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Canadian taxes
Old 10-20-2007, 10:42 AM   #1
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Canadian taxes

Hi all,
I have a chance to both retire (at a later date) in Canada and get Canadian PR. I'm applying for the PR soon. I taught at a university and internationally for a number of years, so a Canadian university is making it a bit easy for me to do some part time lecturing and teaching at the same time while working on my PR application. I like Canada, and appreciate the more relaxed lifestyle.

I'm having second thoughts. however. I have a nice personal retirement plan already that is taxed only on the earnings. If I lived in the States, my retirement income taxable would maybe be only 7 or 8%. I've heard some stories that retirement income can be taxed as high as 30% as a single person. Is that correct?

There is also the possibility that I might get married with a woman who works at the same school as I do, and she's Canadian. We could live in the States, and she might work on her US green card. However, we both prefer Canada. Is there quite a tax break for married couples in Canada? How does that work?

The part about Canada I like is the free health care, however slow. But if the 2 of us lived in the States, we'd pay less taxes and perhaps need to but our own health care. Are there any of you out there that actually are Americans retired in Canada? Do you ever have any regrets?

Regards,
Rob
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Old 10-20-2007, 11:33 AM   #2
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There are ways to retire in Canada and not get taxed heavily. We have only paid taxes in 2 of the 5 years of retirement. Dividends from Canadian public corporations are given attrractive tax treatment. Capital gains are only taxed at 50% of the gain when realized. This offers the chance to have a taxable year every third year, for example. In the years when we paid any taxes the aggregate rate was 15%.

There are opportunities to defer property taxes when you are over 65. Many things are free or substantially reduced then such as transportation, car insurance, ski lift tickets...

It is hard to generalize because it varies by province.

OTOH there are "sin" taxes on alcohol, gasoline and tobacco. These never end and offset the single payer health insurance (not free but subsidized). Drugs and dental are covered by private insurance such as Blue Cross.
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Old 10-20-2007, 09:40 PM   #3
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Old 10-22-2007, 09:06 PM   #4
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I'm an American who just retired recently and moved to Canada. Your mileage may vary, but here's my take:

I would plan on having about 5% more income to retire in Canada than in the US to cover the somewhat higher cost of living. As kcowan said, it's going to vary significantly depending on where you settle. I'm in a one stoplight town in the Purcell Mountains of British Columbia. Food, cable, mobile phones, gasoline, car insurance etc. cost significantly more than they did where we moved from...the Seattle WA area, not known for its low cost of living.

I plan to do taxes for H&R Block part time as I used to in the States, so I'm taking their basic Tax Class to get up to speed. For 2007, the lowest marginal tax bracket will be 15.5% on taxable income of up to about $37,000. There are NO joint tax returns for married/common law partners. Each individual files separately, although if a spouse/partner has low enough income, the higher income person can take SOME of the other's standard exemption.

Any untaxed money you draw out of your US accounts will be taxed by one country or the other. As a Canadian resident, you're subject to their taxes. As a US citizen, you are subject to US taxes wherever you live. So you'll end up doing your taxes for both countries, paying whichever one is higher, and then claiming the tax paid on the other return to wipe out that tax bill (avoiding double taxation on the same income).

Last month a change to the US/Canada tax treaty was been proposed that would make Roth IRAs a recognized pension plan as far as the Canadian tax authorities go. So if you've got Roth IRAs, income you take from them would be tax free in either country after age 59 1/2.

Health care is not free. Buy something in Home Depot in Snohomish County WA and sales tax is 8.6%. Buy the same thing in Home Depot in Cranbrook BC and the cost is about 10% higher (they are not reflecting the weakness of the US dollar here yet) AND the taxes total 13% (6% national GST and 7% provincial). But in return for the higher taxes is the universal health care available. I can cover health insurance for my partner and myself for $96 a month vs. $400 in the US.

I definitely agree that the lifestyle is more relaxed in Canada; we feel very laid back here compared to the US. And we have a deer that practically lives in our back yard...now how cool is that?
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Old 10-25-2007, 05:12 PM   #5
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Originally Posted by Rob View Post
Hi all,

The part about Canada I like is the free health care, however slow.
Regards,
Rob

Better have a head check if you think health care is really "free" in Canada.

