# Moving back to Canada from working in US - Tax Implication of Transfering my stocks



## TheKind (May 1, 2016)

I was working in the US for over 10 years and moved back to Canada. I had American stocks in a US TD Ameritrade account. Had it transfer to Canadian TD Waterhouse account. From what I can determine, the stocks wasn't sold and repurchase. My understanding is I have to determine the market value on the day I enter Canada. So when I sell these stocks, my gain or loss will be base the market value on the day I enter Canada for Canadian taxes purposes.

1. My questions is what happen to the gain or loss on the day of the transfer, is it deemed disposed at time of the transfer? If it is then do I have to file my gain or loss with the IRS? Or will my gain or loss be tax when I sell and withhold by the IRS. I kind of worry about this transfer, I'm trying to do the right thing.

2. I left the US on Dec and had vacation pay that wasn't paid until Jan after my move back to Canada. I talked with CRA and they said it was foreign income because it was based on the time I received it. I find it hard to believe that I had to pay Canadian tax on it just because it was delayed getting pay.


----------



## AltaRed (Jun 8, 2009)

With respect to 1 above, I believe you may have a 'deemed disposition' when leaving the USA and have to pay cap gains tax. BUT it is possible that may be deferred until you actually sell the stocks. Try asking that question in the Serbinski tax forum where there are gurus there that know that sort of thing. 

For Canadian tax purposes, the ACB of your investments is the Fair Market Value of those investments on the day you returned to Canada.

Same with your Q2. Ask in the Serbinski tax forum.


----------



## Eclectic12 (Oct 20, 2010)

Assuming you gave up Canadian tax residency at some point, then yes - Canada expects you to use FMV to set the cost for the stocks not sold.

On what basis were you working in the US?
My understanding is that US citizens and green card holders are considered tax residents unless appropriate steps are taken. Tax residents are taxed by the US on world wide income and have to file a US tax return.



> Green Card Test
> 
> You meet the green card test if you are a “Lawful Permanent Resident” of the United States at any time during the calendar year. You are considered a Lawful Permanent Resident if you have been granted the privilege of residing permanently in the US. Normally, you will have been issued a green card (alien registration form, Form I-551).
> 
> ...


http://www.usexpattaxhelp.com/green-card-holder-taxes-us-resident-alien.php#green card test
http://www.taxplanningguide.ca/tax-planning-guide/section-2-individuals/us-persons-resident-canada/
http://www.nolo.com/legal-encyclopedia/visa-green-card-holder-pay-taxes-29639.html


Fro #1 ... Canada expects when leaving one has sold the stock where one pays the CG or files an election to defer the CG to the future (in case one returns, there is a way to unravel the leaving part). I don't know but would expect the US to want the same thing.

As per the above ... the key question is whether the US agrees that you are no longer a US tax resident who will continue paying taxes to the US on your world wide income.


For #2, what determines whether the income being paid is taxed by Canada is when you became a Canadian tax resident. It sounds like the payment was after you became a tax resident so that, unfortunately, is the way it works. The good news is that there is a tax treaty between the US and Canada so if any taxes were taken by the US, those will be taken into account.


Bottom line is that with all the changes (particularly for the US tax system), these types of moves to another country are better done after one has consulted professionals.


Cheers


----------



## Eclectic12 (Oct 20, 2010)

It is important to figure out if one is a US tax resident as things like the TFSA or Canadian ETFs will cause problems. For example, the TFSA is not recognised by the US as a retirement account so that it is taxed where the TFSA is Canadian tax free.

This link has some info ...
http://www.gfsconsulting.ca/us-income-tax/u-s-income-tax-u-s-citizens-living-in-canada
http://business.financialpost.com/p...ada-the-irs-is-not-coming-to-seize-your-house
http://www.bdo.ca/en/Library/Servic...ens-and-other-US-Persons-Living-in-Canada.pdf


Cheers


----------



## TheKind (May 1, 2016)

I'm a Canadian, I was working using the TN NAFTA professional worker visa.

Regarding the first question, I found something on the Internet regarding departure of US, it indicates "No implications unless expatriation". I'm not sure expatriation tax applies to me because I'm not a US citizen but tax wise I'm treated that way while I'm working in the US.

Thank you for your responses.


----------



## AltaRed (Jun 8, 2009)

TheKind said:


> I'm a Canadian, I was working using the TN NAFTA professional worker visa.
> 
> Regarding the first question, I found something on the Internet regarding departure of US, it indicates "No implications unless expatriation". I'm not sure expatriation tax applies to me because I'm not a US citizen but tax wise I'm treated that way while I'm working in the US.


I agree you are not a US Permanent Resident, nor a US person* (once you have returned to Canada), so none of that nonsense to deal with, with respect to the long reach of Uncle Sam on an ongoing basis. The question you need answered is how your stocks are treated as a result of leaving the USA. 

Generally speaking, a resident alien (of which you were) is supposed to file a 'sailing permit' before exiting the USA to ensure all tax obligations are paid before exiting. Very few returning ex-pats do this except for those that have the major accounting firms under corporate retainers to help with such things. Every time I finished an ex-pat assignment in the USA, the Deloitte's, PWC's of the world prepared my exit tax return (sailing permit) and each time I went for an exit interview with the IRS....before leaving the USA. That is the fine point of the law, but as I say few do that and there seems to be no penalties for anyone who does not do so.

I do suggest you either ask an expert cross-border accountant what your 2015 US tax filing should consist of and what you owe..... or go to the Serbinski forum to find out. Lots of ex-pats ask those kinds of questions and no doubt the answer is there (look for threads with respect to Canadians returning home from assignments in the USA).

* Expect some grief down the road from Canadian financial institutions, especially brokerages. The IRS and CRA communicate via matching SINs and SSNs and at some point, the IRS could be telling your financial institution that you are a US person...simply because (and if) you have a SSN. That FI will come at you with a letter asking you to declare yourself. About 7 years ago, one Canadian discount brokerage would not let me open a taxable account without me signing a W-9 form (for US persons) instead of a W-8BEN and simply because I had a SSN. It was a month long battle and I finally told them to F off. A second Canadian discount brokerage insisted on the same thing and I finally got Deloitte (or PriceWaterhouseCoopers - I forget which) to intervene and one of the partners wrote that brokerage a letter explaining the situation and ascertaining I was not a US person (course I had to sign an affadavit on that too). That brokerage finally relented and accepted that I was not a US person. The situation can be brutal.

Added: http://forums.serbinski.com/viewtopic.php?t=9510&highlight=returning+canada suggests there would be no IRS cap gains tax owing. If so, that means all the cap gains that accrued while in the USA get a free ride. Better check with an expert to be sure. Not sure this loophole exists any more (it did exist back in 2006 when I came back from the USA) but I've been told that this loophole was closed. Caveat Emptor.


----------



## james4beach (Nov 15, 2012)

The OP's question is pretty complex and beyond the abilities of most individuals and conventional tax preparers.

The OP may need to file form 1040C upon departing the US
https://www.irs.gov/uac/Form-1040-C,-U.S.-Departing-Alien-Income-Tax-Return


----------



## AltaRed (Jun 8, 2009)

More info here https://www.irs.gov/Individuals/International-Taxpayers/Departing-Alien-Clearance-(Sailing-Permit)

I did 3 of these over a period of 30 years, but like I said, a lot of returning ex-pats don't do this and end up filing 'after the fact' for the tax year of departure.


----------

