RRSP if moving to Australia

jimflea
Junior Member



Joined: 03 Dec 2007
Posts: 12

Posted: Mon Dec 03, 2007 12:51 am

 

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Question to any Canadians who have migrated as a permanent resident to Australia:

How are RRSPs treated tax-wise in Australia? Are these considered to be tax-exempt under the Canada-Australia tax treaty (or treated as a tax-exempt pension or superannuation) for former Canadian residents now living in Australia until the time that withdrawals (either before or after conversion to a RRIF or annuity) actually occur?

Am considering moving to Australia soon, but have a lot of money in my RRSPs, so would like to know how they are treated. I do know that as per the tax treaty, any Canadian source income (from investments) is subject to a 15% withholding tax by Canada (which can be used as a foreign tax credit in Australia for taxes payable there), but what about in the interim during the years that the investment is growing until the RRSP owner is ready to retire?

Thanks.

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waja
New Member



Joined: 04 Sep 2008
Posts: 1
Location: Sydney

Posted: Thu Sep 04, 2008 12:13 pm

 

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Hi Jim,

I have the same question, I will be moving to Australia in the next few months. My RRSP's, like most others, has suffered lately, so I'd like to leave them here and let them recover, hopefully . I don't know if you have received an answer yet, but I need to know if this is possible as I would like to open a HSBC Premier account, and currently they have a special offer available if you transfer some investment assets to them.

Thanks in advance.

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jimflea
Junior Member



Joined: 03 Dec 2007
Posts: 12

Posted: Yesterday at 10:43 pm

 

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Within the first 6 months of becoming a tax resident of Australia (and AFTER you are no longer a Canadian tax resident), pull out all of the (non locked-in) RRSP money, have the Canadian bank/investment company withhold 15% as per the tax treaty (make sure you tell them that you're a tax resident of Australia!), and there's no Australian tax implications, obligations are over and done with. You don't report any of it on a Canadian return as it is withdrawn when you are a non-resident and NR tax is already withheld.

If you wait until after 6 months, the difference between the value at the date you became a tax resident and the date it is liquidated will be taxable income in Australia. (e.g. if worth $60k at date of residency, and 65k at liquidation, you'll have 5k of taxable income in Australia). It may also be subject to Australia's FIF rules and tax possibly payable on an annual basis (with additional accounting required to figure out the proper foreign tax credits).

If you have "locked-in" RSPs / LIRAs, it's not so easy to get the money out, depends on the federal or specific province rules that the account(s) need to follow (would be based on the pension where the locked-in account originated).

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