Someone else already mentioned combined GST taxes--provincial and national. Just returned from a visit to Victoria. Every thing we bought we had to add 13% to the retail price tag. That would be on top of any provincial and national Canadian income taxes a person living there would have to pay.

Where does the money come from for the government to offer the "free" health care system? Do all the doctors and hospitals donate their time, skills, and services just so the government can offer "free" health care to everyone? I don't think so.

Also, while in Victoria, I read in a local paper about Canadians going south for medical care because of longwait times. I was surprised to see this viewpoint in a Canadian paper, relating Canadians' experiences. And that was not the only Canadian "griping" about their so-called free health system I ran across. I have been following the debate in the US about universal health care, so I was interested to note how another country's citizens felt about their own universal plan, and how it was wroking or not.

In some cases, Canadian medical care was almost completely non-available. One example mentioned was care for premature infants. The province had so many "beds" or "slots" to care for such infants, but the need was 100-fold or more greater than that. So, parents of such preemies headed south just to get "any" care at all for those babies.

So, I think Canadian healthcare is "not free". If it is available when you need it. Imagine being on the waiting list for heart surgery.
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Old 10-25-2007, 08:54 PM   #6
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In some cases, Canadian medical care was almost completely non-available. One example mentioned was care for premature infants. The province had so many "beds" or "slots" to care for such infants, but the need was 100-fold or more greater than that. So, parents of such preemies headed south just to get "any" care at all for those babies.

So, I think Canadian healthcare is "not free". If it is available when you need it. Imagine being on the waiting list for heart surgery.
Imagine having an neonatal intensive care unit with 16 beds. On average, it operates at 85% occupancy (generally considered a safe level). That means that, on average, between 13 and 14 beds are occupied on any given day. The available number of nurses, doctors, etc, in any city, or country, can maybe stretch to cover 16 babies.

Now imagine a woman having FOUR babies, all needing the highest level of intensive care, arriving at 25 weeks gestation. It's mathematically impossible to accomodate all four babies, unless the unit has 12 babies or less.

And that, my friends, is what actually happened in Calgary (a boom town) a few months ago. Now, if you were the CEO of the health authority, and you were already paying the best wages in Canada, and still couldn't find enough staff, what would YOU do?

(a) pay whatever it took to make arrangements for mother all four babies to be cared for at another centre with a large amount of unused capacity (read expensive buildings, staff to spare)

(b) scramble, sending one baby to each of four different cities, each of which could provide one bed.....(transport and separation = not a good idea!)

(a) is what happened.

The real question for a city like Calgary with a big influx of young families is: how can we possibly keep up? There will never be 100% guarantee of having sufficient capacity to deal with "surges" like quadruplets.

Disclaimer: I am a baby doctor NOT living in Calgary.

For the record, in my province, the wait time for urgent cardiac surgery is 3 days. The average wait time for all cardiac surgery is 32 days.

Of course it's not "free". I get paid, don't I?
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Old 10-27-2007, 02:10 PM   #7
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For the record, in my province, the wait time for urgent cardiac surgery is 3 days. The average wait time for all cardiac surgery is 32 days.

Of course it's not "free". I get paid, don't I?
The average wait time in my hospital for routine non-urgent surgery (VGH) is 2 months. Urgent situations are usually same or next day depending on patient stability.

There are bad examples such as north of Nanaimo where seniors are flooding in to retire without regard to the infrastructure. And in the interior where there is a shortage of doctors (too close to the oilfields).

Anecdotes about horror stories are produced by the press to sell stories to the gullible...
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This might be helpful too.....
Old 10-27-2007, 02:46 PM   #8
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This might be helpful too.....

CTV.ca | Flaherty: Ottawa has the money for deep tax cuts
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Old 10-28-2007, 12:31 PM   #9
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I doubt that they will pump any more money into health. Expect to see pre-election type goodies, not long range improvement beyond the already committed reductions.
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