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Can a non-resident open an funding account in Canada?

Withdrawing from investments if you don’t reside in Canada

You ask about RRSP withdrawals sooner or later. As a Swedish resident, withdrawals can be topic to 25% Canadian withholding tax.

In retirement, registered retirement revenue fund (RRIF) withdrawals could also be topic to a decrease 15% charge. However when you contribute now, after which need the cash out in just a few years if you’re a non-resident, you’ll save no tax on the contribution and be topic to 25% on the withdrawal—a foul final result.

Canadians investing in ISKs

Sweden presents an investeringssparkonto (ISK) account that is similar to a Canadian TFSA. As an alternative of the revenue earned within the account being topic to tax, the account worth is topic to a flat 30% tax charge, payable on a normal revenue charge that adjustments from 12 months to 12 months.

The usual revenue charge for 2022 is 1.25%, so 30% tax is payable on 1.25% occasions the account worth. Curiosity, dividends and capital good points are typically taxed at 30% in Sweden as properly, so so long as you possibly can earn greater than 1.25% in your ISK investments, you need to be higher off investing in that account than an everyday, taxable funding account.

It looks like an ISK account is an effective possibility so that you can contemplate, Kyle, even if you’re in Sweden simply quickly. For those who return to Canada, you should utilize your RRSP room and contribute to an RRSP at the moment, when the tax deductions are literally of use to you. TFSA room will start to build up once more as properly, and you can also make TFSA contributions.

RRSPs and TFSAs for Canadians overseas

Till that point, you possibly can keep your present RRSP and TFSA accounts. You possibly can actually have a common funding account in Canada. Withholding tax of 10% would apply for curiosity revenue, 15% for dividends and belief (mutual fund or trade traded funds, a.okay.a. ETFs) distributions, and no withholding tax can be payable on capital good points in your investments as a Swedish resident. Canadian withholding tax would typically be eligible to say in opposition to the tax on these investments in Sweden.

Canadian non-residents can’t purchase new Canadian mutual funds, however they will proceed to carry present mutual funds. Some monetary establishments are extra versatile than others on the subject of working with non-residents of Canada. Most will let you keep an account after turning into a non-resident however opening a brand new account as a Canadian non-resident could be tough.

I hope that helps, Kyle. Good luck together with your Canadian and overseas investing and determining the place your expat journey will take you subsequent!

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