# Tax treatment of foreign stocks and mutual funds for an immigrant



## drdtyc (Mar 23, 2010)

Hello everyone in this great forum.

having obtained a Canadian immigration visa, I will become a landed immigrant when I relocate to Ontario later this year. Currently I hold a few UK stocks and UK mutual funds (these are called OEICS and Unit Trusts in the UK). I intend to continue holding them when I settle in Canada. 

I have the following two questions to ask for your inputs:

(1) How would I report dividends from UK stocks and distributions from UK mutual funds in my 2011 tax filing? I think a financial year (FY) ends on 31 December in Canada but FY ends on 31 March in the UK. I may not have received the necessary UK dividends and distribution slips to file my tax return to CRA. 

(2) I will keep a record of the market prices of my holding on the date of my landing on Canadian soil. These prices will be my base prices for calculating future capital gain when I dispose of the stocks or funds. Can I use the UK tax credits on dividends and distributions to reduce my capital gain?

Thanks in advance.


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## humble_pie (Jun 7, 2009)

i'll post a tentative answer here, subject to revision, for the simple reason that no one else has responded and we should all welcome you to canada most heartily !

as for your questions, what we are slaving over now are the 2009 returns. And you have not even arrived yet, so you will not have any 2009 canadian returns to file.

i'm going to have some difficulty with your questions, and whatever i might scribble down here should be re-checked with the CRA (canadian revenue agency) after you arrive.

but here goes. On march 31 2010 your UK securities will officially declare & distribute year-end amounts & receipts. That's only a week away. Will you be ovah heah by that date ? Or will you still be ovah theah ? Tax consequences will be quite different.

suppose you will still be residing & paying tax ovah theah, in your sceptred isle, that precious stone set in the silver sea, on the 31st day of march 2010. Again, what happens overseas to an overseas taxpayer is no concern of the canadian authorities.

now let us suppose some more. You arrive in our fair land - described by voltaire as quelques arpents de neige - on june 15, 2010. Some time after march 31, 2011 you receive the annual distibutions & tax receipts for the UK securities. The way i see it (please check with the CRA) you won't have to report this 2011 income until april 2012. It's my belief that you will be able to prorate it for the portion of the fiscal year april 1 2010-march 31 2011 that you will have resided in canada, namely, from june 15 2010 to march 31 2011.

it would probably be a good idea to check with your various oeics & unit trusts - or with the brokerage house that issues any tax receipt for these - as to whether or not the UK will withhold moneys as non-resident tax before the balance is made available to you as a resident of canada. When you eventually commence filing canadian returns, these withheld overseas taxes will become a foreign tax credit (not necessarily in their entirety, but fairly close.)

as for your question (2), yes, keep a record of UK closing market prices for your securities on the day you arrive in canada. These prices will serve as your cost base. However i have no clue about answers to your 3rd sentence. I think you'd have to take this up with the CRA, using specific details and identifying each security. Generally we do not mix dividend tax credits with capital gains calculations in canada, but remember that we are poor peasants only lately descended from bush pioneers, so perhaps our taxation practices are rustically quaint.


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## OhGreatGuru (May 24, 2009)

To add to Humble Pie's witty remarks, the agency in charge of income tax is the Canada Revenue Agency (CRA), whose main web page is:

http://www.cra-arc.gc.ca/menu-e.html

Look under "Topics for Individuals." generally.

Also see "Newcomers (Immigrants) to Canada:
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nwcmr-eng.html

Also see Foreign Interest & Dividend Income:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/121/frgn-eng.html

and the Guide No. T4037 - Capital Gains

PS: see also the page on IT-451R - "Deemed Disposition and Acquisition on Ceasing to be or Becoming Resident in Canada". Paras. 24-26 apply to your situation, which is why Humble Pie told you to record the Fair Market Value at your date of entry.
http://www.cra-arc.gc.ca/E/pub/tp/it451r/it451r-e.html


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## drdtyc (Mar 23, 2010)

Dear HP and OGG,

Thank you very much for your advices.
These certainly have guided me in the right direction.

I may come back with some questions after reading through the CRA literature as suggested. Although both our countries use English as a common language, the terminologies of CRA are very much different from those used by Her Majesty's Inland Revenue! 

Thanks again.


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