Establishing Residency in Canada

Question

2129 viewsMarch 15, 2019Accounting

0

Omer Khan (anonymous) Posted March 15, 2019

Hi Allan,

I became a permanent resident of Canada 15 years ago (my wife is a Canadian Citizen) but both of us have spent very little time in Canada. I did not declare my assets when I first landed in Canada and have not ever filed a tax return. We are now planning to move to Canada permanently. I own property outside Canada from the time before I become a permanent resident of Canada. If I sell the property after I declare it in Canada how will the capital gains be calculated? What would be a better strategy to decrease the amount of tax that I have to pay (sell it before I move, gift it to my wife etc)?

Thanks

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score 0 · Answer 1 · 2019-03-15T20:05:45+00:00

Sell the property before you come back to Canada permanently in order to avoid Canadian capital gains tax, or transfer the property to a family member that has no connection with Canada prior to coming to Canada. If you sell the property after you come back to Canada, then there could be a taxable capital gain for Canadian tax purposes.

The capital gain is the difference between the selling price (net of selling expenses) and the ‘cost basis’. The cost basis is equal to the fair market value of the property (expressed in Canadian dollars) as of the date you permanently moved to Canada. One half of the capital gain will be included in your income in the year of sale. To avoid double taxation, you can claim a foreign tax credit on your Canadian personal tax return for the foreign taxes paid in respect of the sale.

Establishing Residency in Canada

1 Answer

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