# Naturalized citizens hoping to return to Canada.



## Caitie (Mar 28, 2008)

Hello, all,

Decades ago my husband and I immigrated to Canada and became citizens. Shortly thereafter, my husband had the opportunity of working on a project in the US, so we sold our home and left Canada, intending to return at the end of the project. One project led to another and we ended up staying in the US for thirty-five years. For tax reasons, we had been advised to take US citizenship, so we did. We are now comfortably retired and would like to return to Western Canada, but we don't know if our Canadian citizenship is still valid. We have an adult son who immigrated to Canada independently of us and is now a citizen.

While absent from Canada, all our earnings were sourced and taxed in the US. If we returned to Canada, would we have to pay the difference between US tax and Canadian tax for all the years we were away?

Since we are retired now, what would be the mechanism for contributing to the health care system? And, if anyone knows, is there a process for obtaining dual citizenship? We have grandchildren in the US and may want to spend part of the winter with them. 
I'd appreciate any insight anyone can offer. Thank you!


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## Harry Moles (11 mo ago)

Your Canadian citizenship will be valid until the day you die, unless you actively renounced it. If you also obtained US citizenship, then you are already dual citizens - there is nothing further you need to do. You have free right of entry to both Canada and the US, forever.

No, you will not owe any back taxes upon your return to Canada. Unlike a certain ****e country to the south, Canadian taxation is based on residency, not citizenship; for the 35 years you were away, you were non-residents as far as CRA is concerned, under no obligation to file.

As soon as you move to Canada, you may enrol in appropriate provincial health care system. (If it's BC, plan for a very long wait to find a primary care physician; Alberta is in better shape.) Your contributions will be made through provincial premiums (if applicable) and Canadian income tax.

You will need to carefully look at the US and Canadian tax implications of your move north, however. As US citizens you will be expected to file US tax returns every year, in addition to Canadian returns as Canadian residents. If you spent most of your working life in the US then presumably that's where your assets and income sources are situated. You might benefit from professional advice so that you can most effectively reduce the total tax burden, and not fall afoul of cross-border reporting requirements.


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## Caitie (Mar 28, 2008)

Harry Moles said:


> Your Canadian citizenship will be valid until the day you die, unless you actively renounced it. If you also obtained US citizenship, then you are already dual citizens - there is nothing further you need to do. You have free right of entry to both Canada and the US, forever.
> 
> No, you will not owe any back taxes upon your return to Canada. Unlike a certain ****e country to the south, Canadian taxation is based on residency, not citizenship; for the 35 years you were away, you were non-residents as far as CRA is concerned, under no obligation to file.
> 
> ...


Thank you so much for replying. We would be bringing some of our assets to Canada but would need to leave our retirement accounts behind because transferring them would trigger an unpalatable tax consequence. We lived in Alberta before but were hoping to land in BC for better weather. How do people manage without primary care physicians?


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## Harry Moles (11 mo ago)

People use walk-in clinics and get on waiting lists for a family doctor. The length of the wait may depend on where in BC you are planning to settle. 

I would definitely recommend getting some professional advice for the cross-border financial moves. As Canadian residents you will have reporting and tax obligations for US assets, though you should be able to avoid double taxation.


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## Caitie (Mar 28, 2008)

Harry Moles said:


> People use walk-in clinics and get on waiting lists for a family doctor. The length of the wait may depend on where in BC you are planning to settle.
> 
> I would definitely recommend getting some professional advice for the cross-border financial moves. As Canadian residents you will have reporting and tax obligations for US assets, though you should be able to avoid double taxation.


That's good advice. I will definitely seek out a CPA before making any move.
Can you tell me how Canadian property tax is calculated? Here, it varies among states. I live in a state where we have no sales tax, so property taxes are high instead. We pay 1.05% of the assessed value of property, which, to allow for market fluctuations is generally around 25% less than its market value, plus add-ons by the municipality, county and/or state for schools, roads, police, fire services, etc., Taxes rise by 3% per year and it can become a hefty bill but we can write off $10,000 a year from income taxes. Is the Canadian system a lot different? We haven't yet decided precisely where to live. We'll probably visit and look around and see what our budget can afford.


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## Harry Moles (11 mo ago)

Property tax rates vary by province and municipality but I think they are lower than in the US, because of course we have higher income tax rates. You can look up the tax rates an get an estimated bill once you know more. (Looking at my last one I'd say it's around 0.7% but there are no municipal add-ons of any kind.) There is no federal write-off for local taxes (or mortgage interest) unless you are self-employed and claiming a portion of your home as a business premises.


