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Are you a Canadian considering relocating abroad? In this insightful discussion, financial advisor Todd Schmekel and relocation expert Emily Bron delve into crucial financial considerations that Canadians should keep in mind when planning to move to a new country. They discuss topics such as taxation, investments, pension plans, property ownership, residency rules, and more. Whether you’re eyeing a warm climate or seeking new adventures, understanding these financial aspects is essential to ensure a smooth transition and secure your financial future. Learn from their expertise to make informed decisions and avoid potential pitfalls.
TIMESTAMPS
00:00 Introduction
05:00 What Canadians Should Consider When Planning a Relocation
10:31 What Type of Funds Can Canadians Use by Receiving Transfers Abroad
21:04 Filing Canadian Tax and Tax Agreements
29:25 Considerations Before Relocation from Canada
Emily: Hello, everyone. It’s me, Emily Bron, owner of the International Lifestyle Consulting And today I was planning to launch a new series of interviews with professionals. Why? Because I know from my personal experience and from experience of many other people who were considering relocation, that it’s not so easy, that people really need to prepare for it and prepare in advance.
And because I get so many different questions about how to do it and what to do and in what order to do it. I decided to invite professionals who are together with me Will clarify this road will answer your possible questions and it will help you, my dear future relocators or people who thinking just about it, or maybe just curious about it to to think, to listen to consider, and to come back with a question, maybe during today’s conversation maybe later when you will have questions to the point. And the first person who I wanted to introduce to you, I mean professional, in the list of professionals who would really help you along the road.
I’m a financial advisor and I would like to introduce to you a financial advisor from Alberta, Canada, Todd Schmekel. So Todd has been a financial advisor for at least a decade and he’s proudly serving and assisting clients across Alberta, British Columbia and Ontario to achieve their financial goals. His primary focus is on providing goals based advice, ensuring that each client’s unique aspirations and ambitions are at the front.
Forefront of their financial journey. Todd has excelled in helping individuals plan safely and ultimately achieve their goals of living and retiring abroad. So it is thought a few believe that by aligning our financial decisions with our long term goals we can unlock extraordinary possibilities.
And create a prosperous future. So, Todd looks forward now to sharing his expertise, insights, and experiences in finance. And, again the first step that I would advise every person who is considering, thinking, planning to relocate, actually, To connect with financial advisor, if you have already one, or to ask me and I would connect you with financial advisors that I know and Todd is one of them because before actually, you know, paving the road.
We all need to understand what finances we have, how we can actually plan our future because without financial support, it’s kind of clear for everyone. We cannot be sure that we can achieve our goals. And it’s the reason I invited Todd and Todd is working with people pre retirement age, retirement age and people from all walks of life for years.
And having experience of serving these people I believe he will help us to clarify some of the matters generally. Obviously it’s not personal financial advice. But it’s just suggestions and advice. And by the way, I’m asking my please forgive me Americans who are listening now, because today I’m offering you a conversation with a Canadian financial advisor, but actually it’s the same.
That’s the same idea you need to consider from your side is the only difference. And I’m working for the Canadian and American market. We are a different country with a different legislation and probably some different abbreviation. When we are speaking about financials I mean. Pension plan mutual funds or name of the, you know, different programs, but actual framework is the same.
What Canadians should consider in this regard, and what do I mean when they are planning, preparing or thinking only about possible relocation. And by the way, I’m speaking for full time and part time relocation because we know Canadians sometimes prefer to live half a year in Canada and half year abroad.
Todd: Okay, yeah, I think those are slightly different situations in terms of taxation and in terms of benefits, particularly in terms of investment benefits or benefits from the Canadian government, such as or CPP if you’re going to relocate. Permanently, that’s going to have an effect on your OAS, and you must have lived in Canada for at least 20 years to be able to collect OAS, and then if you move abroad, your OAS could be clawed back completely, and each situation is different.
And each situation needs to be sort of investigated. And what I see with people on a regular basis is they just decide they’re going to move abroad without having consulted people like yourself, Emily, or without having considered consulting a tax account or an accountant in terms of what they’re going to be affected by.
