If you have assets in the UK, then careful planning before your move to Canada could save you thousands of dollars in tax. As a Canadian tax resident, you will be liable to pay tax on worldwide income and gains. This means that even assets outside of Canada, such as UK pensions, ISAs, and investment accounts, are assessed and liable for tax in Canada.
If you're an expat and have existing ISAs and other investments, it is wise to explore potential options that could be more tax-efficient in both the short and longer term. There are a variety of investment options available.
Expat investment options can take many guises but are broadly broken down into two categories: onshore or offshore. For expats, offshore investments are often considered more favourable due to the tax benefits.
However in Canada there are a number of different options such as a Tax Free Savings Account (TFSA) which is most similar to a UK ISA and provides similar tax advantages for Canadian tax residents.
Other options include Segregated Funds offered by insurance companies. These funds offer security to the investor as they are held separately from the insurance company's other investments. Segregated funds can also provide certain guarantees, as well as, provide tax advantages when paid to a beneficiary as estate fees are avoided.
For those that require stable income where the capital invested is never at risk then Guaranteed Investment Accounts (GIAs) offer a great option.
Or if you have children and are planning on sending them to college or university in Canada then Registered Education Savings Plan (RESP) is the most efficient way to save with additional contributions made each year by the Canadian government. Along with a Universal Life Insurance Investment that allows for tax-free withdrawals and re-contributions so the funds can be used again in retirement.
As an expat, understanding all the investment options available can be complex and confusing. This makes it even more important to get independent advice from a qualified adviser.
Many expats will opt for a mixture of investment products, often managed by a financial adviser or wealth manager.
Getting the right advice is crucial to ensure you don’t fall foul of the more complex investment rules or end up paying unnecessary tax. Talk to one of our expert wealth advisers for independent advice about your best course of action.