Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
FIRE to Canada
Old 08-26-2005, 10:02 AM   #1
Thinks s/he gets paid by the post
maddythebeagle's Avatar
 
Join Date: Jun 2005
Posts: 2,450
FIRE to Canada

Red_y actually brought this topic in another thread and I was wondering if this is something others are considering. How hard is this to do? Is it really worth it? What are the tax implications?
__________________

__________________
- Hurry! to the cliffs of insanity!
maddythebeagle 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!

Re: FIRE to Canada
Old 08-26-2005, 10:13 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Jul 2004
Posts: 1,505
Re: FIRE to Canada

What's with you guys wanting to leave the awesome U.S. of A? Oh man, i think we were so lucky to be born here.

__________________

__________________
azanon is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 10:41 AM   #3
Full time employment: Posting here.
Calgary_Girl's Avatar
 
Join Date: Jun 2004
Location: Calgary
Posts: 775
Re: FIRE to Canada

Quote:
Originally Posted by azanon
What's with you guys wanting to leave the awesome U.S. of A?* * Oh man, i think we were so lucky to be born here.

No offense, but I think I was lucky to be born in Canada.
__________________
I can only be nice to one person today! Today is not your day...tomorrow doesn't look good either.
Calgary_Girl is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 10:42 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: FIRE to Canada

I think its pretty hard to do, at least legally. *You'd have to watch out for the specifics of immigration laws and probably have to be out of the country for part of the year, although I don't know the specifics. *Regardless of where you live, the US will still tax you.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 10:46 AM   #5
Full time employment: Posting here.
Calgary_Girl's Avatar
 
Join Date: Jun 2004
Location: Calgary
Posts: 775
Re: FIRE to Canada

Quote:
Originally Posted by maddythebeagle
Red_y actually brought this topic in another thread and I was wondering if this is something others are considering. How hard is this to do? Is it really worth it? What are the tax implications?
Here's the link to the Government of Canada website for immigration info: http://canadainternational.gc.ca/gtc...Canada-en.aspx

Basically, one simply can't retire to Canada if one feels like it. Canada has a point system and it's much easier to immigrate here if you are young and educated.
__________________
I can only be nice to one person today! Today is not your day...tomorrow doesn't look good either.
Calgary_Girl is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 10:56 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Jul 2004
Posts: 1,505
Re: FIRE to Canada

Quote:
No offense, but I think I was lucky to be born in Canada.
Oh I agree, that's plenty lucky given all the other possible options!

No offense intended in my reply, of course.
__________________
azanon is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 11:01 AM   #7
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Re: FIRE to Canada

Quote:
Originally Posted by Calgary_Girl
Basically, one simply can't retire to Canada if one feels like it. Canada has a point system and it's much easier to immigrate here if you are young and educated.
In other words, they do not want old and uneducated.

Not that many years ago, the only requirement was that if you have an asset of $200K or more, you are automatcally qualified. That was the ticket for many people to immigrate from Hong Kong to Canada in the late 90s.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 11:26 AM   #8
Full time employment: Posting here.
Calgary_Girl's Avatar
 
Join Date: Jun 2004
Location: Calgary
Posts: 775
Re: FIRE to Canada

Quote:
Originally Posted by Spanky
In other words, they do not want old and uneducated.

Not that many years ago, the only requirement was that if you have an asset of $200K or more, you are automatcally qualified. That was the ticket for many people to immigrate from Hong Kong to Canada in the late 90s.
You are right, you "score" higher if you are bringing assets with you (i.e. cash) and you also score higher if you were a business owner in your previous country and plan on starting a business in Canada.
__________________
I can only be nice to one person today! Today is not your day...tomorrow doesn't look good either.
Calgary_Girl is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 11:33 AM   #9
Full time employment: Posting here.
Calgary_Girl's Avatar
 
Join Date: Jun 2004
Location: Calgary
Posts: 775
Re: FIRE to Canada

Here's the point classification system used to determine if you qualify as a "skilled worker":

http://www.cic.gc.ca/english/skilled/qual-5.html

Of course, you can also immigrate if you have relatives here who are willing to sponsor you.

My husband (an American) was able to immigrate here because he obtained a job transfer from the States. The drawback is that you must work for the same employer. DH is now a Permanent Resident though (meaning he can work for anyone and is the first step in applying for Citizenship) because I sponsored him since I am a Canadian citizen.
__________________
I can only be nice to one person today! Today is not your day...tomorrow doesn't look good either.
Calgary_Girl is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 11:34 AM   #10
Recycles dryer sheets
Red_y's Avatar
 
Join Date: Aug 2004
Posts: 77
Re: FIRE to Canada

I was writing this up on the other thread while y'all started this one, so I'll repost my reply here about why I'm going to Canada and how hard it is to get there.