Residency is determined a number of ways in Canada and residency then determines which accounts you can operate from abroad. So, for example, you can run a TFSA from abroad if you have one. Canadian residency. If you don’t have Canadian residency, you can have a TFSA, but you can’t add it to your TFSA. So the only benefits are, is to take the money from it tax free and have growth contributed tax free.
Thank you.
Emily: Live talk even for me. Thank you.
Todd: You’re very welcome. RSPS Are slightly different in terms of what you can contribute and what you and what you can’t contribute and how that works. I can’t comment on the US system because that’s a system that’s beyond my understanding in terms of taxation and in terms of investments.
You also need to make sure you’re working with an advisor that can still work with you if you’re abroad. Some firms do not allow advisors to work with people abroad. And you need to consider if you’re Canadian that Canada is taxed on it, or Canadians are taxed on their world income. But their benefits are only provided based on Canadian income.
And so that you end up with radically different amounts of income. I think your best bet for most people in Canada is to start to work with a financial advisor and make sure that you save the appropriate amount of money to engage someone like Emily. And I, I’m not sure if Emily has. I don’t know if I’ve said this or not, but I think that before you choose a place to live, you should visit a place and maybe visit a number of places and get and get to see these places and then figure out what your costs are.
I think the number one problem I find in financial advisory services today and financial planning is that people don’t know what they’re going to need to spend. And if you don’t know what you’re going to need to spend You end up making it up and that causes a big problem in terms of shortfall to be honest
Emily: So it’s actually the reason that I created my business because I realized that people don’t have enough knowledge practical knowledge of this or other countries they might have only You know, vacation experience, traveling experience, and I was promoting before COVID, actually, lifestyle discovery tours, and I’m on top of changes in the country, price wise, and even, you know, different region in country might actually have different cost of living, and I’m very happy that you’re outlining again that people should work with professionals.
It’s not enough just to search the internet to find some, you know, articles and legislation and stories for other people, which might be applicable, you know, for other people, but each of us in every financial situation is different. Thank you.
Todd: Yeah. And even residency for, for Canada is such a mixed bag of what can sit, what is.
To be considered resident and what is to be considered not resident by the Canadian government. I know that I have a number of clients that have predominantly moved to South America, mostly Mexico, Nicaragua, Panama, and you have different tax treaties with Canada and those countries and how things are going to be taxed.
And just because you don’t qualify for a benefit here doesn’t mean you won’t qualify for a benefit. and vice versa, because when there’s a social agreement between the company or countries, not companies, then some of your years here will be added to some of your years there, which could result in you getting a benefit down the road that you might not get from the beginning.
But I think these things are all very important to have sort of a decent understanding of before you move somewhere.
Emily: Very interesting, very interesting. And the next question I would ask, so what type of funds can people, and I mean now Canadians, use by receiving the transfers abroad? If you know, let’s…
Let’s speak about Mexico because I understand that with every country, it might be a different story based on the channels. But you mentioned Mexico, like your clients going to Mexico. I know that Mexico is now accepting thousands of people from Canada and the United States as well. So what do you know from your experience about funds that people can use being in Mexico?
Todd: So
In Mexico, Canadians my advice to Canadians is before you divest yourself of everything in Canada and move to Mexico if you go to Mexico and live a couple of years and maintain your residency in Canada. Maybe that’s a home. Maybe that’s an address property. You have to look at the residency requirements and continue to operate your accounts directly from Canada through Mexico.
It’s very easy for advisors to transfer funds from Canada. To Mexico, and there’s a number of websites that you can actually hook up to your bank account, but I often have clients who buy property in Mexico, and we just wire the funds directly, either to the realtor or to their lawyer in Mexico. So, the process is not as difficult as I think people make it sound where it is difficult if people pop down to Mexico and decide they’re going to buy a house.
