Can you move your investments from Canada to the U.S.?

Types of securities you can transfer to the U.S.

If you own Canadian mutual funds and/or bank or portfolio manager proprietary pooled funds, you will not be able to transfer them across the border.

Canadian mutual funds cannot be sold to non-residents of Canada. As a result, a U.S. brokerage account will not accept a transfer of a Canadian mutual fund.

A proprietary pooled fund can only be held at the company that offers it. So, you cannot transfer it to another brokerage in Canada, let alone the U.S., if it is not publicly traded.

Few American brokerages will be able to hold Canadian-listed stocks, bonds or exchange-traded funds (ETFs), either. A U.S.-listed stock or ETF can probably be transferred.

Canadian guaranteed investment certificates (GICs) aren’t eligible for transfer to the U.S.

Here’s a table that quickly explains what can and can’t be transferred.

Types of investment accounts in Canada and the U.S.

A Canadian cannot transfer investments from a Canadian registered account like a registered retirement savings plan (RRSP) and a tax-free savings account (TFSA) to a similar account in the U.S. Even though individual retirement accounts (IRAs) and Roth IRAs in the U.S. work very much like RRSPs and TFSAs in Canada, you cannot make a direct tax-sheltered transfer.

In your case, Meranda, you are looking to make a transfer from a taxable non-registered account in Canada to one in the U.S. You may be able to do this as long as the security you want to transfer can be held at the receiving institution.

However, the process may not be as simple as transferring securities between two Canadian financial institutions. It may take longer across the border, and there may or may not be a tax advantage.

Tax implications of transferring investments

If your primary reason for transferring your investments, Meranda, is to defer tax, your tax residency will be important. If you are leaving Canada and ceasing to be a tax resident, you will have a deemed disposition for your investments. This means the securities will be treated as if you sold them at fair market value on the date you moved. As a result, transferring them to the U.S. will not save you tax. In fact, it may cost you.

When immigrating to the U.S., your original cost base for an asset becomes your cost base for U.S. capital gains tax purposes. This differs from Canada, where your investments’ market value when you immigrate becomes your adjusted cost base (ACB). As a result, if you are becoming a U.S. resident, especially for the long term, you may want to consider selling your investments before you move.

That said, you may be able to defer the tax payable on your deemed disposition. To do this, your tax owing must be more than $16,500 (or $13,777.50 for Quebec residents). You can make this election by filing Form T1244, Election, under Subsection 220(4.5) of the Income Tax Act, to Defer the Payment of Tax on Income Relating to the Deemed Disposition of Property. You must provide adequate security to the Canada Revenue Agency (CRA) for the tax owing in order to defer it. Security could include pledging the assets themselves or a letter of credit from a Canadian financial institution.

As a U.S. resident, you may have disclosure requirements or adverse tax implications for any non-U.S. assets, including Canadian bank accounts, GICs, stocks, bonds, ETFs and/or mutual funds. So, this may be another reason to start fresh with U.S. investments.

If you are transferring the investments simply because you want to hold them at a U.S. brokerage, Meranda, and you remain a Canadian tax resident, there will not be any tax implications.

Canadians are taxed on their worldwide income, so holding the investments outside of Canada will not make them non-taxable.

As a Canadian resident, you will typically have a 15% U.S. withholding tax on the American securities you own, whether you hold them at a U.S. brokerage or a Canadian brokerage. This tax withheld can be claimed on your Canadian tax return as a foreign tax credit.

Should you transfer your investments from Canada to the U.S.?

There are investment and tax implications to consider here, Meranda. In some cases, you may be able to transfer your Canadian investments to a U.S. brokerage. The tax implications will depend on your subsequent tax residency.

More from Ask a Planner:

• When are costs for a U.S. property tax-deductible in Canada?
• How to report foreign income in Canada
• RBC’s discount broker launches international trading—what to know before you invest
• How much is capital gains tax in Canada?—and other reader questions answered

About Jason Heath, CFP

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.

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