Hi Guys!
Self & my husband are in the process of taking the plunge to settle ourselves in Toronto and having browsed through the expertise shared by your members, we would appreciate your inputs on managing our Indian funds.
Unfortunately, we've been unable to find details pertaining to the below mentioned queries :
1. Is it legally binding that our savings in India be transferred to Canada, as declared in the immigration forms?
2. If it is mandatory to transfer our funds, do we enjoy any tax concessions.
3. What are the implications if we do not declare our Indian funds in the first year of filing our tax returns & specify it in the forthcoming year?
Kindly advise. Thanking you in anticipation.
Posts: 1628
Location: carl sagan's universe
Posted on: 21-02-07 00:25:31
Location: carl sagan's universe
Posted on: 21-02-07 00:25:31
Quote:
Originally posted by CAN-VASi
Hi Guys!
Self & my husband are in the process of taking the plunge to settle ourselves in Toronto and having browsed through the expertise shared by your members, we would appreciate your inputs on managing our Indian funds.
1. Is it legally binding that our savings in India be transferred to Canada, as declared in the immigration forms?
2. If it is mandatory to transfer our funds, do we enjoy any tax concessions.
3. What are the implications if we do not declare our Indian funds in the first year of filing our tax returns & specify it in the forthcoming year?
Kindly advise. Thanking you in anticipation.
The answers to these questions would better be answered verbally.
You know the old song
"Never put in writing, whatever you do....
Never put it in writing or something deadly is gonna happen to you...."
Feel free to send me a msg (pm) and we can work something out egarding giving you the reply verbally.
There might be some bold enough to reply in writing, but will they mean what they write?
Quote:
Originally posted by CAN-VASi
Hi Guys!
Self & my husband are in the process of taking the plunge to settle ourselves in Toronto and having browsed through the expertise shared by your members, we would appreciate your inputs on managing our Indian funds.
1. Is it legally binding that our savings in India be transferred to Canada, as declared in the immigration forms?
2. If it is mandatory to transfer our funds, do we enjoy any tax concessions.
3. What are the implications if we do not declare our Indian funds in the first year of filing our tax returns & specify it in the forthcoming year?
Kindly advise. Thanking you in anticipation.
I shall try to answer your query in a detailed fashion:
1. Is it legally binding that our savings in India be transferred to Canada, as declared in the immigration forms?
Not at all. You can keep everything out of Canada – only thing is that you should carry the minimum stipulated amount with you when landing in Canada. And you may keep it out of Canada for the rest of your life.
2. If it is mandatory to transfer our funds, do we enjoy any tax concessions.
When you land in Canada for the first time as a PR, for tax purposes it is deemed that you disposed off all your assets and liabilities on that day and acquired it on the same day at a fair market value. This includes everything you own or owe. So lets say you had a real estate property which you had acquired a few years back for Rs 20 lakhs and on the date of your landing, the fair market value was Rs 55 lakhs, it will be deemed that you acquired it on the day of landing at Rs 55 lakhs converted into CAD. From there onwards, any capital appreciation realized will be taxed. If you do not sell it, no tax will be levied.
3. What are the implications if we do not declare our Indian funds in the first year of filing our tax returns & specify it in the forthcoming year?
You are required to declare your out of Canada assets if they exceed CAD 100K on your first tax return. If it is less than that, there is no declaration on the first tax return. However, you have to keep reporting any income on your foreign assets each year on your tax returns.
In case, at the time of your filing your first return the assets were not more than 100K but became worth much more later, you will have to declare that on your return the year in which they increased in value to an amount over 100K. Now most probably the tax department might ask you for this declaration assuming that you have earned some income outside Canada on which you are liable to pay tax. However, if it is purely increase in value, you can show the proof on the basis of which you have valued those assets to be over 100K combined – on which there will be NO TAX since it is an unrealized gain.
