Should we really expect an influx of U.S. citizens in Canada?
By: Jacinthe Marquis, Vice-president, US Tax
Following Donald Trump’s election, many observers have reported an increased interest by Americans wishing to settle in Canada. The Immigration, Refugees and Citizenship Canada website received 200,000 visitors on the evening of the election.
Should we expect this interest in Canada to result in a massive immigration wave from the South? That is far from certain. According to Jacinthe Marquis, Vice President, U.S. Tax at Richter, once the initial reaction is over, few Americans will actually make the leap. “We have had a lot of calls from U.S. citizens wishing to settle in Canada following the recent political changes in the United States. But when we explain everything such a move involves, most prefer to think it through before going ahead,” explains Ms. Marquis.
The personal, professional, legal and tax consequences of such a move are larger than one could think. Other than the unenviable winter conditions and immigration formalities—not to be underestimated—there is a lack of harmonization of tax laws in relation to financial products. While pension plans usually benefit from neutral tax treatment between the two countries, other financial products like education savings plans and insurance policies have major tax implications, or even double taxation, when they are taken out in the United States and held by a Canadian tax resident. In many cases, it would be better to liquidate everything and start over from scratch, which will not be easy for people who, for instance, are no longer insurable due to poor health.
Ms. Marquis believes that it is more likely that we will see a return of Canadian citizens living in the United States, who do not have to face the same immigration obstacles as foreign citizens. “Many are already planning a return to Canada when they retire or complete a project. Since Trump’s election, some seem to be planning an accelerated return,” specifies Ms. Marquis.
Due to our Southern neighbour’s ambient uncertainty, some skilled workers and foreign investors hesitating between Canada and the United States could well choose Canada— meaning an increase in the country’s skilled labour pool. Against the backdrop of an aging population and competition to attract the best talent, this would be highly beneficial for Canadian firms.
Stay tuned for new posts in our Trump effect series. Missed a post? Read on here:
Post 1: Insights: The US Corporate Tax Code
Post 2: Should we really expect an influx of U.S. citizens in Canada?
Post 3: What does the future of TPP mean for your business?
Post 4: Is NAFTA next?
Post 5: How the new administration could affect the tech sector
Post 6: Cybersecurity: changes on the horizon
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About Richter : Founded in Montreal in 1926, Richter is a licensed public accounting firm that provides assurance, tax and wealth management services, as well as financial advisory services in the areas of organizational restructuring and insolvency, business valuation, corporate finance, litigation support, and forensic accounting. Our commitment to excellence, our in-depth understanding of financial issues and our practical problem-solving methods have positioned us as one of the most important independent accounting, organizational advisory and consulting firms in the country. Richter has offices in both Toronto and Montreal. Follow us on LinkedIn, Facebook, and Twitter.