Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Dual Citizenship Strategy?
Old 07-21-2012, 11:37 AM   #1
Dryer sheet aficionado
 
Join Date: Jun 2012
Location: Brisbane
Posts: 36
Dual Citizenship Strategy?

I just spent some time trying to figure out if there are any advantages to dual citizenship. In my case it is Can/Aus. I work here as a resident. Superannuation contributions are limited to 25k and after that you are taxed at an excessive rate if you want to put in to your super.
I was thinking that instead of contributing extra to my super in Australia, I could be contributing to the equivalent in Can (RRSPs). It doesn't lower my taxable income but it does put my money in a tax sheltered investment.

Anyways, it was just a random thought. It actually doesn't work great for early retirement but it made me wonder if there are other advantages dual citizens could use.
__________________

__________________
dr_popeye is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-21-2012, 11:41 AM   #2
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
I'm sure there can be advantages. But it's obviously highly dependent on which countries you hold dual citizenship, and also whether they have certain tax agreements in place.

I hold the only form of dual citizenship the US government recognizes -- I'm a citizen of both the US and my tribal nation. But that doesn't really provide me a heck of a lot of advantages other than the potential for "Indian preference" in hiring for jobs within tribal nations or with the BIA.
__________________

__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 07-21-2012, 12:23 PM   #3
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
You have access to two different systems of healthcare. This may be useful if one is substantially different than the other (for example, Canada has a single payer system whereas the US does not).

You may also be able to get two different old age / social security pensions. This would depend on the specifics of both countries. Personally I am eligible for US SS but don't believe I've worked enough in Canada to qualify for benefits.
__________________
photoguy is offline   Reply With Quote
Old 07-21-2012, 12:30 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,423
Some years ago, I read about a local Indian tribe making decent distribution from casino revenues to tribal members. So, I joked with friends that perhaps we should apply for "citizenship". My friends laughed and said "Nah, it would not be so easy!".

By the way, to be eligible, members must be living on tribal land. That really limits the chance to have other incomes. It is never that easy.

PS. In response to ziggy's reply below, the above was (is) true with that particular tribe I described. But I guess other tribes might have some other forms of limitation to ensure that the beneficiaries of the tribal income contribute to the common welfare somehow.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 07-21-2012, 12:36 PM   #5
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by NW-Bound View Post
By the way, to be eligible, members must be living on tribal land. That really limits the chance to have other incomes. It is never that easy.
That depends on tribal policy. For this purpose the US government recognizes the tribes as sovereign nations which can implement their own policies.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 07-21-2012, 03:41 PM   #6
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by dr_popeye View Post
I just spent some time trying to figure out if there are any advantages to dual citizenship. In my case it is Can/Aus. I work here as a resident. Superannuation contributions are limited to 25k and after that you are taxed at an excessive rate if you want to put in to your super.
I was thinking that instead of contributing extra to my super in Australia, I could be contributing to the equivalent in Can (RRSPs). It doesn't lower my taxable income but it does put my money in a tax sheltered investment.

Anyways, it was just a random thought. It actually doesn't work great for early retirement but it made me wonder if there are other advantages dual citizens could use.
I think you have to be a Canadian resident to contribute to RRSP.

The UK will allow UK expats to contribute to their SS system, you might see if Canada will allow the same voluntary payments.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 07-21-2012, 08:26 PM   #7
Dryer sheet aficionado
 
Join Date: Jun 2012
Location: Brisbane
Posts: 36
Quote:
Originally Posted by nun View Post
I think you have to be a Canadian resident to contribute to RRSP.

The UK will allow UK expats to contribute to their SS system, you might see if Canada will allow the same voluntary payments.

Yeah, that was just an example. I figure there must be some other benefit. The Canadian healthcare system doesn't really have anything to offer over the Australian one. But there must be some sort of financial advantage that can be manipulated. Otherwise it doesn't encourage repatriation.
__________________
dr_popeye is offline   Reply With Quote
Old 07-21-2012, 08:52 PM   #8
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,108
Quote:
Originally Posted by nun View Post
The UK will allow UK expats to contribute to their SS system, you might see if Canada will allow the same voluntary payments.
I contributed to both the US and UK SS systems for the first 7 years I lived in the USA until I had obtained Resident Alien status in the US and was certain that I could stay here. I later became a US citizen while retaining UK citizenship.

The advantage I see to our status (DW is also dual US/UK) is that we can choose to move back to the UK for whatever reason. I already receive a UK private pension, and will begin receiving a 2nd at age 65, plus I'll also get the UK version of SS since I paid into it for ~17 years. (I've paid into the US SS for 22 years).

I have no knowledge about dual citizenship other than UK/US
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is online now   Reply With Quote
Old 07-21-2012, 09:24 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,293
You will probably find that while income in your RRSP is sheltered in Canada, it is NOT Sheltered in Australia.
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 07-21-2012, 10:29 PM   #10
Dryer sheet aficionado
 
Join Date: Jun 2012
Location: Brisbane
Posts: 36
With the aging population, I don't believe voluntary paying into Can SS makes sense. Its either retirement savings plans or some other investment. I have no faith that SS in either Aus or Canada will be worth anything by the time I am 60+.
__________________
dr_popeye is offline   Reply With Quote
Old 07-21-2012, 10:32 PM   #11
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by Ed_The_Gypsy View Post
You will probably find that while income in your RRSP is sheltered in Canada, it is NOT Sheltered in Australia.
I'm sure Canada and Australia have a tax treaty and one country might well recognize the tax sheltering of the other's pensions. I know that's the case for the UK and the US.

