Withdrawing from investments if you don’t stay in Canada
You ask about RRSP withdrawals sooner or later. As a Swedish resident, withdrawals could be topic to 25% Canadian withholding tax.
In retirement, registered retirement earnings fund (RRIF) withdrawals could also be topic to a decrease 15% price. However in case you contribute now, after which need the cash out in a number of 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 consequence.
Canadians investing in ISKs
Sweden affords an investeringssparkonto (ISK) account that is analogous to a Canadian TFSA. As an alternative of the earnings earned within the account being topic to tax, the account worth is topic to a flat 30% tax price, payable on a regular earnings price that modifications from yr to yr.
The usual earnings price for 2022 is 1.25%, so 30% tax is payable on 1.25% occasions the account worth. Curiosity, dividends and capital features are typically taxed at 30% in Sweden as effectively, so so long as you possibly can earn greater than 1.25% in your ISK investments, you ought to be higher off investing in that account than a daily, taxable funding account.
It looks as if an ISK account is an effective choice so that you can contemplate, Kyle, even if you’re in Sweden simply quickly. Should you return to Canada, you should use 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 effectively, and you can also make TFSA contributions.
RRSPs and TFSAs for Canadians overseas
Till that point, you possibly can preserve your present RRSP and TFSA accounts. You possibly can also have a common funding account in Canada. Withholding tax of 10% would apply for curiosity earnings, 15% for dividends and belief (mutual fund or trade traded funds, a.ok.a. ETFs) distributions, and no withholding tax could be payable on capital features in your investments as a Swedish resident. Canadian withholding tax would typically be eligible to say towards the tax on these investments in Sweden.
Canadian non-residents can not purchase new Canadian mutual funds, however they will proceed to carry present mutual funds. Some monetary establishments are extra versatile than others in the case of working with non-residents of Canada. Most will mean you can preserve an account after changing into a non-resident however opening a brand new account as a Canadian non-resident will 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!