Do US retirees pay income tax in Canada if they move there?

Question

I am a US citizen, retired, considering a move to Victoria, Canada. Assuming I can get permission from the Canadian government to establish full-time residency, my question is: Will I have to pay income tax in Canada and/or in British Columbia? As of now my income is entirely US stock market capital gains and dividends, and social security. In other words, no income derived from activities in Canada.

If I would have to pay income tax in Canada, what are the rates paid on capital gains, dividends, and US social security? I assume there is a tax treaty between the US and Canada so that cross-border residents are not double-taxed. Is that correct?

DJClayworth · Answer

Retirees are not treated any differently from anyone else. If you are resident in Canada for tax purposes (which you certainly would be if you lived there most of the year) then you are expected to pay tax to Canada (and BC) on all your income, wherever it comes from.

With almost any other origin country in the world, living almost all your time in Canada would exempt you from paying taxes in your country of origin. However the US is well-known for taxing all its citizens, wherever they live. So you would also need to file and potentially pay taxes in the US. There does exist a 'double taxation' treaty between Canada and the US, which means that tax paid in Canada does not have to be paid again in the US. But you still have to file, and potentially pay if there is a difference in the way your income is assessed.

You can look up current general tax rates very easily.

Federal and Provincial tax assessment is done with a single form and you pay all tax to Canada Revenue, which forwards the appropriate amount to the Province. So you don't have to do separate Federal and Provincial filings. (Quebec is of course an exception to this).

Do US retirees pay income tax in Canada if they move there?

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