Canada Pensions Essay

790 Words2 Pages

"When Canadians think of tax havens, they rarely think of the U.S., but it truly is one of the best options available for Canadians today," according to Robert Keats, an internationally renowned expert in Cross-border financial planning and author of the book "A Canadian's Best Tax Haven: The US".
If you are eligible for the OAS pension and have lived in Canada for more than 20 years, you could maximize income from your Canadian public pensions on an after tax basis by leaving Canada and emigrate to the U.S. Here are the tax benefits for Canadian Non-residents residing in the U.S. receiving Canadian public pensions:
12.1 Taxes
Non-Resident's Tax
Because of the tax treaty between U.S. and Canada, the income from Canadian public pensions payable …show more content…

as a resident, the income from Canadian public pensions is taxed in a manner similar to U.S. Social Security benefits. That means married couples with incomes of less than US$32,000 (including the Canadian public pension income) or a single person with less than US$25,000 of income do not pay any U.S. tax on this income. Consequently, the income from Canadian public pensions is completely free from both Canadian and U.S. taxes for people in this income bracket. For those at the higher income levels, only 85% of the Canadian public pension income is taxed at the standard U.S. tax rate; the other 15% is …show more content…

taxes and can potentially be double-taxed or overtaxed by the U.S. and Canada. But they can be a great source of tax savings if you plan for them correctly. An optimized solution is to remove your RRSPs out of Canada with as close to zero net tax as possible. However, this is one of the strategies that you should not attempt to implement on your own. I recommend you use an experienced cross-border financial planner who is trained in all aspects of Canadian and U.S. investments and tax to guide you in the right direction.
12.4 Complications
But retiring and living in the US might not be for everyone. There are some of the issues and implications:
Healthcare – as a non-resident of Canada, you will not be covered by Canada's publicly funded healthcare system.
U.S. Estate Taxes – as a U.S. resident, you are subject to U.S. estate taxes on your worldwide assets. The maximum tax rate in 2014 is 40%.
Giving Up Canadian Residency – In order to be deemed a non-resident of Canada, you have to sever your ties with Canada. That means you have to sell your principal residence, close all your bank and investment accounts, and plan not to return to Canada for at lease two years after leaving,

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