RRSP eligibility

[dannykool]

You should never contribute to RRSPs if you are non-resident for tax purposes.[/quote]

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I agree. But you can keep what you have contributed already I assume, to avoid the tax to be paid if one cashed it out.

-- Mon Oct 26, 2009 3:44 pm --

That sounds like some silly bank rule they came up with, so the only option is try a different bank I guess. If you're resident for tax purposes than you can contribute to RRSPs, it's that simple. Well, foreign tax rules notwithstanding, but the Canadian end of it is simple.

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Yes I remember my bank advisor telling me that I need to stop contributing to my RRSP's as a non resident...but you surely can if you continue to be a tax resident of Canada.

[agnelson]

Just to clarify, there is no rule/regualtion against contributing to an RRSP as a Cdn non-resident. In fact the 216 return, which is strictly for non-residents, allows one to take RRSP deductions for contributions made against rental income (which btw counts toward income eligible for RRSP contribution room).

It is the US SEC rules that prevent Cdn brokers (for the most part) from accepting new monies and invest these in securities in Canada. So most banks simply have a policy to not accept it. But even a US resident (and Cdn non-resident) could buy GICs etc to put in their existing RRSP after leaving Canada. I myself did this the first year after I left and could have continued.

The truth is however, that there is no tax advantage to doing this if one has little or no Cdn income. There is however some advantage for doing it it the months immediately after leaving Canada (ie. up until the RRSP deadline of the year following departure) to lower final departure year tax, especially if one leaves canada late in the year.

But in the case of a foreign resident working in canada? He should have no problem investing in RRSP (non-securities of course). aagin., my wife did this for the 6 months she continue to commute to work in canada after she was non-resident.

[dannykool]

Just to clarify, there is no rule/regualtion against contributing to an RRSP as a Cdn non-resident. In fact the 216 return, which is strictly for non-residents, allows one to take RRSP deductions for contributions made against rental income (which btw counts toward income eligible for RRSP contribution room).

It is the US SEC rules that prevent Cdn brokers (for the most part) from accepting new monies and invest these in securities in Canada. So most banks simply have a policy to not accept it. But even a US resident (and Cdn non-resident) could buy GICs etc to put in their existing RRSP after leaving Canada. I myself did this the first year after I left and could have continued.

The truth is however, that there is no tax advantage to doing this if one has little or no Cdn income. There is however some advantage for doing it it the months immediately after leaving Canada (ie. up until the RRSP deadline of the year following departure) to lower final departure year tax, especially if one leaves canada late in the year.

But in the case of a foreign resident working in canada? He should have no problem investing in RRSP (non-securities of course). aagin., my wife did this for the 6 months she continue to commute to work in canada after she was non-resident.

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indeed very true, the advantage is really in the year after departure. But good clarification in that they are 'technically' allowed. I just did what my advisor told us to do. Yes, working or living in canada would of course be allowed to contribute but i wonder why not securities ? I guess as a US resident one cannot invest in cdn securities, even RRSP backed ?

I know there's a wealth of info on that issue but have'nt read it in depth.

[agnelson]

As I said, 99% of the houses in which Cdns deal their RRSPs (the banks, direct mutual fundcos, individual brokers) are simply not licensed in the US person's state of residence to deal in securities with that person (and at the time I moved NO ONE was allowed, period).

But GICs and savings accounts have always been allowed. I'm simply making that distinction since one need not be specially licensed at a bank branch to sell anyone -- from anywhere -- a GIC.