# Retire overseas and avoid capital gains taxes?



## snowbeavers (Mar 19, 2013)

This is a question that I have been thinking about since I am a non-resident Canadian. 

If you are a non-resident, you do not have to pay capital gains taxes for stocks that are sold. So why wouldn't more people simply live overseas for a few years, sell their investments, and then move back to Canada with the assets (or stay overseas). I do not believe this is illegal in any way, correct? Is this tax evasion?

I understand that many people might not be inclined since they probably have property and family, etc...but from a tax point of view, it makes sense.


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## MoneyGal (Apr 24, 2009)

I'll answer your question with a question: How do people become non-resident? If you answer that, you'll have the answer to your question.


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## fraser (May 15, 2010)

We looked at it long and hard a few years ago and we reviewed it with an accountant. It is not as straightforward as you would imagine.

In our case it was exercising stock options that was the trigger for the discussion.


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## PuckiTwo (Oct 26, 2011)

MoneyGal said:


> I'll answer your question with a question: How do people become non-resident? If you answer that, you'll have the answer to your question.


http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.htmlNon-residents

...."You are a non-resident for tax purposes if you:
normally, customarily, or routinely live in another country and are not considered a resident of Canada; or
do not have significant residential ties in Canada; and
you live outside Canada throughout the tax year; or
you stay in Canada for less than 183 days in the tax year....."

If you are a non-resident of Canada wouldn't you be a resident of another country and would have to pay taxes (capital gains or similar) in that country? 

Unless you are a "stateless person" and even then I assume you will have to pay taxes in the country where you will be living. ........


> _Every stateless person has duties to the country in which he finds himself, which require in particular that he conform to its laws and regulations as well as to measures taken for the maintenance of public order. _


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## AltaRed (Jun 8, 2009)

snowbeavers said:


> This is a question that I have been thinking about since I am a non-resident Canadian.
> 
> If you are a non-resident, you do not have to pay capital gains taxes for stocks that are sold. So why wouldn't more people simply live overseas for a few years, sell their investments, and then move back to Canada with the assets (or stay overseas). I do not believe this is illegal in any way, correct? Is this tax evasion?
> 
> I understand that many people might not be inclined since they probably have property and family, etc...but from a tax point of view, it makes sense.


There is seldom a free lunch. When a person leaves Canada (becomes non-resident), all of their capital property is deemed to be sold at market value on the date of departure. Capital gains taxes are thus due (or it may still be possible to post a bond for the taxes owed). Depending on country of residence, you may well owe taxes on stocks sold since you would have to declare gains made and could end up paying twice. Cross-border taxation is complicated and you need the advice of good cross-border tax accountants.


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## MoneyGal (Apr 24, 2009)

Not "what is a non-resident" but "how do people become non-resident?"

HINT: read the section called "deemed disposition" at this CRA link: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html


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## MoneyGal (Apr 24, 2009)

Took me too long to post and AltaRed snuck in with the answer!


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## snowbeavers (Mar 19, 2013)

Thanks...after investigating it more, you are completely right. It is difficult and risky.


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## fraser (May 15, 2010)

If you had a significant amount of monies that we coming into taxable income it might be worth your while to relocate to Alberta for a few months. We moved to Alberta for business. In my last five years of working I brought into income a considerable amount of performance bonus money and exercised stock options. The marginal tax rate was about 12 percent lower than Ontario or BC.


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## MoneyGal (Apr 24, 2009)

...a few months *that include December 31 and beyond.*


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## fraser (May 15, 2010)

Yes, absolutely Dec. 31. We chose to move for a number of reasons. An unanticipated benefit was a total tax savings of about $125-$150K (over five/six years) attributable to a lower marginal tax rate on income, stock options, and bringing back into income tax shelter dollars that were deducted from income in BC where the marginal rate at the time was, as I recall, 52 percent.


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