Well, now, how are you going to get your money? That’s problematic. If you and I know of one situation, a lady lives in Puerto Vallarta, she went there during COVID, got COVID, decided never to come home, decided to buy a house, the bank says, you can’t take your money. And she’s like, what do you mean?
I can’t take my money. They’re like, well, you have to come here to sign the papers. We have to see you to transfer this money. So she ended up coming back to Canada. And then I had a conversation with her. In the end, we transferred all her funds here. And we just transferred them by a wire service to Mexico.
And she needs them now. So these are things you want to think of before you get there. Because you can’t, it’s not Canada. And the rules are different. And how, mortgages are different. Qualified for a mortgage, but once you’re there and you’ve used services to get there in Mexico does have a pension agreement with Canada.
So, your OES can be serviced in Mexico. Your CPP can be serviced in Mexico.
Emily: Can
I ask you, what do you mean service? Like it can be transferred directly without any taxes.
Todd: You can actually know so Mexico and Canada have a tax agreement. Yeah. Generally speaking, if there’s no tax agreement, you’re going to lose 25 percent.
But Mexico’s tax agreement is 15 percent, I believe. So your OAS can be directly deposited into a Mexican bank or can be directly deposited into a Canadian bank in Trent and you can make use of your credit card or your Bank card to take the money out. The same thing with your CPP can be directly transferred to you there.
I would say that most people that I work with maintain residency of some sort in Canada and they transfer all of their funds stay in Canada and they just transfer portions into Mexico when they need them. One client calls this the Canadian tax But he also feels that there is potential for instability in South America.
And if you maintain a residency requirement in Canada and keep your money in Canada, you don’t have potentially the same instability, particularly in currency, right? But everything can move from Canada to Mexico fairly easily, and it’s easy to get your money out of your RRSP. So on a monthly basis, we either transfer money directly into your bank account in Mexico or to one of these services.
And there are a number of services that people use, and we transfer money directly into bank accounts like Scotiabank accounts that are US bank accounts, and people just use their credit cards or their bank card to take the money out. So both things work. By totally moving all your assets there or by maintaining the residency here, it’s more of a situation that you’re comfortable with.
My advice would be you’d start with maintaining assets in Canada until you’re comfortable where you’re going to live.
Emily: So actually what I’m advising people when they already had some experience living for a couple of months at least in Mexico, all they Sure, as they say, 100% of Mexico is a place actually to start from a residency to apply for temporary residence through the Mexican consulate in Canada closest like Calgary, Toronto, Vancouver, because with residency, In Mexico, you can open bank account in Mexico.
Now you cannot do it without it, like without having temporary residence. And it established a direct channel between money transfers between Canadian banks and Mexican banks. And… I believe that it’s possible to give US financial advisors authority from a legal perspective. Like if people, for example, living in Mexico, can they sign for your authorization to transfer money directly or via the account?
Can it be the case?
Todd: Yep,
they can directly do that. It’s excellent . What your chat is getting people to do. I would say a step ahead of where most people are. I find most people move down to Mexico. They don’t have residency. And so then they buy a piece of property. Then they start trying to get residency.
And then they’re like, well, I need money. Well, they don’t have a bank account. So where are we transferring money? So this is why I often have to transfer money directly to a lawyer or to a real estate agent. Which from my perspective is a little nerve wracking because I don’t know the people I’m transferring money to.
And so a good example is a client who moved down to Jalisco, I think it’s called, I think you say, Jalisco, and they bought property. Yeah. So, we had to transfer 850, 000 to a realtor, which I was, I was a little bit uncomfortable with, but they knew the realtor, they were very comfortable with it, so we did it.
My preferred way would be that you do what Emily says, you get residency, you get a bank account, I’ll transfer you the money in your name.
Emily: Yeah, and I can tell even more I get more and more connections in Mexico, and I myself already went through this residency process so I really can advise in this regard, I mean, to Mexico, I cannot relocate to all countries I’m working with, but speaking about Mexico, I’m really comfortable, and I have lawyers now immigration lawyers, taxation lawyers and business lawyers in Mexico who would help with any possible questions along the road.
