Departure Tax and Selling Shares in Future

Question

2690 viewsJanuary 16, 2017International Tax

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Anonymous Posted January 16, 2017

Dear Allan,

Thank you for the videos you posted online. They are very informative.

I’m going to move back to Hong Kong for retirement, but I would like to keep my investment account with BMO InvestorLine in Canada. I understand that upon my departure, I have to pay a departure tax on “deemed disposition” of all the stocks I hold in the investment account, and after I left Canada, I have to pay 25% withholding tax on the dividends I receive as a non-resident. My question is do I have to pay tax on the capital gain if I later sell some of the stocks in my investment account?

Thank you for your help

1 Answer

score 0 · Answer 1 · 2017-01-16T17:24:19+00:00

Once you pay departure tax, the adjusted cost base (ACB) of your stocks/shares increases to their fair market value as of the date departure tax is calculated. This revised ACB is used to determine the capital gain / loss when these stocks are later sold in the future.

For example, assume that your purchased the shares of ABC company for $1 / share. When you left Canada in 2015, the market value of the shares was $1.50 / share. You eventually sell the shares in 2017 for $5.00 / share.

The deemed capital gain on the date of your departure from Canada is $0.50. The actual capital gain when you sell the shares in 2017 is $3.50.

Departure Tax and Selling Shares in Future

1 Answer

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