Important issues if retiring abroad
Canada is a wonderful country, but there seem to be two things
Canadians don’t mind giving up – our high taxes
and low temperatures. Which is why many thousands of Canadians
retire abroad, largely to Florida and Arizona, the most popular
retirement destination for Canadians.
Temperatures are higher and taxes are lower in the U.S. but
if your primary goal is to achieve lowest taxes, you can do
better. There are many countries around the world that want
your money and are willing to offer you significant tax concessions
to get it.
But if you want to maximize any tax advantages that may be
available to you, you’ll have to make some major decisions.
And most of those decisions concern residency.
Residency can be a taxing question
If you are a non-resident of Canada, you do not have to pay
Canadian tax on your income (unless you earned it in Canada).
And if you are going to be retiring abroad, you may be wise
to establish your status as a non-resident before you file
your last tax return in Canada.
But non-residency is not a simple thing and it is determined
by the government on a case-by-case basis. Even if you become
a legal resident of your new country, that does not automatically
make you a non-resident of Canada.
Residency ties are based on such things as houses and cottages,
bank accounts, spouses and dependents, credit cards, driver's
licenses, health-plan memberships, club or professional memberships
and finally, time spent in Canada.
 Although
you may be a non-resident, you’re still eligible to
receive CPP/QPP and OAS benefits. However, there would be
a 25% withholding tax on this and other “passive”
income such as annuity payments or pension payments from private
plans. Some countries have tax treaties with Canada in which
case this tax could be reduced or waived.
And you should know that you can become a non-resident but
still remain a citizen. In fact, if the laws of your new country
permit dual-citizenship, you can become a citizen of your
new country while retaining Canadian citizenship because Canadian
law permits a Canadian to have more than one nationality.
Whatever your reason for wanting to leave Canada –
weather, taxes, renewing family ties – there are many
other important issues you should consider, healthcare being
one of the most critical. Others include estate planning,
housing, cost of living, culture, society, government and
language to name a few.
Simply stated, retiring abroad raises a host of questions,
many of a tax and legal nature. So before you make too many
plans, you would be wise to seek professional advice. If
you’d
like to speak to someone who has experience dealing with
these issues, click
here to find the RBC financial planning professional closest
to you. Although they may not be able to give you this
type of advice, they will help you contact someone who can.
Important information about our financial planning services can be found at the bottom of our
homepage.
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