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## Caitie (Mar 28, 2008)

Harry Moles said:


> Property tax rates vary by province and municipality but I think they are lower than in the US, because of course we have higher income tax rates. You can look up the tax rates an get an estimated bill once you know more. (Looking at my last one I'd say it's around 0.7% but there are no municipal add-ons of any kind.) There is no federal write-off for local taxes (or mortgage interest) unless you are self-employed and claiming a portion of your home as a business premises.





Harry Moles said:


> Property tax rates vary by province and municipality but I think they are lower than in the US, because of course we have higher income tax rates. You can look up the tax rates an get an estimated bill once you know more. (Looking at my last one I'd say it's around 0.7% but there are no municipal add-ons of any kind.) There is no federal write-off for local taxes (or mortgage interest) unless you are self-employed and claiming a portion of your home as a business premises.


Thank you. This information is greatly helpful. I assume we'd be paying Canadian tax rates on our American income, and that seems fair. If you can stand one or two more questions, do you happen to know whether the provincial health care premiums are a per person flat rate cost, or are they based on income or wealth? Does provincial health care cover dentistry, hearing and vision, too, or are those insured separately via add-on policies?


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## Harry Moles (11 mo ago)

Caitie said:


> Thank you. This information is greatly helpful. I assume we'd be paying Canadian tax rates on our American income, and that seems fair. If you can stand one or two more questions, do you happen to know whether the provincial health care premiums are a per person flat rate cost, or are they based on income or wealth? Does provincial health care cover dentistry, hearing and vision, too, or are those insured separately via add-on policies?


Contact each province about health care premiums - it varies and in some provinces it's zero. Dental, prescription and all those other things are add-ons through Blue Cross, Sun Life or other providers of "extended health benefits". If you retire to Canada you won't be continuing an employer's extended plan so may pay a fair bit of money for that.

Don't assume that you'll be paying Canadian tax on all your US income. If you are receiving Social Security that may be taxed by the US instead. Consult the US-Canada tax treaty (or talk to a professional) for the specifics. For example, rental income on a US property would be taxed first by the US, not Canada, and US _in situ_ investments as well. For all I know it might be beneficial to leave most of your assets in the US, though you would also need to consider exchange rate risk.


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## Caitie (Mar 28, 2008)

Harry Moles said:


> Contact each province about health care premiums - it varies and in some provinces it's zero. Dental, prescription and all those other things are add-ons through Blue Cross, Sun Life or other providers of "extended health benefits". If you retire to Canada you won't be continuing an employer plan so may pay quite fair bit of money for that.
> 
> Don't assume that you'll be paying Canadian tax on all your US income. If you are receiving Social Security that may be taxed by the US instead. Consult the US-Canada tax treaty (or talk to a professional) for the specifics. For example, rental income on a US property would be taxed first by the US, not Canada, and US _in situ_ investments as well. For all I know it might be beneficial to leave most of your assets in the US, though you would also need to consider exchange rate risk.


Thanks again for answering. I know that there is a reciprocal tax credit arrangement, and that taxes paid in the US can be used to reduce the tax liability in Canada. 
I've just learned today that leaving our investment accounts in the US may not be an option. Many US companies generally will not allow investment accounts to be held by non-residents. These accounts can't be transferred directly to an RRSP. That has to be done via an IRA. Such a transfer would trigger a 20% US withholding tax consequence which could be claimed as a foreign tax credit in Canada but may take years to recover via claimed tax credits, and, depending on the amount, how much we withdraw every year and how long we live, may never be recovered. This has definitely given us food for thought, so we will need to do our homework very carefully before committing to a move. 
Thank you very much for helping us start to figure it out. Much appreciated.


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## Harry Moles (11 mo ago)

You may want to retain a fictitious US residence, using one of your children as a mailing address. You wouldn't be the first people to do this. What you tell the IRS and CRA versus what you tell your investment company are two quite separate things.


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## cheval47 (Oct 14, 2012)

I am in a similar situation to the OP. I am a Canadian citizen who grew up in Hamilton, Ontario and now after 30 some years of living (and retiring) in the US, I am considering moving back to Canada. Will my SIN and OHIP numbers still be valid? Will I need to reactivate or refresh them?


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## Harry Moles (11 mo ago)

Your SIN number never goes away, but you'll want to contact OHIP to find out how you restart coverage.


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## maesonna (Jun 10, 2008)

There are short-term private health insurance plans specifically designed to fill the gap for returning Canadians who have to wait a few months for their provincial coverage to take effect.


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## cheval47 (Oct 14, 2012)

Good info from you both. Thank you


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