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Question

Hi Phil

I recently received a job offer from XXXXX to work in Victoria BC and me and the family will be moving up permanently in June. The tax implications of the move have me quite confused and I’ll need help with the transition. Here’s a snapshot of my situation:

  • Accepted a job with a Victoria company for benefits and $150,000 in wage
  • Wife and 2 kids will be joining me. My wife has a small home base business earning less than $20,000 per year
  • We both have a 401k and IRA plan in the US (need some advice on whether we should move these up to Canada)
  • We are currently trying to sell our California home, but we’re not sure how long it will take to sell.
  • No other assets other than what mentioned above
  • Kids are in high school and we are planning for University

Based on the information above is there anything I need to plan for before I get into Victoria?

I can book a consult if it makes sense.

Answer

Hi XXXX

Thanks for the email and congrats on the new job in Victoria. I can outline some basic tax considerations based on the information above, however it would be best if we could meet to discuss your situation in more detail.

  • Assuming you’re both US citizens you’ll need to continue filing US tax returns in addition to new Canadian tax returns while in Canada
  • When you enter Canada the cost base of some of your assets will be revalued for Canadian purposes. This likely only relates to the house, however we can discuss this detail more when we meet.
  • For now leaving the 401k and IRA in the US is likely the easiest and most efficient option, however there are some options for transferring them to Canada which I can outline when we speak.
  • The house should be easy if it sells before you leave. If not, it will need to be reported (potentially) on the Canadian tax return for this year. That being said I wouldn’t expect any tax to be owing.
  • We can discuss university saving options when we meet

Assuming your family income is comprised of your employment income and your wife’s business income your Canadian/US tax returns would look like this for 2016:

  • You will both file an entry T1 Canadian tax return
  • You will file a joint US 1040 income tax return
  • Both your Canadian employment and business income will be included on both returns
  • It’s likely that all the Canadian taxes you pay in 2016 will reduce all of any US taxes payable on this income, effectively allowing you to pay little or not US tax for 2016
  • You will also need to file form 114 FBAR to report any non-US bank or investment accounts

There could be additional tax forms to prepare once we fully establish your tax situation. Please give me a call at 250-381-2400 and we can setup a time to chat.

Cheers

Phil

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