlie (May 20, 2011)

no need to cash in your RRSP or RRIF. You just get taxes withheld at 25%. You can have your CPP and OAS fwded too...(also subject to the 25% tax). No further cdn tax obligation.

The tax rate is lower for treaty countries -- but those ones usually tax you at their end. There was a book a while ago 'Take the money and run' I think, where the author claimed there'd be no withholds or tax at all on RRSPs in certain circumstances (I think it was a british protectorate subject to the british treaty but not british tax?) and no local tax either. Some tax gurus debated his claim, with some suggesting it wasn't quite on board.

me...since I'm relying on the lotto like most of my countrymen...i won't be taxed too badly....


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## diharv (Apr 19, 2011)

Financially speaking and living abroadwise , the only citizenship that is toxic is US. I wouldn't give up Cdn citizenship for anything !


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## m3s (Apr 3, 2010)

OP is asking about reducing income tax in retirement with a Canadian pension and CPP

Dirty calculation of the break even point seems to be well around $80k income in most provinces, during retirement (that's not taking into account income splitting between spouses) It seems to really depend on your income. If you have a lower income in retirement, and can income split etc, I think you are much better with the progressive tax brackets, no? Ex If you were a resident of Ontario, Alberta, BC etc with $30k retirement income split, the average income tax is actually only 12-14%, even $40k each is under 15%. You could keep your TFSA.. but I read you probably want to close it immediately prior to leaving for tax purposes.

Some people with a db pension lean towards TFSA over RRSP because it is really the most flexible.


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## Addy (Mar 12, 2010)

Charlie said:


> no need to cash in your RRSP or RRIF. You just get taxes withheld at 25%. You can have your CPP and OAS fwded too...(also subject to the 25% tax). No further cdn tax obligation..


So, other than the perhaps false thoughts by the guru, there's no way to keep rrsp's, emigrate (legitimately), and not pay Cdn income tax?

It's interesting how many countries do not tax foreign earned income at all, impressive actually. I'm learning of more and more each day.

Wendi the Andrew Hallam link is great reading, thank you!


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## fraser (May 15, 2010)

When we sold our home and decided to travel for nine months we looked very seriously at this option. I was about to take a large sum of money (for us) in to taxable income. 

We had several discussions with a tax professional. Giving up residency is not as straightforward as it appears. Citizenship was not the issue.

We were told advised that there were lots of ongoing disputes with CRA on this issue and that should we wish to move forward the recommendation would be to get advice from a tax professional who specialized in this particular area. Our situation may have been different. We were prepared to spend two years outside the country but we did intend to return-whether it be for more or less than six months at a time.

Were were told than many of the outstanding disputes with CRA over this issue had to do with intent. In some instances CRA looked at everything, right down to such things as whether you maintained a safety deposit box in Canada or retained ownership of a vehicle, retention of health care insurance, subsequent visits back to Canada and the length of them etc. Plus the threat of a certain amount of double taxation (depending on the country) should CRA reject the claim and have the rejection upheld.

We decided to pass on the idea and bite the bullet as it were.


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## Addy (Mar 12, 2010)

fraser said:


> We had several discussions with a tax professional. Giving up residency is not as straightforward as it appears. Citizenship was not the issue.
> 
> We were told advised that there were lots of ongoing disputes with CRA on this issue and that should we wish to move forward the recommendation would be to get advice from a tax professional who specialized in this particular area.
> 
> Were were told than many of the outstanding disputes with CRA over this issue had to do with intent.


Yes, this does not surprise me, I'm sure the Feds put lots of resources into ensuring Canadians pay income tax. Why give up revenue easily. I can see the day they move towards the US rule of (trying to) taxing emigrants on their local income, crazy as it sounds.


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## OhGreatGuru (May 24, 2009)

Addy said:


> So, other than the perhaps false thoughts by the guru, there's no way to keep rrsp's, emigrate (legitimately), and not pay Cdn income tax?
> 
> ....


RRSP is a tax deferral plan, not a tax avoidance plan. You get a tax benefit when you make contributions; it's not unreasonable for CRA to ensure that you can't "fly the coop" when it comes time to make withdrawals


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## OhGreatGuru (May 24, 2009)

Addy said:


> ....I know there are countries out there where you can do this, some even paying no income tax, but I'm sure there are more out there than I have heard of.


Just don't expect me to vote in favour of the Canadian Forces coming to rescue you when the peons in your tax haven rise up in arms against all the rich foreigners.


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## Addy (Mar 12, 2010)

OhGreatGuru said:


> RRSP is a tax deferral plan, not a tax avoidance plan. You get a tax benefit when you make contributions; it's not unreasonable for CRA to ensure that you can't "fly the coop" when it comes time to make withdrawals


Is that a no, or are you ranting because I asked?


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## Addy (Mar 12, 2010)

OhGreatGuru said:


> Just don't expect me to vote in favour of the Canadian Forces coming to rescue you when the peons in your tax haven rise up in arms against all the rich foreigners.


Hahahaha seeing as my husband is in the Canadian Forces your comment is hilarious. Thanks for the laugh. If you have anything useful to add that would be lovely.


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## OhGreatGuru (May 24, 2009)

Addy said:


> Is that a no, or are you ranting because I asked?


I't a no.


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## kcowan (Jul 1, 2010)

We have a friend living in Malta ever since they seized his Canadian-registered sailboat (50 foot yacht) for back taxes. He owns 2 residences here in PV but none in Canada.


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## Pluto (Sep 12, 2013)

Charlie said:


> no need to cash in your RRSP or RRIF. You just get taxes withheld at 25%. You can have your CPP and OAS fwded too...(also subject to the 25% tax). No further cdn tax obligation.


Just to clarify, Is the 25% tax a marginal rate? or straight off the top? If it's a straight 25% many Canadians, of modest income, who sever residency to retire in another country end up paying more tax, compared to staying in Canada. For instance, someone with a marginal rate of around 33% could find that their total tax paid as a percent of taxable income is 22%. Then when they leave, they find their tax is 25% (as a percent of taxable income). In that instance their tax went up, and they lose health care. Then after figuring out what equivalent health insurance costs in the private market, one could be way behind financially. 

Anyway, my main question is, the 25% a marginal rate, or a percent of total income?


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## Addy (Mar 12, 2010)

Pluto said:


> Just to clarify, Is the 25% tax a marginal rate? or straight off the top? If it's a straight 25% many Canadians, of modest income, who sever residency to retire in another country end up paying more tax, compared to staying in Canada. For instance, someone with a marginal rate of around 33% could find that their total tax paid as a percent of taxable income is 22%. Then when they leave, they find their tax is 25% (as a percent of taxable income). In that instance their tax went up, and they lose health care. Then after figuring out what equivalent health insurance costs in the private market, one could be way behind financially.
> 
> Anyway, my main question is, the 25% a marginal rate, or a percent of total income?


Good question, I am curious as well.


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## OhGreatGuru (May 24, 2009)

25% is off the top, regardless of income bracket. It is below the average overall tax rate across Canada.

If an expatriate's income is low, they may make a Section 217 Election and file a tax return instead of paying the 25% if it would be beneficial to them. This is explained on http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/snrs_217-eng.html

There is a separate tax package for non-residents. You would have to work through the whole thing to determine if you would be better off. They add a 48% surtax on the federal Schedule 1, which presumably accounts for a "deemed provincial" tax. The non-refundable credits may be reduced by a calculation done on Schedule B comparing your total eligible Canadian income to your total world income.


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