Finance & Investment

Can you transfer investments from Canada to the United States?

However, the process may not be as simple as transferring securities between two Canadian financial institutions. Crossing the border may take longer and may or may not have tax benefits.

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Tax implications of transferring investments

Meranda, if your main reason for moving investments is to defer taxes, your tax residency will be important. If you were to leave Canada and cease to be a tax resident, your investments would be treated as a disposal. This means that the securities will be treated as if you sold them for fair market value on the date of your move. Therefore, moving them to the United States will not save you tax. In fact, it might cost you.

When immigrating to the United States, your original asset’s cost basis becomes the cost basis for U.S. capital gains taxes. This differs from Canada, where the market value of your investments at the time of immigration will become your adjusted cost basis (ACB). Therefore, if you are becoming a U.S. resident, especially a long-term resident, you may want to consider selling your investments before moving.

That is, you may be able to defer the tax due on your deemed disposal. To do this, you must owe more than $16,500 ($13,777.50 for Quebec residents). You can make this election by filing Form T1244 “Election” under section 220(4.5) of the Income Tax Act to defer payment of income tax in connection with a deemed disposition of property. You must provide sufficient security to the Canada Revenue Agency (CRA) to pay the tax owed in order to defer taxes. The security may include the mortgaged asset itself or a letter of credit from a Canadian financial institution.

As a U.S. resident, you may have disclosure requirements or adverse tax consequences for any non-U.S. assets, including Canadian bank accounts, GICs, stocks, bonds, ETFs and/or mutual funds. So this could be another reason to start investing again in the United States.

If you transfer investments simply because you want to keep them with U.S. brokerage firm Meranda, there will be no tax consequences if you remain a Canadian tax resident.

Canadians are taxed on their worldwide income, so holding investments outside of Canada does not make them tax-free.

As a Canadian resident, you are generally subject to a 15% U.S. withholding tax on U.S. securities you own, whether you hold those securities with a U.S. brokerage firm or a Canadian brokerage firm. This withholding can be claimed as a foreign tax credit on your Canadian tax return.

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