Taking up Canadian residence

If you become a resident of Canada during 2016, you’re generally deemed to have disposed of and immediately reacquired each property you own (with the exception of taxable Canadian property) at proceeds equal to its FMV on the date you take up residence. This FMV becomes your adjusted cost base when determining any future capital gain or loss.

If you were employed or carried on a business in Canada prior to becoming a resident, you’ll be taxed in Canada on that income for the part of the year you were a non-resident of Canada. Once you become a resident of Canada, you’re taxed in Canada on your worldwide income from the date you establish residency.

You are entitled to claim personal tax credits, but the amounts are generally reduced on a pro-rata basis according to the number of days in the year you are taxed on your worldwide income.

If you arrived from a country that has a tax treaty with Canada, any provision in the treaty that conflicts with the Canadian tax rules may override the Canadian rule.

Foreign pension plans

If you become a resident of Canada, there may be Canadian tax consequences if your employer continues to contribute to a foreign pension plan on your behalf. In general, provided you have not been a resident of Canada for more than 60 months in the preceding 72-month period, and you were a member of the foreign plan prior to establishing Canadian residence, contributions by your employer won’t be subject to tax. However, membership in this type of foreign plan will diminish your ability to take advantage of Canadian tax-deferred savings plans, such as RRSPs, RPPs and DPSPs. Employer contributions outside these timelines may still be exempt from Canadian taxation,provided your employer files an election, you were a plan member prior to becoming a Canadian resident and you are not a member of an RPP or DPSP.

Distributions received from a foreign pension plan while you’re a resident of Canada are generally taxable. However, the tax treaty between Canada and the foreign country may provide some relief.