Protecting my money from Trump

[deadbird]

Actually as deadbird pointed out, Trump did say (both on the campaign trail, as well as quite recently after assuming office) that he would tax remittances sent back home by undocumented immigrants.

However, one needs to understand that there are several nuances to this point. First off, there is no way on earth he could just "levy" a tax on everyone trying to send money out of the country (especially if that money was earned by someone that is lawfully present in the U.S.). Second, even if something like that were to be instituted, I'm not sure he could just unilaterally issue an Executive Order (like he tried to do with the Muslim travel ban). He would likely need to go through congress, and I would imagine that there are at least a few sensible Republicans who would not go along with an insane idea like that. Third, if something like this did ever come to fruition, there would be lawsuits flying around left and right, before this thing had the slightest chance of seeing the light of day! Trump learned that quite quickly that he is not King of the United States of America after that Muslim ban edict of his : Fourth, Trump has been all over the place with this issue. First he said that, then he said he would levy a 20% tax on all imports coming from Mexico to pay for the "wall" : (which was, of course, quickly shot down by members of his own party).

Also keep in mind that this "threat" by Trump was in regards to securing payment from Mexico : for constructing that infamous "Border Wall". So it was specifically directed towards Mexico and Mexicans. There is a ZERO chance of this happening to people sending money to Canada.

I completely agree with you that the probability of a tax on remittances to Canada would be quite low. However, there are other Trump related risks as well. e.g.
Another angle is hedging against currency fluctuations. Even if Trump isn't able to block remittances he might pass protectionist trade deals. These will likely cause turmoil in the currency markets. Having money on both sides in USD and CAD is a more defensive risk posture than keeping it in the US alone.

 

[spyfy]

Fair point. However, I'd rather have multiple points of view, do my research and decide for myself rather than treat the word of the tax consultant as gospel.

Last time I spoke with a "good" immigration lawyer, they assessed my EE application for 25 less CRS points than what I deserved.

Of course I understand what you mean. But generally I think it there is way less black sheep in the tax consultant industry compared to the immigration lawyer industry.

Usually it's a good idea to ask around for tax consultants and to check google reviews. I have had some very good experiences with tax consultants (they were on non-international tax matters though, so I don't have a recommendation handy for you)

 

[deadbird]

Of course I understand what you mean. But generally I think it there is way less black sheep in the tax consultant industry compared to the immigration lawyer industry.

Usually it's a good idea to ask around for tax consultants and to check google reviews. I have had some very good experiences with tax consultants (they were on non-international tax matters though, so I don't have a recommendation handy for you)

Ah, well, too bad. I was going to ask you for a recommendation soon :-(

 

[wyho007]

I completely agree with you that the probability of a tax on remittances to Canada would be quite low. However, there are other Trump related risks as well. e.g.
Another angle is hedging against currency fluctuations. Even if Trump isn't able to block remittances he might pass protectionist trade deals. These will likely cause turmoil in the currency markets. Having money on both sides in USD and CAD is a more defensive risk posture than keeping it in the US alone.

That's why it's a good idea to own both CAD and USD if you are or will live in Canada.

 

[steaky]

That's why it's a good idea to own both CAD and USD if you are or will live in Canada.

Not just Canada, it make sense in any parts of the world to own multiple currencies.

 

[Snowisland]

I am currently working in the US and will be doing a short PR landing after which I will return to the US for a year or so before settling in Canada permanently.

I am concerned that Trump may to try to apply an exit tax for remittances from the US to other countries. I know that is probably not a likely scenario however, it will help me sleep better at night if I move most of my money to Canada. On the other hand, I don't want to be considered a Canadian tax resident while I'm working in the US.

If I open a Canadian bank account and transfer a non-trivial amount of funds ( >$100K ); will I be considered a Canadian tax resident?
According to this page, I would have "secondary residential ties" if I opened a Canadian bank account. Is that sufficient to be considered a resident - http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

Also, what would be the situation if instead of just keeping the money in a savings account, I invested the money in a Canadian brokerage account. I assume that would generate dividend income and would need filing of Canadian taxes. Would that mean that I would be a Canadian tax resident by default.

I opened an account years before I landed. I have a Canadian checking account, USA savings account and a Canadian savings account. I sold my house in the US and had the profit wired to my US savings in Canada. Then when the Feds hiked the interest rates in the US, I moved my money from the US savings to the Canadian checking and profited from the exchange rate.

Once you land, you must continue to file US taxes and also file Canadian. Canadian requires reporting world wide income. There is a tax treaty between the two countries so you will not be double taxed. In addition you must let the US know if you have at any time during the tax year have 10k or more in a foreign bank. This includes a US account in a Canadian bank. The form you need is an FBAR and even if you haven't landed, you must file it.

I often use a US credit card that has no foreign exchange fees. This benefits me as I get the exchange rate when I use it.

So once you move, if you still have US income of any kind, you are best to put it in a Canadian bank but in a US account, then move the money to the Canadian account to benefit from the exchange rate.
Watch the bank rules as I have to mone my money from US savings to Canadian checking, not to Canadian savings or I won't get the exchange rate. I just wait a day after I move it to checking if I want to put it in savings. The banks are very helpful and will explain it to you if you want them to. There are currency exchange apps so you can see the rates. Right now it's running 1.31 for every US dollar to every 1.00 Canadian. The amount you get also depends on how large of an amount you are exchanging. And credit cards give a few cents less on the dollar.

 

[keesio]

I am currently working in the US and will be doing a short PR landing after which I will return to the US for a year or so before settling in Canada permanently.

I am concerned that Trump may to try to apply an exit tax for remittances from the US to other countries. I know that is probably not a likely scenario however, it will help me sleep better at night if I move most of my money to Canada. On the other hand, I don't want to be considered a Canadian tax resident while I'm working in the US.

If I open a Canadian bank account and transfer a non-trivial amount of funds ( >$100K ); will I be considered a Canadian tax resident?
According to this page, I would have "secondary residential ties" if I opened a Canadian bank account. Is that sufficient to be considered a resident - http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

Also, what would be the situation if instead of just keeping the money in a savings account, I invested the money in a Canadian brokerage account. I assume that would generate dividend income and would need filing of Canadian taxes. Would that mean that I would be a Canadian tax resident by default.

Putting your money in a foreign bank account does not protect you from an exit tax. You still need to report it and any income gained from it when you file taxes. It is considered part of your overall assets