Question:
Hi, I’m a Canadian living/working in Arizona, and my partner is American. We have talked about maybe moving to Canada in the future, and are also going to be getting married soon. I thought the tax situation might be tricky, so I have a few questions:
1. I read that she should never hold a TFSA or RESP, is that true?
2. I know the cost basis of investment accounts resets when you enter Canada. Will this change with a US spouse, even though I would keep the investments in my name?
3. Does she need to file FBARs for any of these?
Answer:
These are all good questions to think about before you finalise the wedding (congrats!) In response:
- It is true that a US Citizen will not want to hold a Canadian TFSA or RESP. The US treats these as foreign trusts, and not tax-exempt. Uncle Sam then wants you to file Form 3520 for these.
- With the marriage, your cost basis won’t change. Whatever date you resume your Canadian residency is the date that your investment basis will be set at.
- For US Citizens, any non-US financial accounts that have over $10,000 US in them will require FBAR reporting. Watch, because FBAR’s aren’t limited to just bank accounts. You are also expected to file for any joint-accounts, RRSP’s, or effectively any bank account that your spouse will have signing authority on (charities or board positions.)
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