Blog post

Question

Hi Phil,

My name is XXXXX.  Thank you for your emails.

I was born in Vancouver, BC in 1955 to UK parents who moved to Washington DC  in 1967 to work.

After high school and a BA degree on the East coast, I completed 2 masters degrees at the University of Hawaii in Honolulu, and never left Hawaii until I moved to Thailand in 2003 to work with a branch of a big bank.

I am now 71, and never worked in Canada, and I don’t even have a Canadian social security number, let alone a BC health card.  I am no longer a US green card holder as well and filed all the exit forms back in 2009.

As i worked in the US until age 60, i collect US social security and enrolled in US Medicare at age 65.

Because i file a 1040NR, i only pay taxes on my US stock trades.

I was considering moving back to BC, but after reading your info, i realize that I would then have to pay 20% of my social security to Revenue Canada… so it does not make sense to move to Canada !

I wish i had met you 12 years ago!

i realize I am a “one-off” edge case.  Have you ever seen any case like mine?

Cheers,

XXXXX

Answer

Hi XXXXXX

Thanks for the email. I’m certainly not as familiar with the US-Thailand treaty compared to that of the Canada-US income tax treaty.

Yes, that is true, if you move to BC and depending on your overall level of income you’ll pay Canadian tax on your US social security. Pursuant to the US-Canada you’ll only be taxable on your US social security in Canada.

Your stock sales will also only be taxable in Canada once you enter (in most cases).

If your income is relatively low and depending on other tax credits available, it’s possible that you won’t necessarily pay 20% combined Federal and BC tax. I’ve pasted the combined BC tax rates below. Note that we have graduated rates in Canada and your average rate will be a blend of the rates below:

This is simply and estimate, however at 74 years of age your monthly SS payment should be around $1,825 or around $22,000 per year. Only 85% of this amount will be taxable for Canadian purposes at $18,700. Therefore, based on the chart above your total amount of tax before credits and deductions should be quite minimal.

That being said, depending on your other income and capital gains your overall tax rate could be much higher.

Hope that helps.

Cheers

Phil