But Mexico, it’s a really simple case in regards to residency and relocation. So what I would advise and what Todd confirmed, you start by connecting with me, speaking with me, you start from the residency and I can help explain how to do it. It’s pretty easy. You go to Mexico, you get your residency, you open a bank account, you establish your residency and banking channel between Canada and Mexico.
And after that, you will probably come back to Canada at least once. You provide this information to your financial advisor. I don’t know if you have a taxation advisor and you have a channel to transfer your money and you have a signed agreement with your bank about online banking because it’s very important and after that you can really withdraw your money at any ATM machine in Mexico.
Only this way, you kind of ensure less stress and actually money comes to you. Speaking about pension Todd, and you mentioned o i s if. People are living part time in Mexico, say, in Canada, so OAS is still coming. If people are relocating, say, after a life of 20, 30 years in Canada I’m wondering if the OAS part will still be, you know, part of the pension.
Todd: Yeah, if you’re a natural born Canadian and you lived in Canada your whole life 40 years essentially, after 18, your OAS is a benefit that will not be taken away from you. So you will then get your OAS regardless of where you live in the world. It’s more a question of how you want it deposited, whether you want it deposited into your brokerage in Canada or directly into the country that you live in.
Most people that I work with have it deposited either directly into a Canadian bank or directly here and then we send them money once a month. But there are a number of people who have their money directly deposited into their, in Mexico is the obvious one, directly deposited into a Mexican bank. I have couples in Panama and Nicaragua and neither one of those or none of those families directly deposited into those institutions.
And those countries are perhaps a little less banking savvy with North America than Mexico is. Mexico and Canada have a pretty good arrangement and it’s pretty good they also have a tax sharing arrangement, which isn’t so good because a lot of Canadians think they’re going to go there and avoid Canadian tax.
You’re not. If you pay, you have OAS and you have CPP, you have Canadian income, so you should file Canadian tax still.
Emily: But what is the Canadian tax in this regard? Because usually our CPP on OS total, it’s not so high.
Todd: No that’s true. But if you, if you’ve saved, as we’ve talked a little bit about living in Mexico and you, and you saved it as a Canadian citizen, you likely have an RRSP.
Or you likely have a pension plan in Canada, either defined benefit or defined contribution plan. And those plans are going to generate Canadian income, which means you’re going to need to file Canadian tax. If you don’t file Canadian tax, you may get your OAS and your CPP may be restricted.
Emily: Even CPP.
Okay. I was sure that CPP, it’s what, you know, we contributed to as Canadians over the years. Always with us,
no?
Todd: What I’m talking about is if you don’t file tax. Ah! So, and often what I find is people leave Canada to relocate somewhere and they decide they’re not going to file Canadian tax anymore. But let’s say they work for a big Canadian company.
And they have a Canadian pension, and they have CPP, and they have OAS. Those are all Canadian income streams, and those income streams need to, or will be taxed by the Canadian government. So if you don’t file tax, they’ll start to say, well, you owe tax, we’re not going to pay the benefits. So my advice would be, if you have those streams of income, which most people who relocate…
From Canada, Mexico do have either an RRSP, they have a TFSA, they have, might have a pension and defined benefit or defined contribution, they’ve got OAS, and they’ve got CPP, they need to continue to file Canadian tax. Now, there’s no problem with filing Canadian tax, and people get in their head.
Well, if I don’t file tax, then I won’t have to pay. Well, the Canadian government, Mexican government have a tax agreement. So whatever you pay in Canada, you’re not going to pay in Mexico. It’s going to, it’s going to be the same tax regardless. And so it just makes your life a lot easier and your benefits from Canada a lot easier to maintain and to have flow easily by doing that.
CPP is the Canadian Pension Plan and OAS is the old age security, which for Americans would be called Social Security and there is no comparator in the States for CPP. In Canada, there are two government pension plans, in the States, there’s just the social services.
Emily: The total is bigger than our Canadian total, but it’s a different story.
Tell me please, speaking about annuities, so it’s considered income as well and can be transferred to other countries?
