Global Families: Beware the Multi-Million Dollar Tax Traps

Terri Williams, CFP

Global Families: Beware the Multi Million Dollar Tax Traps

By Terri Williams

What does the great wealth transfer look like post-pandemic and after tax?   The trend may be that sharing money and assets with the next generation will happen sooner rather than later,  according to a recent CIBC survey.

  The trigger is the housing market.   But there are other issues, according to Dr Dean Smith, President of Cadesky U.S. Tax and distinguished faculty member at the Distinguished Advisor Conference. Dr. Smith says many wealthy Canadians are now considering moving out of Canada. 

However, there are many questions they need to ask before they decide to go – or stay. He cited many questions advisors should be considering if their clients are thinking about emigration:

• What changes would they need to make to business/investment portfolios?
• What assets would be subject to departure tax? Can they afford the departure tax?
• Would their current advisors be able to transact on their behalf after they left Canada? Where are they licensed?

• Would Canadian rules be followed? Is there a treaty or tax information exchange agreement (TIEA) in place?
• What rules would they have to follow in their new country?  Will it recognize tax deferred registered accounts?  Will they have to cash out their registered accounts before they leave – resulting in large tax liabilities?
• Will life insurance payments be tax free?
• What capital gains laws are in place in the new country?  Will a home still be exempt from capital gains taxes?

Dr. Smith warned that your clients can run, but they can’t hide.  And, there are very limited countries someone can move to that will provide a tax holiday.  Lots of homework must be done before leaving Canada for good. 

Additional Educational Resources:  Knowledge Bureau’s Cross Border Course. 

Registrations for the 2022 Distinguished Advisor Conference are also now available.  We will be live in Niagara Falls, October 16 – 19.  Seating is limited.  Be sure to register early.