# Leaving Canada - What will happen to my RRSP and TFSA?



## Kalergie

Hello,

I am thinking of leaving Canada for a new job in Asia and wonder what implications this will have on several issues. I am a permanent resident since 2.5 years ago and I have money on a current account, TFSA as well as an RRSP. I am not planning to come back to Canada and would inform CRA on the day I leave about my move. First, I am wondering if I will lose my Permanent Residence status immediately. Second, I wonder if I can keep my current account, TFSA and RRSP or if CRA requires me to liquidate those accounts immediately. 

I really appreciate your help.


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## liquidfinance

To maintain pr status you need to be resident around 2 years within a 5 year period.

http://www.cic.gc.ca/english/helpcentre/answer.asp?q=727&t=4

I believe to be non tax resident you must pretty much sever your ties to Canada.


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## Kalergie

liquidfinance said:


> To maintain pr status you need to be resident around 2 years within a 5 year period.
> 
> http://www.cic.gc.ca/english/helpcentre/answer.asp?q=727&t=4
> 
> I believe to be non tax resident you must pretty much sever your ties to Canada.


Thanks. I knew about this rule and since I have achieved the 2 year minimum, I was sure to be able to extend my status as planned. The thing is, how does a concious decision to leave Canada for the foreseeable future change my eligibility to extend my PR status. And most of all, how does this impact my RRSP and TFSA accounts? It would hurt me very much if I was supposed to liquidate my RRSP at once being subject to 25% tax.


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## AltaRed

You can maintain your current TFSA and RRSP accounts. You just cannot add to them. See any of the insitutional websites for information on TFSAs. Example: http://www.sunlife.ca/advisor/v/ind...bd2d09fRCRD&vgnextfmt=default&vgnLocale=en_CA or this from Scotiabank:


> If you become a non-resident, you are able to maintain your TFSA and will not be taxed on any earnings or withdrawals in the account. However, you will not be allowed to contribute additional funds and no contribution room will accrue for the years in which you are a non-resident.


The bigger issue may be whether you can actively trade within those accounts. You would need to ask the institutions holding your RRSP and TFSA accounts if they will permit you to do that with a home/postal address in Asia.


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## My Own Advisor

You can't actively trade or at least, buy stocks or ETFs out of country, in Kalergie's situation?


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## liquidfinance

My Own Advisor said:


> You can't actively trade or at least, buy stocks or ETFs out of country, in Kalergie's situation?


You can trade. You just can't add new money. 

The rrsp should maintain its tax free status but check on the tax treaty between Canada and your new country of residence. 

The TFSA will likely have little benefit if you are outside of Canada as you would most likely need to report the income. This depends if your new country would require you to declare world income.

An example in my case is that I have an ISA in the UK. This is the equivalent to a tfsa. In the UK I can trade within it and income / capital gains are tax free. Now I'm a resident of Canada it has no tax advantage as I must declare to cra. It's kind of a reverse situation to yourself. 

I would ask the question on an immigration specific forum where people have likely been in your situation. 

Personally if you don't ever plan on coming back I would collapse everything and take the tax hit now. If you don't live here within 5 years then you will lose PR and have to reapply from the beginning of the process. There is no guarantee you would be granted PR the second time just because you had it once before.


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## SpendLessEarnMore

I'm moving to Asia as well this January for years maybe forever. But I'm a Canadian Citizen. That could be your other option since you've met the 2 year requirement so what's a few more years wait to get Canadian citizenship and thus the Canadian passport that will allow you to travel anywhere you like and allow you to come back to Canada if things don't work out in Asia.


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## Kalergie

I think, I need to add a little bit more information so you better understand my specific situation.

I quit my job in Canada in January this year to travel (mostly within Canada). So I have had very little income in 2013. I have 26,000$ in my RRSP which I specifically filled for 2 years to A) save taxes while I work and B) to live of my withdrawals while I travel in 2013. My intention is to withdraw as much as I need but try to stay below the 2013 basic personal amount so I won't be taxed at all. January employment income 4,000$ + RRSP withdrawals 6,000$ = 10,000$. Therefore, I would have 20,000$ left over in my RRSP. 

