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A tax consultant has offered to answer questions related to Canadian taxes

Jonathan Elias a tax consultant has offered to answer questions related to Canadian taxes. His expertise is in taxes related to independent contractors/business owners and startups but you can ask him any tax-related questions and he’ll try answering as many possible.

Post your questions by Aug 4th

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Hi Jonathan - thanks for doing this. I have a question about US Investments. I am currently on h1b in USA and have investments in both tax advantaged (employer 401k, Roth IRA, HSA) and non-tax advantaged (individual investor accounts). Most of the funds are in etf’s such as VTI, but also some independent stocks. Would you recommend moving these funds to non-US domiciled ETFs so as not to trigger any US with holdings for non residents? Or are there enough tax treaties between USA and Canada for this to be a non issue?

  1. https://www.bogleheads.org/wiki/Non-US_investor's_guide_to_navigating_US_tax_traps
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Hello Jonathan,

I am a Motion Graphics Designer currently living in the US and I plan to move to Toronto soon. I am planning on working as a freelancer in Toronto with mostly American clients. My current employer is interested in working with me on freelance projects but wants me to register as a business and potentially sign a “w-8ben-e” form. Does this mean I need to Incorporate? Would it be beneficial to operate as a business vs an independent contractor?

I really appreciate you taking the time to answer our questions, Thank you.

Hi Jonathan,

Thanks for taking the questions. I’d like to post a few frequent questions I have received and I think you’ll be the right person to answer those.

  • What are the steps involved in creating a corporation
  • Is it fine to open a corporation on our own or is it better to have a CPA create the corporation.
    • What are the costs involved?
  • What are the benefits of incorporating over working as contractor
  • GST/ HST: When invoicing a client, through a corporation, should such taxes be applied in addition to the sub-total amount (invoiced cost/hours),
    • if client is within Canada
    • if client is not registered in Canada (eg: a corporation in the US)
  • In a corporation with only the owner and no employees, once the corporation has received revenue/income from clients, what options does the owner have, to pay self, through
    • dividends only or
    • a combination of dividends and salary.
    • what are the tax benefits / implications
  • How to plan for RRSP, EI, Pension and other aspects of retirement, while minimizing tax liability.
  • What steps are required to be addressed, say if a Spain based contractor to works on a contract with a client in Germany, but the Canadian corporation is the vendor for the German client? (German client pays Canadian corp, and Canadian corp pays the contractor in Spain). Would this be same as having a Canadian Contractor and a Canadian Client?
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Hey Jonathan,

Thanks for offering your help in answering our questions here!

My questions are not related to independent contractors/business owners, but are general questions that a lot of new Canadian immigrants have, who moved here from US.

  1. Can I still continue investing in stocks using my US Fidelity/E-trade trading accounts?
    If Yes, do I have to continue filing taxes in US using 1040NR or I just have to include those transactions in my Canadian tax returns?
  2. Do you recommend moving 401K to RRSP? Is it even possible? If Yes, then what is the most tax efficient way to do so?

thanks for your help

Hey @deepac and Jonathan, thanks for doing this.

I had a few questions :

  1. I have been living in the US for the past 8 years, and lets say I move to Canada in October as a PR, would I be considered as a deemed resident for tax purposes from Oct to Dec 2020 in Canada? How does that play with the US resident alien calculation? Do I become a dual resident in US?
  2. How do stock options (especially ISO and NSO) granted in the US work with Canadian taxation? Lets say they are exercised a) before moving to Canada vs b) after moving to Canada and are sold later in Canada (as per the tax treaty, there are some appropriation law for this, but curious as to whether exercising in the US vs Canada is better)
  3. Any suggestions on a tax consultant who specializes in cross border tax (US and Canada) who can help out in such scenarios?

I own some stocks listed on an American exchange. Now that I’m no longer an American tax resident, can I move over these to a Canadian broker and what is my cost basis for these?

Additionally since my spouse is no longer employed, can I gift here these investments for a favorable tax treatment upon disposal.

Thanks!

Thanks for submitting your questions. Jonathan or I ( on his behalf) will update the thread soon.

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