Personal Finance

Moving to the US for work, suggestions on CAD funds?

  • Last Updated:
  • Jan 7th, 2019 5:57 pm
[OP]
Sr. Member
Jun 5, 2015
952 posts
16 upvotes
Toronto, ON

Moving to the US for work, suggestions on CAD funds?

I am transferring to my employer's US office, and will stay there for the foreseeable future. I am in the process of closing my TFSA and personal stock brokerage accounts, and have sold my place recently. The biggest dilemma at the moment for me seems to be how I should handle the CAD funds I have? It's about 500 - 520K, and with today's exchange rate that number will be divided by 1.38 to convert to USD. Some banks are forecasting that it could go down to 1.2X while some are saying it will only get worse ... the change of 0.1 is a lot of money and I am hesitant about what to do with this: if I leave it in Canada, I can't really invest it or I'd be ineligible for non-tax resident status and would be taxed by both the US and Canada, if I convert it all and transfer it to the US, if USD weakens next year (which is possible given what it looks like now), then I'd lose/miss out a lot...

What would you guys with similar situation/experience do?

Any inputs would be greatly appreciated

Thanks
24 replies
Deal Addict
Jan 20, 2016
2028 posts
1004 upvotes
Houston, TX
thisismyid wrote:
Dec 26th, 2018 11:53 am
I am transferring to my employer's US office, and will stay there for the foreseeable future. I am in the process of closing my TFSA and personal stock brokerage accounts, and have sold my place recently. The biggest dilemma at the moment for me seems to be how I should handle the CAD funds I have? It's about 500 - 520K, and with today's exchange rate that number will be divided by 1.38 to convert to USD. Some banks are forecasting that it could go down to 1.2X while some are saying it will only get worse ... the change of 0.1 is a lot of money and I am hesitant about what to do with this: if I leave it in Canada, I can't really invest it or I'd be ineligible for non-tax resident status and would be taxed by both the US and Canada, if I convert it all and transfer it to the US, if USD weakens next year (which is possible given what it looks like now), then I'd lose/miss out a lot...

What would you guys with similar situation/experience do?

Any inputs would be greatly appreciated

Thanks
Max your rrsp, and keep the rest in hisa. No reason to exchange on 1.35 which is way below historical 1.2 until you're really needed them. Nobody know where it goes, but once it fall beyond what is reasonable, quite expected it should bounce back...at some point. Just wait for it if you could.

Yes, you will be taxed 25% in Canada on income and that will cover the US tax until you are having 1m income in USA :)

You have to file all this fbar paperwork as well, just to remind you...
Make the face great again
[OP]
Sr. Member
Jun 5, 2015
952 posts
16 upvotes
Toronto, ON
Thanks, but the HISA rates are all pretty low (for reputable banks in Canada anyway), about 1.5% or less, while if I convert them and put in some US banks it could earn 2.7% with savings or CD
Sr. Member
Feb 21, 2010
852 posts
239 upvotes
Scarborough
Negotiate with banks on the HISA as well as GICs.
Deal Addict
Jan 20, 2016
2028 posts
1004 upvotes
Houston, TX
thisismyid wrote:
Dec 26th, 2018 2:13 pm
Thanks, but the HISA rates are all pretty low (for reputable banks in Canada anyway), about 1.5% or less, while if I convert them and put in some US banks it could earn 2.7% with savings or CD
You'd loose about 10% on ex, hardly justify 1% in interest, besides there are many 2.5%+ promos in Canada for hisa, just search.
P.s. CD it's not a hisa, it's a gic where you are not free on terms , Canadian gic are 3% and above in such case.
Make the face great again
Deal Addict
Jan 20, 2016
2028 posts
1004 upvotes
Houston, TX
amal1595 wrote:
Dec 26th, 2018 5:12 pm
Buy and hold non dividend stocks
Not an option for non resident, as many brokerage will just liquidate any nonres account to cash. And he will have to pay depart tax and then 25% tax on dividends..."great" advise lol
Make the face great again
Jr. Member
Feb 8, 2018
126 posts
40 upvotes
asa1973 wrote: Not an option for non resident, as many brokerage will just liquidate any nonres account to cash. And he will have to pay depart tax and then 25% tax on dividends..."great" advise lol
Are you saying that us residents can not have holdings in CAD at IB?
Deal Addict
Jan 20, 2016
2028 posts
1004 upvotes
Houston, TX
amal1595 wrote:
Dec 27th, 2018 3:44 pm
Are you saying that us residents can not have holdings in CAD at IB?
Some they you could NOT have any non-registered (and it not TFSA as considered as a trust by IRS), and California residents also are taxed on their RRSP as CA do not recognize it as tax sheltered account...
Unfortunately, Canadian non-residents living in the U.S. are not able to non-registered accounts (aka Cash accounts).