It's doable but takes some planning. Regarding the point system, you have to remember that the Canadians can raise or lower the "pass mark" at will. After 9/11, they raised it considerably and I didn't have enough points. In Sept. 2003 they lowered it to where I qualify. So if you're thinking of taking this route, get in while the gettin's good.

My story:
I am (1) disillusioned with the direction the US is taking on a number of levels (2) queer as a 3-dollar bill (3) an outdoors nut (4) liberal and pacifist in the extreme.

In Canada, I can live in one of the best countries in the world (with its national health system, livable climate, educated and tolerant population, budget and trade surpluses), speak English, drive on the right side of the road, feel somewhat less of a target for violent extremists, and legally marry my SO.

It is possible to immigrate in the Skilled Worker category as I am if you meet their point system requirements. Points are given for education, speaking fluent English or French, work experience, age, etc. My useless English degree finally paid off! There are other immigration categories if you have relatives in Canada or marry a Canadian.

Sadly, they eliminated the Retirement category some time ago. That's why it was important for me to apply before I was 50...you start to lose points then in the Skilled Worker scheme.

It took me about 2 years total to get through the immigration process...making the decision to go, collecting all the required documentation, submitting the application, undergoing medical check, getting FBI fingerprint check, etc. For the two of us, it cost about $3500 total in fees, medical tests, photos, fingerprint check, express mail, etc.

All Canadian citizens and Permanent Residents are eligible to be covered by the provincial health care system of the province they reside in. I'll have a 3-month waiting period when I move to BC, but that's it. Dental and vision coverage are not included; from what I've read on the newsgroups, most Canadians self-insure for those.

And I will be paying into the system after I move to British Columbia via the GST (Goods and Services Tax) and PST (Provincial Sales Tax). These add about 15% to just about every purchase you make of goods and services. That's where funding for their health care system comes from.
__________________
Red_y is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 11:50 AM   #11
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: FIRE to Canada

It looks like you lose your US citizenship if you become a Canadian citizen by applying for Canadian citizenship (vs acquiring Canadian citizenship automatically). What sort of hoops to do you have to jump through if you decide to repatriate to the US?
__________________
wabmester is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 11:56 AM   #12
Full time employment: Posting here.
Calgary_Girl's Avatar
 
Join Date: Jun 2004
Location: Calgary
Posts: 775
Re: FIRE to Canada

Quote:
Originally Posted by wabmester
It looks like you lose your US citizenship if you become a Canadian citizen by applying for Canadian citizenship (vs acquiring Canadian citizenship automatically).* *What sort of hoops to do you have to jump through if you decide to repatriate to the US?
Nope. Our immigration lawyer told us that my husband can have dual citizenship. Plus, DH already knows that we won't be going back to the U.S. except maybe for a few months in the winters to be snowbirds
__________________
I can only be nice to one person today! Today is not your day...tomorrow doesn't look good either.
Calgary_Girl is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 11:59 AM   #13
Recycles dryer sheets
Red_y's Avatar
 
Join Date: Aug 2004
Posts: 77
Re: FIRE to Canada

Actually, citizenship in Canada comes later. I'll have to be a Permanent Resident of Canada for 3 years before I can even apply for citizenship. Then that starts another round of application, tests, fees, waiting...

And I do not lose my US citizenship by either becoming a PR or a Canadian citizen. Dual citizenship is not a problem to the Canadians.

Renouncing US citizenship is pretty harsh and doesn't relieve you of the requirment to file a US tax return. In fact, the IRS just assumes you are renouncing to avoid taxation and makes you file for an additional 10 years anyway. Not worth it, IMHO, just to make a point or as a "protest". US citizenship is a pretty valuable thing.
__________________
Red_y is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 12:01 PM   #14
Thinks s/he gets paid by the post
maddythebeagle's Avatar
 
Join Date: Jun 2005
Posts: 2,450
Re: FIRE to Canada

Does anybody have a good factsheet on the tax system in Canada. So it sounds like you still have to pay us income and investment taxes? plus that extra sales tax that you talked about for the health care system.
__________________
- Hurry! to the cliffs of insanity!
maddythebeagle is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 12:03 PM   #15
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: FIRE to Canada

Gotcha. *I misread the following from another site:

a person who acquires a foreign citizenship by applying for it may lose U.S. citizenship

But the may apparently means only if you insist on it, not that the US will revoke your citizenship.

http://www.amcits.com/dual.asp

__________________
wabmester is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 12:06 PM   #16
Recycles dryer sheets
 
Join Date: Jun 2005
Posts: 126
Re: FIRE to Canada

I think that you can also still get immigrant status in Canada under an "entrepreneur" category, if you deposit $400,000 (Canadian) with the provincial government for 3 years (or so) interest free.....

