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What are the financial implications of retiring outside of Canada?

Many Canadians decide to live a part of each year outside of Canada, perhaps in Florida, Arizona or Mexico. Generally speaking, these “snowbirds” are subject to the same tax rules as any retired Canadian as they will still be considered a Canadian resident, maintain a Canadian address and bank account, and file an annual Canadian income tax form. The advent of Internet, telephone banking and worldwide-automated banking machines makes it easier than ever to access your funds and pay your bills while outside of Canada.

There may however be restrictions to the length of time that you spend outside of Canada and other items that need to be considered, such as the need for extra health insurance coverage. Canada Customs and Revenue Agency has an excellent publication entitled “Canadian Residents Going Down South” (P151) which is a good resource for snowbirds. This article contains important information on taxation and links to American tax authorities that would prove useful for those owning retirement property in the United States. Visit www.ccra-adrc.gc.ca or call 1-800-267-1267 to obtain this publication and to find related information. For those Canadians who decide to live permanently, year-round in another country after retiring things become a bit more complicated. Do you intend to travel back to Canada on a regular basis? Do you wish to continue owning property in Canada? Are you leaving investments in Canadian financial institutions? Such critical questions must be answered before relinquishing your Canadian residency status and you may wish to consult with an accountant and a lawyer before making a permanent move to another country. Again Canada Customs and Revenue Agency is a good source for clarification under what circumstances Canadians would be considered non-residents for taxation purposes. While CPP, QPP and OAS benefits can be paid to you when you reside permanently outside of Canada during retirement, you will likely to subject to certain conditions such as regular filing. Also be aware that investment income, pension income, RRIF payments etc. may be subject to a Canadian withholding tax (generally 25%). Much depends upon whether there are specific tax treaties between Canada and the country in question. Issues such as travel, health insurance, housing, Canadian consular protection etc. all need to be considered when deciding to move permanently to another country. An excellent place to begin your research is Consular Affairs web site: www.voyage.gc.ca, which contains “Information and Assistance for Canadians Abroad” and is a service of the Department of Financial Affairs and International Trade. This site contains information regarding how to register as a Canadian abroad and publications such as “Retirement Aboard: Seeing the Sunset”.