I have some savings and investments in Canada that I would like to bring into the US. However, I don't want to just transfer the money over, because in that case I would owe departure tax of at least 28.5%.

What are my options? Is there a way to create a loan in the US, secured by the assets in Canada? Sure, I would be paying interest for access to my own money, but it would be far less than 28%.

  • Aren't you liable for the departure tax regardless of what happens to the money? – littleadv Mar 7 '14 at 19:50
  • Wouldn't your lender have to pay the departure tax to access the collateral when/if you default? – DJohnM Mar 7 '14 at 19:50
  • @User58220: I guess it depends on where the lender is located. If a Canadian bank agrees to write a loan, then they can get the collateral without any issues. – alekop Mar 7 '14 at 19:57
  • @littleadv: If the money doesn't leave the country, there is no departure tax. The idea is to keep the money there, while opening a loan for the equivalent amount "on the other side". – alekop Mar 7 '14 at 19:59
  • I believe you're wrong. cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html – littleadv Mar 7 '14 at 20:05

Canadian departure tax is implemented as a deemed sale gains proceeds taxation. Check here for details.

What it means is that you're taxed on the difference between your FMV on the date of terminating residency and your Canadian cost basis (FMV when you acquired residency, or regular cost basis if you acquired the assets while being resident of Canada).

It doesn't matter if you actually withdraw the money or not, it has no significance. You'll have to pay the tax either way.

  • This would have no effect on cash savings, true? – DJohnM Mar 7 '14 at 20:15
  • Why would it not? I mean, the savings themselves are after-tax, but the gains are taxed (interest etc). – littleadv Mar 7 '14 at 20:16
  • But the interest, except in the year of departure, would have been declared to and taxed by any/all jurisdictions involved as earned, no? Capital gains, actual or deemed, are different, I thought... – DJohnM Mar 7 '14 at 20:26
  • What was declared is not gains, its after tax. Gains is what's not been declared yet. I'm not sure what you're confused about. – littleadv Mar 7 '14 at 20:27
  • @littleadv: My understanding was that the departure tax was due when you actually take the money out out the country, not when you change your status. Thanks for clarifying that. Does this mean that I can simply wire the entire remaining balance to the US and not pay any additional taxes? – alekop Mar 10 '14 at 22:51

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