You also can get in under a "business" category if you have the experience and wherewithal to start a business.

__________________
jerryo is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 12:17 PM   #17
Recycles dryer sheets
Red_y's Avatar
 
Join Date: Aug 2004
Posts: 77
Re: FIRE to Canada

I'll dig up some tax info I have at home and post later.

The net/net is that the Canadian exemptions, rates and brackets are pretty similar to the US, except that the highest rate tops out at 46%. As a frugal retiree, I'll be nowhere near the top bracket.

No joint returns; married couples file individual tax returns.

No deduction for home mortgage interest.

They don't recognize the Roth IRA as a retirement vehicle, so you have to pay taxes on income/cap gains in your Roth every year as if it were in a taxable account. Regular IRAs they do recognize.

There is a tax treaty between the US and Canada that prevents the same income from being taxed twice, but you do have to file dual returns ad infinitum. Canada taxes based on residency, the US taxes based on citizenship.

Giant PIA but I have access to H&R Block tax info to help me sort it all out.
__________________
Red_y is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 02:14 PM   #18
Recycles dryer sheets
 
Join Date: Feb 2004
Posts: 178
Re: FIRE to Canada

Quote:
Originally Posted by maddythebeagle
Does anybody have a good factsheet on the tax system in Canada. So it sounds like you still have to pay us income and investment taxes? plus that extra sales tax that you talked about for the health care system.
Compared to the US, the upper middle class gets soaked for income tax in Canada. Marginal tax rates on employment income climb much faster than they do in the US. Tax on investment income is actually pretty comparable to the US, as long as you're careful about it.

For a moderate income FIREe with an appropriately structured portfolio, it's not a big deal. (Working stiffs with fat incomes take it in the neck on your behalf.) The example I always cite is that a married couple can collect close to $160k a year in dividends and capital gains - it has to be evenly split between them and the dividends have to be Canadian - and still pay only about 10% of it as income tax (combined federal + provincial).

There is a good marginal rate calculator here. It's really only good for marginal rates - not the tax liability in total - because of the assumptions it makes about source of income (e.g. if you plug in $30,000, it says a BC resident would pay $4786 in income tax; if that $30,000 is Canadian dividends, a BC resident would actually pay less than a grand; if it were all capital gains, s/he'd pay about $1500).

Anyone seriously thinking about this should read the digest of advice here. If your financial situation is at all complex, get professional advice before you move.

P.S. Welcome to BC when you get here, Red_y.
__________________
I'd rather be sailing.
nfs is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 02:25 PM   #19
Full time employment: Posting here.
Calgary_Girl's Avatar
 
Join Date: Jun 2004
Location: Calgary
Posts: 775
Re: FIRE to Canada

Quote:
Originally Posted by nfs
Compared to the US, the upper middle class gets soaked for income tax in Canada.* Marginal tax rates on employment income climb much faster than they do in the US.* Tax on investment income is actually pretty comparable to the US, as long as you're careful about it.
I don't know if I agree with this nfs. DH is in a very high income tax bracket but his gross salary is the same as when we lived in the States. His net income however is at least the same however (if not a little bit more actually). That's why I laugh when Americans say we pay so much in taxes because I just don't see it.
__________________
I can only be nice to one person today! Today is not your day...tomorrow doesn't look good either.
Calgary_Girl is offline   Reply With Quote
Re: FIRE to Canada
Old 08-26-2005, 02:40 PM   #20
Recycles dryer sheets
Red_y's Avatar
 
Join Date: Aug 2004
Posts: 77
Re: FIRE to Canada

Thanks, nfs. The links you provided are ones I've got bookmarked at home!

I also check in periodically on the discussion boards at www.serbinski.com and www.grasmick.com.

They both have exhaustive discussions about US/Canada cross-border taxation issues. You have to weed through them to find the threads that are about US citizens in Canada; usually the reverse situation is the norm, since the US prevailing wages are higher in some fields, like health care.
__________________

__________________
Red_y is offline   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


Similar Threads
Thread Thread Starter Forum Replies Last Post
About to FIRE - can you help me stir my pot? coolie Hi, I am... 3 09-24-2006 10:15 AM
Planning a FIRE in Canada Canadian FIRE Hi, I am... 5 03-22-2006 01:07 PM
My "unconventional" route to FIRE FreeBird Young Dreamers 46 02-06-2006 12:21 AM
I'm going to FIRE soon at 35. free4now FIRE and Money 33 02-03-2006 09:53 AM

 

 
All times are GMT -6. The time now is 03:39 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.