So for example, if you had a house worth 20 lakhs at the time of landing and Rs 5 lacs in your bank account, you are not required to declare it in the first year. You will only have to declare the interest earned in your bank account and rental income, if any, from your house. However, if say 4 years later, the house is worth 35 lakhs and bank account is 550K, that year (assuming the INR/CAD rate to be same at that time) your foreign property shall be over 100K CAD and you will have to declare it on your tax return in that year – though the tax will be levied only on the amount of foreign income earned that year.
-----------------------------------------------------------------
Chandresh
Advice is free – lessons I charge for!!
Very clearly explained Chandresh ,
Do you do consulting also ?
-----------------------------------------------------------------
Fido.
Chandresh, very much appreciate the prompt response.
Your indepth explanation has given us a good insight into handling our finances this end.
Thank You & Cheers!
Quote:
Originally posted by chandresh
Quote:
Originally posted by CAN-VASi
Hi Guys!
Self & my husband are in the process of taking the plunge to settle ourselves in Toronto and having browsed through the expertise shared by your members, we would appreciate your inputs on managing our Indian funds.
1. Is it legally binding that our savings in India be transferred to Canada, as declared in the immigration forms?
2. If it is mandatory to transfer our funds, do we enjoy any tax concessions.
3. What are the implications if we do not declare our Indian funds in the first year of filing our tax returns & specify it in the forthcoming year?
Kindly advise. Thanking you in anticipation.
I shall try to answer your query in a detailed fashion:
1. Is it legally binding that our savings in India be transferred to Canada, as declared in the immigration forms?
Not at all. You can keep everything out of Canada – only thing is that you should carry the minimum stipulated amount with you when landing in Canada. And you may keep it out of Canada for the rest of your life.
2. If it is mandatory to transfer our funds, do we enjoy any tax concessions.
When you land in Canada for the first time as a PR, for tax purposes it is deemed that you disposed off all your assets and liabilities on that day and acquired it on the same day at a fair market value. This includes everything you own or owe. So lets say you had a real estate property which you had acquired a few years back for Rs 20 lakhs and on the date of your landing, the fair market value was Rs 55 lakhs, it will be deemed that you acquired it on the day of landing at Rs 55 lakhs converted into CAD. From there onwards, any capital appreciation realized will be taxed. If you do not sell it, no tax will be levied.
3. What are the implications if we do not declare our Indian funds in the first year of filing our tax returns & specify it in the forthcoming year?
You are required to declare your out of Canada assets if they exceed CAD 100K on your first tax return. If it is less than that, there is no declaration on the first tax return. However, you have to keep reporting any income on your foreign assets each year on your tax returns.
In case, at the time of your filing your first return the assets were not more than 100K but became worth much more later, you will have to declare that on your return the year in which they increased in value to an amount over 100K. Now most probably the tax department might ask you for this declaration assuming that you have earned some income outside Canada on which you are liable to pay tax. However, if it is purely increase in value, you can show the proof on the basis of which you have valued those assets to be over 100K combined – on which there will be NO TAX since it is an unrealized gain.
So for example, if you had a house worth 20 lakhs at the time of landing and Rs 5 lacs in your bank account, you are not required to declare it in the first year. You will only have to declare the interest earned in your bank account and rental income, if any, from your house. However, if say 4 years later, the house is worth 35 lakhs and bank account is 550K, that year (assuming the INR/CAD rate to be same at that time) your foreign property shall be over 100K CAD and you will have to declare it on your tax return in that year – though the tax will be levied only on the amount of foreign income earned that year.
Good explanation ! How one can transfer the money gained due to increase in capital gain ? I heard that RBI permits money transfer upto 100K! Do you know the process ?
-----------------------------------------------------------------
AK
Quote:
Originally posted by neerupam
Good explanation ! How one can transfer the money gained due to increase in capital gain ? I heard that RBI permits money transfer upto 100K! Do you know the process ?
Thanks!
However, having left India soon after doing my CA in '83 I have no idea about RBI rules for money transfers - more so because I had a net worth of only about US$ 400 when I left India with $40 in my pocket!
Chandresh
-----------------------------------------------------------------
Chandresh
Advice is free – lessons I charge for!!