Todd: It can be transferred to other countries as well. The annuity is bought usually by an account company, either in the United States or in Canada, and it pays out monthly and that is considered income as well and it’s taxable as well.
Emily: Okay, but we were speaking about the case when people are living part time in Canada or in Mexico. But when people are relocating and living, say, full time in another country, they do not consider it. After some time, actually residents, tax residents of Canada, what in this case with pension and all other.
Todd: So they still, the Canadian government is still going to tax non residents. on their benefits from Canada. So you can be completely non resident anymore and still get CPP and OAS. My advice would be you’d still file tax, you won’t pay tax, you’ll just file it, and it’s just to keep your benefits flowing.
Emily: Okay, so regardless we are living full time and part time abroad, we as Canadians are responsible for filing every year. Our taxes to avoid actual problems with CRA and actually to keep our benefits on, correct?
Todd: That’s correct,
yeah. And there are cases I know of where people have moved, and this is more a Mexican situation, where they moved to Mexico and they’ve harmonized their CPP and OAS with the Mexican system and they do not file Canadian tax anymore.
But that harmonization has to be done through an immigration lawyer.
Emily: Harmonize, you mean they created some entity in Mexico and kind of paying taxes in Mexico for?
Todd: Yeah, so essentially what, so Mexico has its own social systems and its own pensions. So essentially what’s happened is they’re collecting the Mexican pension.
But in the CPP and the Canadian government and Mexican government have said, all right, you’ve got the person has enough years to collect the pension. We’re just going to use the Mexican pension. And there’s a cross sharing of funds between the 2 pensions and you only collect the Mexican pensions then.
Even though you contributed to the Canadian and you only pay Mexican tax. It works exactly like this. Your benefits are exactly or very, very similar. It just saves you filing tax in both places. I find for most Canadians they still want to maintain their Canadian benefits. Just because it, I find that people often in South America feel a little bit, Canadians seem to feel a little bit unsure about the system, and whether it’s as stable as the Canadian system, and so they often maintain their Canadian connections, but there is ways of just Moving everything to Mexico and just being a complete Mexican just like you were born there, but it’s more
difficult.
Emily: Thank you. Thank you very much. Speaking about OAS you mentioned Canadians who were born in Canada. I am a Canadian who was not born in Canada and the maximum is probably what I can get. It’s been 30 years of working. I mean, working. Time in Canada, what might be OAS kind of rules in case of immigrants like me?
Todd: So you have to have been in Canada at least 18 years from the year you were 18 to collect OAS. If you have been here less than 20 years and you move and relocate abroad you will not, they will take your OAS back. So you have to have been here more than 20 years to get your OAS.
Emily: So, I will be 30 years, see.
Todd: Yeah, you’ll be okay. You’ll get your OAS. No, you’re not going to get a full OAS. You’re going to get a proportion. So, if you know, you divide 32 by 40, that’s 80%. You’ll get 80% of whatever the amount is, sort of thing. This is a very good question and it’s a question where all of these and I think that’s one of the most important topics we’ve talked about.
It’s really important for you to go on to the CRA’s website and look up residency there and look up how you qualify for CPP and OAS, particularly OAS there’s more rules around OAS. CPP Canadians paid into so they’re guaranteed whatever they paid into, so to speak. But OAS is a different kettle of fish and everybody’s situation is unique.
The guidelines are broad, but everybody’s situation is unique. So, for example, we’re talking about people who are just snowbirds. That’s what I call it when they go for half a year or whatever. Every province has a different amount of time. You can snowbird in Manitoba. It’s six months in Alberta. It’s 183 days, which is Half a day, more than six months.
That sort of thing. And you want to really keep very accurate records about when you come and go. And there’s no forgiveness. And my experience with clients is there’s no forgiveness by the government in that you’re playing. was delayed two days. You’re better off coming back and forth with a few days on either side.
