Transcript – Saving tax by moving US based in investments to Canada

12 May 17


Saving Tax on moving your investments to Canada from the US. Here’s a small strategy that some people don’t take advantage of when trying to save on overall tax from a portfolio standpoint. If we imagine a situation where an individual has a non-registered investment account in the US and a non-registered investment account in Canada, this individual receives dividends from their US account, and let’s assume that this individual is not a US citizen, but they’ve had this account in the US for some time. The dividends that they’ve received from this account, will attract an immediate 15% US tax and also will be taxed in Canada at regular Canadian rates converted at appropriate average exchange rates.

Now if we assume a tax payer’s marginal bracket of 30% in Canada, they’ll pay 30% tax on that dividend. They’ll get a credit for the 15% that they already paid in the US. So essentially their overall tax is going to be 30%. Now compare that to a portfolio that’s paying out dividends from Canadian companies which wouldn’t be that much different. All this individual would have to do would be move their US money into Canada. So compare that to a portfolio that’s paying out Canadian dividends and in a lot of cases you can earn, assuming you don’t have any other income, you can earn up to $60,000-$70,000 of Canadian source eligible dividends and pay very little tax. So just the savings on moving the money from the US to Canada and reinvesting those funds in the Canadian dividend paying stocks is a significant advantage. In a lot of cases that might save between 20% and 30% of tax that you would normally pay on an annual basis. The same planning applies to capital gains distributions and return of capital distributions in the US that maybe taxed in Canada at full rates.

Phil Hogan, CPA, CA, CPA (Colorado)

Phil Hogan is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at or via telephone at 250-661-9417. You can also read more about Phil at

This commentary reflects the personal opinions, viewpoints and analyses of the Beacon Hill Wealth Management Ltd. partner providing such comments, and should not be regarded as a description of advisory services provided by Beacon Hill Wealth Management Ltd. or performance returns of any Beacon Hill Wealth Management Ltd. client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Beacon Hill Wealth Management Ltd. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. Any discussion about taxation is for educational purposes only and should not be viewed as professional advice. Consult your tax professional for tax advice on your particular situation.

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