Generally speaking having dual citizenship doesn't offer any financial benefits because tax advantaged accounts generally require residency and tax treaties have to be considered.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 07-21-2012, 10:59 PM   #12
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by dr_popeye View Post
With the aging population, I don't believe voluntary paying into Can SS makes sense. Its either retirement savings plans or some other investment. I have no faith that SS in either Aus or Canada will be worth anything by the time I am 60+.
It's not an easy decision unless the voluntary payments are as inexpensive as they are for the UK as they only cost about $200 a year.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 07-21-2012, 11:01 PM   #13
Dryer sheet aficionado
 
Join Date: Jun 2012
Location: Brisbane
Posts: 36
Quote:
Originally Posted by nun View Post
It's not an easy decision unless the voluntary payments are as inexpensive as they are for the UK as they only cost about $200 a year.
Totally makes sense in that case. I will look into the rules.
__________________
dr_popeye is offline   Reply With Quote
Old 07-21-2012, 11:23 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Location: North of Montana
Posts: 2,753
Quote:
Originally Posted by dr_popeye View Post
With the aging population, I don't believe voluntary paying into Can SS makes sense.
What do you mean by Can SS?

If you are refering to CPP, you must contribute some percentage of your Canadian earned income (up to about $45K only) and there are no 'voluntary' contributions. If you aren't paying Candian taxes on your income, and you have no reason to pay C tax on Aus earning, it's not possible.

If you are refering to RRSP's, again it takes Canadian 'earned' income to have contribution room. Your Aus income won't apply.

If you are refering to OAP, you don't have to contribute but there is a residency requirement (previous 10 years, I think).

I doubt there is a financial advantage to dual Cdn/Aus citizenship but it does give you the option to live in either country at your whim. I don't see a downside.
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
kumquat is offline   Reply With Quote
Old 07-22-2012, 12:10 PM   #15
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
It looks like Canada has an agreement with Australia to count time worked in Aus as periods of contribution to Canada:

Infosheet on the Agreement on Social Security between Canada and Australia

For other countries, the link below provides details:

International Benefits
__________________
photoguy is offline   Reply With Quote
Old 07-22-2012, 12:22 PM   #16
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
Quote:
Originally Posted by dr_popeye View Post
I have no faith that SS in either Aus or Canada will be worth anything by the time I am 60+.
Is the CPP projected to be financially unsound? From what I see from a brief search suggests the opposite. Canada also has a high per capita immigration rate which may help with aging issues.
__________________
photoguy is offline   Reply With Quote
Old 07-22-2012, 02:40 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,423
We made an RV summer trip to Banff a couple of months ago, and of course stopped by Calgary. There were so many immigrants there, more than in Vancouver I thought. And we were in Toronto more than 10 years ago, and saw that it was also an international city.

So, after being back home, I did some Web research and found that Canada now leads the US in being the international melting pot.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 07-22-2012, 03:26 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Apr 2010
Posts: 1,690
Canada's CPP is on a very sound foundation. This was not always the case. Fifteen years ago or so the Government of the day did a review, the outcome was that CPP in it's then current form was unsustainable. Demographics played a part, but so did funding and investment strategy.

Even more suprising was their decision to go forward with contribution rate changes (unpopular at the time) and a complete revanping of the the investment strategy. CPP is now ranked very highly when compared to other similar plans in terms of sustainablity and investment strategy.

My understanding is that tax laws in countries where you live or own property are as, or more important than your nationality/dual citizenship.

We did some preliminary work on the tax implications of living outside of the country. The one thing we learned was that one needs be to VERY aware of the tax laws prior to buying real estate or establishing a domicile of any kind. Nationality had nothing to do with it.

As an example, France is about to change their tax laws that will have a major impact on Brits who own property and rent it out periodically. Tax on that rent will rise to 35 percent. Capital gain on the sale of that property will rise to about 50 percent.
__________________
brett is online now   Reply With Quote
Old 07-22-2012, 04:11 PM   #19
Dryer sheet aficionado
 
Join Date: Jun 2012
Location: Brisbane
Posts: 36
Good to hear that the CPP is on solid foundation. My understanding was that the aging population is going to make everything more difficult in the future. Of course, by the time I am past 60, the current aged population will mostly be deceased. I know immigration is high in Canada. In Australia it is less but they make the criteria more difficult in order to attract skilled migrants.

I am really suprised about the CPP agreement. That is great news. I suspect they will have made it so you can't get both though.
__________________
dr_popeye is offline   Reply With Quote
Old 07-22-2012, 05:23 PM   #20
Thinks s/he gets paid by the post
 
Join Date: Apr 2010
Posts: 1,690
My understanding is that CPP is quite dissimlilar to social security. Employees pay just under 5 percent or earnings, up to a max of approx. $2400 year. Employers contribute the same amount.

Max. CPP payments are currrently about $980 month at age 65 but depend on your contributions over time. CPP is based upon the average industrial wage-which I think is currently about $47K. I was surprised to learn that a very low percentage of people get the max. CPP payment. It is based on earnings from age 18 with a number of low earning years taken away. It is not really a substitute for a good pension plan-either company provided or one base on personal savings.

The add on to this is the OAP, old age pension, which is about $600. mo. You need to have lived in Canada for 40 years to get this, otherwise it is prorated at 5 percent per year. Starts at 65, but that is being adjusted upwards to age 67. It is funded entirely from general tax revenues.
__________________

__________________
brett is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 11:57 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.