And that’s usually around medical benefits that people are concerned about, right? It’s, they, if you’re snowboarding, almost all snowbirds that I work with maintain all of their financials in Canada. They may take their funds out of U. S. banks or Mexican banks with, or, or debit machines with their credit card or their debit card, but they maintain everything in Canada.
The one exception is when people snowboard and buy a piece of property, and in that case, I think that’s more an Emily question about how you buy a piece of property and, and not be a resident, or maybe you’re a partial resident in Mexico. I don’t know how people
do that.
Emily: No, in Mexico, you can buy property when you are not resident.
By the way, the same in Canada. Foreigners can come to the country and buy the property. So,
Todd: I didn’t know if it was the same in Mexico.
Emily: It is the same. There is difference between actually in what area you buy in Mexico or when you sell if you foreigner or you Resident of Mexico, but in regards to buying property, there is no restriction in Mexico kind of everyone is welcome, but you know to to work with a lawyer broker and paying required taxes
Todd: Another thing Canadians should consider is if you’re going to completely relocate And break your ties with Canada, there can be a departure tax in Canada and that departure tax can be significant.
It can be like if you have a house and you’re selling your house, you can end up selling or having to pay a lot of tax on that property. So before you relocate, you want to, you want to speak to an accountant and you want to make sure that you know where you’re going and that you’ve saved the right amount of money.
And I find sometimes people have saved the right amount of money and then their departure. Their departure results in a large tax, which means they don’t have enough money. And so we want to make sure these things are all, all these things are checked off. And so you sort of need three people.
You need Emily. There’s no question. You should have a financial advisor to save and grow your money. And that’s going to prevent most people from moving to Mexico. At 27, they’re moving in Mexico at 55, 65 so they need to, you need to grow your money within the Canadian system tax efficiently and you need an advisor for that.
The third thing is you need to get an accountant. Now you can have an accountant in Canada just to do your taxes on a regular basis but before you move abroad you want a relocation, an accountant that understands relocation in that system and there are not a ton of these and you should be prepared to pay for them.
But once you get it out, once you get everything sort of squared away, it works really well.
Do I understand correctly that you are one of these advisors, accountants, who people can connect with when they consider the relocation? I’m an
advisor that helps a lot of people relocate, but I’m people sometimes confuse advisors with accountants.
I’m not an accountant and any, any tax kind of conversation that we’ve had here should be checked against an accountant because tax law changes and tax agreements between countries change on a regular basis. And so I know probably just a bit more tax information than the average person, but I know how to grow the money.
To get it to what you need to and then I know how to disperse the money to where you’re going to be, but the tax issues are different and they’re not investment issues. So, for example, many Canadians move to Arizona. I know how to get them their money. I know how to help them buy a house, that sort of thing.
I don’t know their tax implications. By making money in Arizona. Now I do know I have a better understanding of the States, but not the same as an accountant would. And Mexico is a different country and their rules change all the time. And just to do this by printing off a bunch of stuff off the internet and trying it like that.
It’s going to end up costing you more money than just doing it the right way. So if your plan is to move to Mexico or wherever, start off by saving as if you weren’t leaving Canada and save all the money you can, then hire someone like Emily, get an accountant, figure out your relocation thing. If you grow your money here, it’s going to work here and it’s going to work somewhere else.
Does
Does that make sense?
Emily: Yes, thank you very much for your insight, for your information. And actually in part two of my series, I’m invited to speak and answer the questions. question exactly the person that you described, the next kind of professional in a line of professionals who can help, it’s accountant, professional accountant with international taxation experience who is already working with people who are relocating to the United States, to Mexico, and to other countries.
It’s exactly what I’m advising my clients. The first step, go to a financial advisor. Be sure that you have enough finances and I will provide you information about cost of living and specifics like in this or other area. But I’m not going inside and I’m not allowed and it’s not in my interest to provide you financial advice.