However, Canadian non-residents living abroad, outside the U.S., can open non-registered accounts.
https://www.reddit.com/r/PersonalFinanc ... residents/ read as well.

SOME brokerage maybe cold do a transfer n kind, (like IB) who works on both sides on the border, but repatriation tax still here for CRA , and conversion issue...really do not make sense, especially if OP already has CASH on hands, not stocks.
Make the face great again
Member
Jul 1, 2006
416 posts
217 upvotes
If you are comfortable owning a portfolio of individual stocks, you could always buy inter-listed Canadian stocks in a margin account, journal them over to the $US side of your account, and then transfer them in-kind to a US based brokerage (such as Fidelity).
https://www.tmxmoney.com/en/research/interlisted.html

You are able to keep HISA's in Canada, at least with most of the banks. I kept a Tangerine account and while I did have to play their games with rates, if you've got $500K to park, I'm sure you'd be able to negotiate at least 3%. Just make sure you open any accounts you might want before you leave - opening them once you become a non-resident will be basically impossible.

You will not pay any withholding tax on the interest earned in a HISA, but you do need to include the income on your US tax returns.
: if I leave it in Canada, I can't really invest it or I'd be ineligible for non-tax resident status and would be taxed by both the US and Canada,
Not really how it works.

You will not be able to invest it in Canada, because the Canadian brokerages won't let you. At least in non-registered accounts. RRSP is OK. Glad to hear you are closing down the TFSA.

The status of your residency is generally based on where you live and work and where your family is (spouse + kids). If you have no house in Canada and any family members are with you in the US, then you are pretty much defacto a US resident / Canadian non-resident as of the date you all leave the country. Other things like credit cards and bank accounts, RRSPs are secondary to that. Unless you wind up spending a lot of time in Canada, in which case you could be deemed resident, but its pretty unlikely. And even then you'd have a reasonable closer ties claim to the US.

Does your employer not offer some sort of tax prep services for international transfers? When I moved down, I had a consult with Deloitte and they prepared the transition year taxes in the US and Canada. Its not for the faint of heart, so I'd suggest you broach the topic and see if your company can help you out here.
Deal Addict
Jun 15, 2012
1769 posts
296 upvotes
Saskatoon
thisismyid wrote:
Dec 26th, 2018 11:53 am
I am transferring to my employer's US office, and will stay there for the foreseeable future. I am in the process of closing my TFSA and personal stock brokerage accounts, and have sold my place recently. The biggest dilemma at the moment for me seems to be how I should handle the CAD funds I have? It's about 500 - 520K, and with today's exchange rate that number will be divided by 1.38 to convert to USD. Some banks are forecasting that it could go down to 1.2X while some are saying it will only get worse ... the change of 0.1 is a lot of money and I am hesitant about what to do with this: if I leave it in Canada, I can't really invest it or I'd be ineligible for non-tax resident status and would be taxed by both the US and Canada, if I convert it all and transfer it to the US, if USD weakens next year (which is possible given what it looks like now), then I'd lose/miss out a lot...

What would you guys with similar situation/experience do?

Any inputs would be greatly appreciated

Thanks
You don’t have to liquidate your TFSA ( you will lose your future contribution room as long as you are not tax resident of Canada, but you will keep all existing), same applies to your registered plans, in your non registered account you may hold whatever you are pleased but you will have to report any dividends payed to cra and irs, if you decide to sell you will have to report capital losses or gains, and pay applicable taxes. Canada and USA had signed a tax treaty to avoid double taxation of its citizens thus won’t overpay in taxes.
Cheers.
'The rich get richer and the poor get - children.'
Deal Addict
Oct 4, 2009
2491 posts
1284 upvotes
Montreal
Amazed at where this thread has gone.

Your CAD funds are worth what they are worth. They aren’t worth what you(or apparently others in this thread) wish them to be worth. Guessing about currency movements is a mug’s game, convert your funds at the smallest possible cost(not at 1.38) and move on.

You should pay less than 0.25% in currency exchange fee on your mid six figure amount.

The CAD:USD exchange rate is going to be irrelevant anyway for investing purposes. So few investors understand this.
Deal Addict
Dec 10, 2007
1939 posts
33 upvotes
You don't actually need to close TFSA (unless you want/need access to that money); you just cannot contribute to any new TFSA once you are considered non-resident. Also any investment in registered account is sheltered and not subject to 25% withholding tax (even if you become non-tax resident).
Deal Addict
Oct 4, 2009
2491 posts
1284 upvotes
Montreal
Sepiraph wrote:
Jan 2nd, 2019 1:15 pm
You don't actually need to close TFSA (unless you want/need access to that money); you just cannot contribute to any new TFSA once you are considered non-resident. Also any investment in registered account is sheltered and not subject to 25% withholding tax (even if you become non-tax resident).
What is the point since US will tax it and require apparently voluminous tax filing? How is this better than unregistered account for the OP?

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