Relocating from the United States to Canada is an exciting transition, but it comes with complex financial, tax, and logistical considerations. Without proper planning, individuals may face unexpected tax liabilities, compliance issues, and financial inefficiencies.
The below covers some of the many critical action items for a smooth financial transition when moving from the U.S. to Canada. Please contact a cross-border financial planner at Cardinal Point to customize planning for your unique situation.
1. Immigration Considerations
Before moving, individuals must ensure they have the appropriate immigration status to live and work in Canada.
- Confirm Residency or Work Permit Requirements – If moving as a permanent resident, ensure the application is complete and approved before arrival. Work permits may be necessary for employment eligibility.
- Apply for a Social Insurance Number (SIN) – A SIN is required to work and access government programs such as healthcare and tax credits.
- Understand Entry Procedures – When arriving in Canada, travelers must provide proof of residency intentions to immigration officers.
2. Customs & Moving Logistics
Bringing household goods and vehicles to Canada involves specific import regulations.
- Prepare a Customs Declaration for Personal Belongings – A detailed inventory must be presented to Canada Border Services Agency (CBSA).
- Confirm Vehicle Import Eligibility – Not all U.S. vehicles meet Canadian safety standards, requiring modifications and inspections.
- Exchange a U.S. Driver’s License for a Canadian License – Canadian provinces allow an exchange process without a written or road test.
3. Banking, Investments, and Credit
Managing financial accounts across two countries requires careful planning to optimize currency exchange, investment taxation, and credit history.
- Open a Canadian Bank Account – Some banks allow accounts to be opened remotely before arrival.
- Review U.S. Investment Accounts –
- IRAs and 401(k)s should remain in the U.S. with a custodian experienced in working with Canadian residents.
- Canadian investment accounts should be opened upon establishing Canadian tax residency.
- Exchange U.S. Dollars to Canadian Dollars Wisely –
- Avoid bank exchange fees by using foreign exchange platforms.
- Consider keeping some assets in U.S. dollars if future U.S. spending is expected.
- Avoid Carrying Large Cash Amounts – Transferring over $10,000 USD or CAD in cash requires a customs declaration.
- Establish a Canadian Credit History – Apply for a Canadian credit card immediately after arrival to start building a credit profile.
4. Real Estate & Property Considerations
Whether to sell or retain a U.S. home depends on tax implications and financial goals.
- Sell U.S. Property Before Establishing Canadian Residency – Avoid potential Canadian capital gains tax on future appreciation.
- Obtain a Fair Market Valuation for Retained Property – This establishes a cost basis for future taxation.
5. Tax Planning Considerations
Tax laws differ between the U.S. and Canada, and improper planning can lead to double taxation.
- Determine Canadian Tax Residency Date – The date residency is established impacts when tax obligations begin in Canada.
- Take Advantage of the Canadian Cost Basis Step-Up – When becoming a Canadian tax resident, investment assets receive a fair market value reset, minimizing future Canadian capital gains tax. Selling taxable assets with unrealized losses before moving to Canada locks in the realized loss for U.S. tax purposes and results in the same cost basis for Canadian and U.S. cost basis tracking.
- Plan for Roth IRA Conversions – Converting a Roth IRA before moving may prevent taxation under Canadian law.
- Prepare your U.S. Taxable Assets for Income Splitting in Canada – Splitting taxable assets equally between spouses before moving will allow spouses to equalize their incomes for Canadian tax purposes, while also not resulting in U.S. to gift tax.
- Claim Foreign Tax Credits – U.S. taxes paid on investment or retirement income may be credited against Canadian tax liability.
- Maintain U.S. Tax Compliance – U.S. citizens must continue filing U.S. tax returns and report foreign assets through:
- FBAR (Form 114) for bank accounts exceeding $10,000.
- FATCA (Form 8938) for foreign-held investments.
6. Healthcare Planning
Canada provides public healthcare, but new residents may experience a waiting period before coverage begins.
- Apply for Provincial Health Insurance Immediately – Most provinces require 3 months of residency before benefits begin.
- Secure Temporary Private Health Insurance – Short-term private coverage is recommended during the waiting period.
- Explore Extended Health Coverage – Some prescription drugs, vision, and dental care are not covered under Canada’s public system, making private insurance beneficial.
7. Estate Planning Updates
Wills and estate planning documents must comply with Canadian law.
- Review and Update Wills & Powers of Attorney – U.S. estate documents may not be valid in Canada.
- Assess Cross-Border Estate Tax Exposure – U.S. citizens remain subject to U.S. estate tax laws, even while residing in Canada.
- Notify Financial Institutions of Address Changes – Banks, investment firms, and insurance providers should have up-to-date residency information.
8. Risk Management (Insurance Considerations)
Insurance coverage must be updated to reflect Canadian residency and assets.
- Review Medicare Eligibility – U.S. citizens should determine if keeping Medicare coverage is beneficial for potential future use.
- Establish Canadian Home & Auto Insurance – Policies should be secured before canceling U.S. coverage.
9. Other Important Considerations
Beyond financial and tax planning, several administrative tasks should be addressed.
- Update Government Records – Notify Service Canada of address changes for tax and pension benefits.
- Cancel U.S. Memberships & Subscriptions – Avoid unnecessary expenses on U.S.-based accounts.
- Ensure Pets Meet Import Requirements – Vaccinations and import permits may be required.
Planning Today for a Smooth Move Tomorrow
Moving from the U.S. to Canada requires careful coordination across financial, tax, and legal systems. By proactively managing key transition items, individuals can minimize tax exposure, optimize investments, and ensure seamless integration into Canadian life.
For expert guidance, please contact a cross-border financial planner at Cardinal Point to tailor a plan that aligns with your individual circumstances and long-term financial goals.