Dual Citizenship Strategy?

[dr_popeye]

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.

 

[ziggy29]

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.

 

[photoguy]

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.

 

[NW-Bound]

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.

 

[ziggy29]

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.

 

[nun]

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.

 

[dr_popeye]

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.

 

[Alan]

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

 

[Ed_The_Gypsy]

You will probably find that while income in your RRSP is sheltered in Canada, it is NOT Sheltered in Australia.

 

[dr_popeye]

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+.

 

[nun]

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.

 

[nun]

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.

 

[dr_popeye]

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.

 

[kumquat]

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.

 

[photoguy]

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]

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.

 

[NW-Bound]

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.

 

[brett]

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.

 

[dr_popeye]

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.

 

[brett]

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.

 

[aida2003]

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

Just curious: Will you also qualify to receive the US SS as well? My DH mentioned that thanks to the tax treaty between the USA and Germany he will be able to claim either German SS or the US SS, depending on its amount. Not sure I understood him well, because how can you do that when you've spent your earning years in the USA only (with an exception of 3-5 years of part-time in Germany)...We'll find out more in 20 years when he'll investigate this question more.

 

[Alan]

Just curious: Will you also qualify to receive the US SS as well? My DH mentioned that thanks to the tax treaty between the USA and Germany he will be able to claim either German SS or the US SS, depending on its amount. Not sure I understood him well, because how can you do that when you've spent your earning years in the USA only (with an exception of 3-5 years of part-time in Germany)...We'll find out more in 20 years when he'll investigate this question more.

I am able to claim both UK and US SS because I paid more than 40 quarters (10 years) into each system. (I paid into it for 17 years). DW is not eligible to her own UK SS because she didn't work and pay into the UK system long enough. She left work 4 years after graduation when we had our first child, and by the time the younger of the 2 was 4 yrs old we had moved to the US. She will be getting US SS because she paid into it for 18 years.

I don't know what the rules are in Germany, but would be surprised if 3-5 years was enough.

 

[brett]

We do not have UK or EU citizenship but we do have what was once referrred to a Patriality Status in the UK by virtue of where our parents/grandparents were born. Our son was able to live and work in the UK for 9 months last year based on the same status.

It does not give us any tax advantage that I am aware of but it does give us the ability for to regiser for a national number (?) and it gives us access to social programs, including health insurance.

 

[Purron]

I was born in the UK in '55 to American parents. Pretty sure I could qualify for UK citizenship and have considered seeking dual US and UK citizenship. Just not sure how this would impact so many things including SS, DH's retirement, health insurance, etc. Not only if I obtained dual citizenship, but if DH and I decided to move to the UK at some future date. BTW, he was born in in the USA so another question would be his status.

Not likely we'd make a move soon due to family ties here, but it's good to know your options. We kinda like having options in this uncertain world.

 

[Alan]

We do not have UK or EU citizenship but we do have what was once referrred to a Patriality Status in the UK by virtue of where our parents/grandparents were born. Our son was able to live and work in the UK for 9 months last year based on the same status.

It does not give us any tax advantage that I am aware of but it does give us the ability for to regiser for a national number (?) and it gives us access to social programs, including health insurance.

That would be a National Insurance number, equivalent to SS number in the USA.

I was born in the UK in '55 to American parents. Pretty sure I could qualify for UK citizenship and have considered seeking dual US and UK citizenship. Just not sure how this would impact so many things including SS, DH's retirement, health insurance, etc. Not only if I obtained dual citizenship, but if DH and I decided to move to the UK at some future date. BTW, he was born in in the USA so another question would be his status.

Not likely we'd make a move soon due to family ties here, but it's good to know your options. We kinda having options in this uncertain world.

Having dual UK citizenship would not impact any of the things you mention, and I do believe that your DH would also be eligible as the law changed on 1/1/1982. After that date, being born in the UK or marrying a UK citizen does make you a UK citizen.

The UK does not tax you on world-wide income like the US, but UK citizens are not allowed to vote if they are not tax paying residents. (you have to be a resident to pay taxes, even on UK income).

However, all things can change so I wouldn't go and get UK citizenship just because you can.