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?
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.)