Possible move to New Zealand/Canada tax implications

[Auckland2016]

I think deemed disposition is really for emigrants who are leaving Canada for good. In your case, I don't think you need to do deemed disposition. Maybe you should keep filing tax return in Canada while working in NZ so that when you eventually move back to Canada, you won't encounter problem with CRA asking for unpaid taxes on overseas income! Big accounting firm, like KPMG will give free 1hr consultation so perhaps you can check with some accountants regarding filing taxes working overseas. In our cases, we have declared to be non-residents so we have kept very little money in our Canadian bank accounts so that no T5 is generated. In addition, we notified TD Direct Investing about our non-resident status so that they will deduct 15% withholding tax on all dividends generated from non-registered holdings so NR4 is generated instead of T3. We can't buy anything new from our TD non-resident investment accounts anymore. I don't know if you own a house in Canada or not but if you maintain a primary residence in Canada, then don't think you can claim to be non-resident but I may be wrong.

BTW, NZ is beautiful, I don't miss snow ;-)

[Super_BQ]

I think deemed disposition is really for emigrants who are leaving Canada for good. In your case, I don't think you need to do deemed disposition. Maybe you should keep filing tax return in Canada while working in NZ so that when you eventually move back to Canada, you won't encounter problem with CRA asking for unpaid taxes on overseas income! Big accounting firm, like KPMG will give free 1hr consultation so perhaps you can check with some accountants regarding filing taxes working overseas. In our cases, we have declared to be non-residents so we have kept very little money in our Canadian bank accounts so that no T5 is generated. In addition, we notified TD Direct Investing about our non-resident status so that they will deduct 15% withholding tax on all dividends generated from non-registered holdings so NR4 is generated instead of T3. We can't buy anything new from our TD non-resident investment accounts anymore. I don't know if you own a house in Canada or not but if you maintain a primary residence in Canada, then don't think you can claim to be non-resident but I may be wrong.

BTW, NZ is beautiful, I don't miss snow ;-)

Life would be much simpler if one could easily choose residency or have residency in more than one place. Unfortunately that's not how the CRA works as during my tax studies back in uni, our tax prof showed us many examples of tax court cases of people who wanted residency and also those who tried to become non-resident. This was way back pre-2000 when the CRA was called Revenue Canada, but I can assure you the Income Tax Act would of evolved no different to their approach of auditing those that try to flex around the deemed disposition laws. As I mentioned before, the clear giveaway was when Trudeau was voted in and shortly, he funded a separate task force at the CRA for audting those in the Vancouver area since the city was most hit with a high proportion of non-residents (who claim to be resident) owning Vancouver real estate, and not paying the tax on the gain because the country they reside has no capital gains tax.

It's very possible to be resident in more than one place but typically, this is discouraged as it opens the door for more complex tax liabilities. That is the tax laws in country A may say you have capital gains (ie Canada) and the tax laws in country B (ie NZ) that has FIF applied. Since both places tax on a "worldwide basis", the person may end up paying both liabilities where the sum of both places would net the person in a very disadvantaged tax situation (this is despite both places having a tax treaty). Don't be surprised of the limits around applying for 'foreign tax credits' under the treaty. If I recall correctly the IRS, set's a max limit of $80K? so having a treaty or not makes little benefit to the ultra wealthy ex-pat American that lives in a tax free haven, yet has to file to the IRS every year as long as they're a US citizen.

About the Cdn investment accounts. If they're non-registered, I can't see why a non-resident Cdn living abroad can not buy and sell shares in their portfolio? TD is a decent size bank and i'm certain they have many 'foreign resident' customers that use their platform to do stock trades. If not, my guess goes back to deemed disposition where the account holder must transfer or solidify the proceeds, pay the tax, and then form a new account as a foreign resident. But doing so is a hassle with recent laws such as the anti-laundering laws and CRS (Common Reporting Statndard) put out by many OECD nations (interstingly the US is not part of the CRS and foreigners can have brokerage accounts in the US without fear the financial institution reporting to the foreign country where the person is resident. I hear many wealthy EU residents moving their wealth to the US for this reason.

[Super_BQ]

To the original post and anyone living abroad looking to move to NZ, there's a financial requirement that the NZ gov't has imposed on brokerage accounts abroad.

https://www.fma.govt.nz/contact/faqs/#Foreign

As bad as how it sounds like how the US often does by going into other country's affairs. The NZ FMA is doing the same thing by requiring financial institutions abroad to comply to all NZ resident accounts.

One must be aware that when they change their brokerage account to non-resident and declare their residency as New Zealand, being part of retail brokerage, they must conform to the FMA. In many cases, most brokerage firms simply do not want to registered and be licensed. Yes for eg. TD Ameritrade instead of going through conforming with registration and licensing with the NZ gov'ts FMA, they are simply saying to existing and future account holders that they would not provide full services ; specifically in derivative trades (futures, options, and forex). I've been hearing a lot of brokerage firms (including in Canada), that they're simply closing accounts for residents living in NZ. So to the original poster, it's important that who ever holds your RRSPs, or equity investments, that you find out if they are to comply with the NZ FMA? You may find out they don't and will get a nasty situation where they would simply, 'close your account'.

From the link above i'll repost the specifics i'm getting at as some often say my posts are nothing but waffle:

"My foreign exchange broker has just told me they must close my account because of New Zealand regulatory requirements. Why?

Most foreign exchange brokers issue derivatives. If they are offering derivatives to retail investors they must be licensed by us – even if they are making an online offer from outside of New Zealand. Some providers have applied for a licence but others have decided to leave the New Zealand market. This means they cannot accept new retail business from New Zealand and they must close all New Zealand retail customer accounts.

Why can’t I use an Australian regulated, European regulated, or US regulated foreign exchange provider?

You can, but it’s illegal for them to offer derivatives to retail investors in New Zealand without being licensed by us. If they are willing to break the law to get your business, it’s likely they will be cutting corners in other areas and you will have much less protection if things go wrong.

Generally you’ll be a retail investor unless you meet certain criteria, for example, you’re a family trust or you have a large sum of money – in which case you could be considered a wholesale investor.

If you are a wholesale investor, derivatives issuers can continue to deal with you without being licensed by us."


and if you read that statement clearly, it seems there's a double standard for those who have "a large sum of money" and those that trade under a foreign trust scheme. My biggest concern is the next step the NZ Gov't would impose under the FMA is simply requiring all overseas brokers to become licensed - and for which to the point the brokerage firms will simply ignore the NZ market altogether and their clients. This will be the straw that breaks the camel's back for any wealthy migrants having considerable assets in say the US stock market, looking to move to NZ.