Tax on investment made well before getting permanent residency/

[FarhanRashad]

Hello there,

This is a really great forum!

I am looking for some expert advice on taxing of an investment which I had made a few years prior to becoming a Permanent Resident of Canada. To provide some background;

a. We (my family and I) applied for PR in 2006.
b. We first landed in Nov 2010, and returned to the UAE until August 2013.
c. We came to live in Canada (Toronto) at the end of August 2013.
d. I had made a small investment in 2007 in Malaysia and with some high yield bond trading, the value of the investment has sky rocketed to an amount in excess of a seven digit figure.
e. I was a partial investor, having split this investment with my parents (50/50).
f. I would like to bring this money into Canada, yet am worried that taxes will reduce this amount considerably.
g. I have the option of transferring the money directly from the institution (where the money was invested) to my parents directly, or to my bank account here in Canada.

Q1. I have heard that gifts from parents are not taxable. Would it be okay to have my parents transfer such a large amount of money? Are there any repercussions to doing that?
Q2. I have heard of a one time gift transfer from a non relative which is non taxable. Does this exist?
Q3. Am I liable to taxes given that the investment was made well in advance of getting my PR?
Q4. Is it better to transfer smaller amounts, rather than such a large amount?

Any advice/guidance is really appreciated.

Farhan

 

[har73]

Hi farhan,
Have you got yours answering, if yes then please share, I am in similar situation.
Thanx.

 

[FarhanRashad]

Unfortunately no responses yet. If anyone can help, please post.

Thanks.

Farhan

 

[hobbes]

I am not a professional, so take this advice with a grain of salt.

1. There is no gift tax in Canada. Transferring a large amount of money might attract CRA's attention though and you may have a bit of explaining to do.

2. I haven't heard of anything about "one time gift".... it can be any number of times. But if it is not a relative, you may have to explain why you are getting the gift if questioned.

3. Yes, you have to pay capital gains taxes. However your cost basis will be the fair market value of the investment when you became a resident - that is, August 2013.

4. Not sure if there is any advantage one way or the other. When there is wire transfer in excess of CAD 10,000, the bank is supposed to report it to the government. If it is all legal, you shouldn't have to worry about it.

 

[Amadan123]

You should verify the information discussed in it, but the link below, at the very least, offers some guidance on gifts and taxation of gifts. It also provides other links for further reading.

http://www.taxtips.ca/personaltax/giftsandinheritances.htm

Best of luck.

Madan Chartered Accountant team
www.madanca.com