My plan was to go back into employment in Canada in January 2014. This plan has changed now with the job offer in Asia. The question is, how and when to withdraw from my RRSP as tax efficiently as possible. 

I found this calculator on the CRA website. 
http://www.cra-arc.gc.ca/ebci/nrtc/resultsSubmit.do

It appears that the RRSP withdrawals would be taxed with a standard rate of 25% if I do it after I leave Canada. Based on the information above, if I withdrew all my RRSP amount (26,000$) this year before I leave Canada, my total income in 2013 would be 4,000$+26,000$= 30,000$. Based on a quick run on a tax calculator on http://www.ey.com/CA/en/Services/Tax/Tax-Calculators-2013-Personal-Tax, my average tax rate would be 12.92% (in Ontario) which is great. Therefore, I would be better off, withdrawing everything now, THEN leave Canada. 

Am I making any sense? Thank you for your help!



SpendLessEarnMore said:


> I'm moving to Asia as well this January for years maybe forever. But I'm a Canadian Citizen. That could be your other option since you've met the 2 year requirement so what's a few more years wait to get Canadian citizenship and thus the Canadian passport that will allow you to travel anywhere you like and allow you to come back to Canada if things don't work out in Asia.


This is a very good idea. I have been thinking of that, too. Unfortunately, my country of origin does not allow me to hold 2 passports. So that's a no go. I can only extend my PR status and see if I will ever come back to Canada within the coming years.


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## AltaRed

If you are likely to leave Canada, never to come back, then yes, withdraw all your money this year, paying the lower overall tax rate for 2013 when you file your Canadian tax return in April 2014. Just be sure you still are a resident of Canada until at least January 1st.


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## Guban

SpendLessEarnMore said:


> I'm moving to Asia as well this January for years maybe forever. But I'm a Canadian Citizen. That could be your other option since you've met the 2 year requirement so what's a few more years wait to get Canadian citizenship and thus the Canadian passport that will allow you to travel anywhere you like and allow you to come back to Canada if things don't work out in Asia.


The country or countries of citizenship doesn't really matter for tax purposes. It is residency that counts.


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## Guban

AltaRed said:


> If you are likely to leave Canada, never to come back, then yes, withdraw all your money this year, paying the lower overall tax rate for 2013 when you file your Canadian tax return in April 2014. Just be sure you still are a resident of Canada until at least January 1st.


If you become non-resident before December 31st, your personal exemption may be prorated.


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## Rob in Munich

OK this is an old thread so I'll be brief. I'll be gone from Canada for almost 15 years and I still have my locked in RSP my brokerage account, all my DRIPS along with my bank account and TD Visa cards. 

Once you leave Canada and close everything you'll never be able to get them again.

Secondly I have used both Canadian (Dads) and overseas without a problem. Only negative is you can't buy MF or get new credit.

Rob


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## Kalergie

Rob in Munich said:


> OK this is an old thread so I'll be brief. I'll be gone from Canada for almost 15 years and I still have my locked in RSP my brokerage account, all my DRIPS along with my bank account and TD Visa cards.
> 
> Once you leave Canada and close everything you'll never be able to get them again.
> 
> Secondly I have used both Canadian (Dads) and overseas without a problem. Only negative is you can't buy MF or get new credit.
> 
> Rob


Do you file a tax return every year in Canada?


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## Eclectic12

Guban said:


> The country or countries of citizenship doesn't really matter for tax purposes. It is residency that counts.


It's an old thread ... but as I understand it, the US is one of maybe two countries where citizenship does matter. One is taxed on one's worldwide income based on citizenship (or holding a green card).

Then there's all the new reporting to make sure one is not hiding anything outside the US.



> If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.


http://www.irs.gov/Individuals/International-Taxpayers/Taxpayers-Living-Abroad


Some of the European dual citizens profiled in the news articles talking about their European bank telling them to take their business elsewhere as the bank doesn't want to deal with the new reporting requirement explicitly talking to some who have never visited the US and say they have no plans to go to the US.


Cheers


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