Sign in to follow this  
Hennie Calgary

PPS payout - taxed in Canada?

Recommended Posts

Hennie Calgary

Does anyone have experience with the PPS provident fund (taxfree) payout after age 60 - when you transfer that money to Canada, do you have to pay Canadian tax on that? When I turn 60, I will have been in Canada 7 years, and citizen for 3 years.

Share this post


Link to post
Share on other sites
Linda

Hi Hennie,

I can’t speak to the taxation of PPS, but we repatriated funds (through Cashcows) for Retirement Annuities that we were unable to have paid out when we left SA in 2000, in 2013/2014, and lo and behold CRA were   ready with outstretched Hand, claiming their share on our 2014/2015 return. Best to get sound Canadian tax advice.

Edited by Linda
Typo
  • Like 1
  • Thanks 1

Share this post


Link to post
Share on other sites
Ann

I suggest you put the money straight away into an RRSP, i.e. the funds received would be added to your income for the tax year and then the RRSP contributions will be deducted from your income for the tax year. 

The net result would be zero tax on the funds for the tax year.  You will pay applicable withholding taxes etc. when withdrawing the funds from your RRSP.

If you don't have enough allowance for the year, maybe the payout can be split, i.e. last business day in December up to your allowance and then the rest on the first business day in January.

Also get some tax advice, as recommended. I think CRA might allow one to go slightly over the allowance, perhaps up to $2000.

This might also be applicable: http://www.taxplanningguide.ca/tax-planning-guide/section-2-individuals/transfer-pension-income/

Edited by Ann
additional info

Share this post


Link to post
Share on other sites
SunshineGirl
On 29/11/2017 at 12:00 AM, Linda said:

we repatriated funds (through Cashcows

Hi @Linda.  Please may I ask what Cashcows is & what services they offer?  Thanks in advance

Share this post


Link to post
Share on other sites
MaryJane
1 hour ago, SunshineGirl said:

Hi @Linda.  Please may I ask what Cashcows is & what services they offer?  Thanks in advance

Cashkows is now known as FinGlobal.

https://www.finglobal.com/

They help with moving monies across the border (and smooth all the associated hassles that go with it :) ).

  • Thanks 1

Share this post


Link to post
Share on other sites
MaryJane

Hi @Hennie Calgary

I don’t know enough about the PPS but would you be taxed in SA when this payout happens? You could perhaps claim the taxes paid too (?).

  • Thanks 1

Share this post


Link to post
Share on other sites
FaithFUL

@Hennie Calgary are you sure that provident fund payout is tax free? It used to be back in the day, but things have changed.

http://www.sars.gov.za/ClientSegments/Individuals/Tax-Stages/Pages/Tax-and-Retirement.aspx

RA's & pension fund contributions are deducted for tax benefits, but provident fund contributions are not treated the same way. The fund should take your provident fund contributions into consideration when calculating the taxable amount, which could possibly make it tax free. I would maybe contact them just to confirm, my ducks are running all over the place the moment and it could be that I'm completely off the track and guiding you in the wrong direction :wacko:

  • Like 1

Share this post


Link to post
Share on other sites
Hennie Calgary
7 hours ago, FaithFUL said:

@Hennie Calgary are you sure that provident fund payout is tax free? It used to be back in the day, but things have changed.

Thanks for the heads-up. @FaithFUL, I will check. Always dangerous to assume, I appreciate the warning, was not even thinking that tax in SA may also be a problem. Homework to do...

 

  • Like 1

Share this post


Link to post
Share on other sites
SunshineGirl

HI @Hennie Calgary.  I was wondering if you came right with this one?  One of the reasons we thought that we might not do a financial immigration because our financial advisor told us that policy payouts need to go into a SA bank account held in the beneficiary's name.  Your post make me question our financial advisor's advice though.  Is it possible to receive benefits from policies after doing a financial immigration? Thanks in advance!

Share this post


Link to post
Share on other sites
Hennie Calgary

Hi @SunshineGirl, I am no expert, but remember that "policies" can be annuities, life cover, provident funds, etc. Different rules for each. In my case I know RAs (Retirement annuities) can be paid out taxfree (in SA) when you do the financial emigration, but not sure about the others. Your advisor is probably correct, you just need to focus on the different rules for different types.

The SA bank could also be your "blocked account" that you get when you do the financial emigration. You can still use the funds, but you are not allowed to have any SA credit cards, etc.

I am now in that position - did the financial emigration, got my RAs paid out, and next year my provident fund payout will follow. I don't even have my SA blocked account anymore, so I still have to see how that is going to work.

By the way, remember you can do the financial emigration long after you arrive in Canada - there is no rush to do that quickly. I recommend leaving that as late as possible, as it becomes quite cumbersome to do credit cards, transfers, etc in SA with the blocked account. Financial emigration is totally unrelated to your actual emigration, no time limit, not mandatory. Many people here in Canada has never even bothered with it, especially if you still have any property or financial commitments in SA (e.g. financial support of family members in SA.)

Edited by Hennie Calgary
  • Like 1
  • Thanks 1

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

Sign in to follow this