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Canadian Expat difficulties, have a Registered Retirement Savings Plan (RRSP) and Tax Free Savings Account (TFSA)?

American Expats offshore

Here’s a problem you may run into as a Canadian expat…

Canadian expatriate, still have an RRSP or TFSA in Canada? You’re not alone. After speaking with many Canadian expats, the question remains, can I/we transfer our RRSP or TSFA?

The direct answer is YES you can, Canada does put certain rules in place for the transfer to go ahead in full. Having the correct jurisdiction is crucial with an RRSP, a TFSA is much easier for the expat.

Tax-Free Savings Account (TFSA)

  • Money is contributed after tax income
  • Able to withdraw money tax-free
  • Can hold many investments such as bonds, stocks etc
  • Only available from 2009
  • Able to contribute $46,500 per year if you did not open an account before 2016
  • Each year from 18 years of age, you can contribute $10,000

Registered Retirement Savings Plan (RRSP)

  • Can hold mutual funds, GIC’s, Stocks and basket investments that are sheltered from tax
  • All contributions are made pre-tax
  • Tax to pay on withdrawal, most have no tax to pay due to retirement
  • Max contribution 18% of gross income or $25,370 as of 2016
  • Able to borrow from the funds in a home buyers plan, pay back later

What options are available?

TFSA – If you currently hold a TFSA (Tax-Free Savings Account), as you have already paid tax on the entry, there is no further tax liability remaining on the transfer.

You will still require a suitable overseas account that will accept the transfer of this. Depending on the country where you relocated to, will depend on the correct jurisdiction.

RRSP – Still have your RRSP (Registered Retirement Savings Plan) but no longer in Canada? As the scheme is currently tax differed, Canada will look at holding 30% tax until a suitable jurisdiction can confirm a DT (double taxation exists).

Exit penalties may be incurred on the exit of funds within the RRSP.

Speak with an advisor at Harrison Brook, we’re happy to answer any questions that you may have.

The information contained herein is for informational purposes only which is subject to change and should not be relied upon. You should seek advice from a professional adviser before embarking on any financial planning activity.

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