| The non-resident
Canadian Canadian |
| by Sam
Barsoumian |
| Unlike US
citizens who are forever doomed to file annual taxes, Canadian citizens
can elect to become non-residents and forever bid Canada Customs and Revenue
Agency (formerly Revenue Canada) farewell.
Non-residency
will be of particular interest to that segment of the Canadian population
who wish to shelter future wealth accruing from capital gains taxes.
By taking residency in just about any country other than the US, capital
gains and interest generated outside of Canada ceases to attract any tax
whatsoever. Depending on the type of instruments generating accrued interest,
some countries, such as Venezuela and the US, do not even tax interest
accrued on bank deposits. Other countries have varying tax schedules on
interest accrued in the country of residency, and these taxes are well
below the prohibitive and confiscatory rates levied in Canada. |
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Apart from
the
tax advantages, taking up residency in other countries allows Canadians
to live in a climate of their own choosing and experience a better quality
of life for comparatively the same amount of Canadian living expenses.
In many cases the cost of living is far less depending on their choice
of country and spending habits.
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For example,
a Canadian in Vancouver spending $2000 CDN per month in after-tax-dollars
can easily find superb living conditions in a high cost city like Guadalajara,
Mexico, for $600 per month. |
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| The non-resident
Canadian in Guadalajara will pay $350 per month for a live-in maid, can
obtain first class medical insurance for $150 per month, have a low utilities
bill of $60 per month which will include telephone service, and spend no
more than $400 per month for food.
In the picturesque
city of Oaxaca in southern Mexico or Merida in the Yucatan, the cost of
living drops dramatically. Other countries in Central America,
with the exception of Costa Rica, provide similar cost comparisons.
Panama is very comparative.
The procedure
whereby non-residency is established is fairly simple when one knows what
Canada Customs and Revenue Agency considers relevant in granting the status
of non -residency. First, it is important to file the NR-7 form,
which can be downloaded, from their site. |
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Offshore
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| It is very
important to do a formal disposition of all Canadian assets, or a deemed
disposition if that is more practical, and pay all the taxes thereon at
the nominal rate. The person applying for non-resident Canadian status
must also no longer own residential property in Canada, own no medical
insurance in Canada, have no telephone service in his or her name in Canada,
nor leave behind a wife or child minor. A divorce decree will satisfy
the bureaucrats.
Rental or commercial
real estate can be held provided that they are leased to parties who are
at arm’s length. Taxes on Canadian based rental income will have
to be paid on a quarterly basis. Canadian stocks can be also held,
but will attract no capital gains taxes upon sale. Dividends, however,
will continue to attract a withholding tax at varying percentages depending
on the country of residency.
It is crucial
to demonstrate to Canada Customs and Revenue Agency that one has a residence
in another country. This can be achieved by presenting them with a lease
agreement or title of ownership, a telephone number, a bank account, medical
insurance, and a residency permit from the issuing country. |
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getting started - Gilly Rich - Editor |
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| Canadians
who elect to become non-residents can easily obtain residency in other
countries by satisfying some fairly simple requirements. The FM-3,
which allows annual renewable residency in Mexico, can be had from any
Mexican Consulate. The Consulate will require a medical exam, proof
of income in the amount of $1000 USD, and a report from the RCMP. Other
countries have similar rules. In Honduras the proof of income is
only $500, and in Panama the amount is the same. In Argentina, the
amount is $2000 USD, the same as in Spain. Asian countries like Malaysia,
Indonesia, and Thailand have amounts ranging from a low of $500 to a high
of $1000 USD.
Becoming a
non-resident will only suit a finite element of the Canadian population,
those desirous of sheltering wealth and fearless to live in a different
culture. |
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Article
Index ~ Canada
Index ~ |