But the next step it’s Taxation, International Taxation Accountant Specialist, which will be the next guest on my series of live streaming events, how to prepare for relocation abroad, part of full-time living. And I’m speaking about snowbirds and I’m speaking about people who are planning to relocate, maybe for the beginning, for part-time.
up to six months, three months, four months but plans might change after them. And for people who are actually considering full time living in every scenario, it might be a different strategy on how to do it correctly. And when we are speaking about exit tax it’s probably not exactly your question. I’m speaking, usually I’m providing this example to Canadians, you need to consider your exit tax.
And since I can speak about only generally, I would connect you with a person who would really tell you, based on your particular situation, how to deal, how to sell your house correctly. Because I’ve had a client who sold her house before she even applied. To the residency before she even was considering it and she was flying away.
Like, like, what are you doing? But okay, it was already late. And sometimes you need to work kind of backwards in order to fix the situation. So in order not to be in this situation. I’m teaching about how to prepare correctly, how at what step to connect with different professionals who would ensure that you will get maximum of your finances, that you will not trespass your taxation rules in regards to Canada or in regard to country you are going to and Mexico and I’m outlined it several times is the best case for us Canadians as well for Americans because we have dual taxation agreement.
We because actually we are a North American continent and we have a lot of agreements. I mean, our three countries, Mexico, U. S. in and Canada. And many rules that might not work for other countries speaking about banking, speaking about transfer of the money are actually less problematic when we are speaking about Mexico.
Todd: Yeah, I would say add two pieces. There is always a good deal. And so what I find often is people find what they consider to be a really good deal. So they got in a hurry and all of a sudden there will be another good deal down the road. You don’t need to hurry. And if you do hurry and you do your good deal, so to speak, and it doesn’t go the way you want, retrieving your money from other places can be very difficult and different and they have different costs, different fees and different title searches and that sort of thing. So you want to go, you want to do it slowly and use the right steps. And when you do have your accountant on, one of the questions that I will ask an accountant or a lawyer, I do a lot of wills and estate planning. I don’t do wills. I do estate planning.
A will comes from a lawyer. How should you buy a piece of property abroad? Should you buy it in your name? Should you buy it through a trust? That sort of thing. If you have Children, they’re going to inherit this. Inheriting things in different locations can be very problematic. So, you want to make sure your T’s are crossed and your I’s are dotted before you do these things.
So, a good example is if you bought a piece of property in Arizona and you have an Alberta will, Arizona does not have to honor an Alberta will. So now you have an orphaned piece of property there. What should you do? Should you have bought it in a trust or should you have an Arizona will? These are all things that should be decided before you buy a piece of property because your heirs aren’t interested in figuring this out.
Emily: Thank you. Very good advice and insights. And I can tell you and our listeners that speaking about property in Mexico and. I would advise anyone don’t rush even after you relocate, take your time living on rent, maybe live in different places before you would really engage in the purchase Because actually to sell in mexico It’s not so easy like in Canada, not so quickly, it’s possible, but it’s not so quick.
There is more tax implication when you’re selling and there’s a lot of new construction. There’s a lot of new development in Mexico. It’s not the last deal. It may be what, like a local broker telling you that it’s the best possible opportunity, but it might not be the case. But speaking about the real, what is good in Mexico?
compared with maybe Arizona. So when foreigners are buying property near the seashore or near the border, which sometimes it’s the same it’s actually all done through bank trust and this bank trust. And I know kind of from a personal experience. actually include the will. So it’s all done through the banking trust.
So you will have an estate and heirs kind of taken into consideration. It’s part of the package. But again, I can consult about this particular, you know, question. If more information is needed about property, about how to properly buy property or even rent property in Mexico, please connect with me because I already have a network of professionals, local professionals in Mexico and I connected with a legal team in Mexico.
And mission for this legal team, it’s actually to be on guard for foreigners to keep who come, you know to live in Mexico, really to help newcomers with real estate questions, with taxation questions, with, you know, business related questions, or maybe even personal security questions sometimes.
So don’t think that you will save. You might save money by doing it all yourself and just looking on internet information and getting all your information from YouTube, which is good for the beginning. But when you’re really considering relocation, I would advise to connect with professionals to build your financial plan, to have your taxation strategy clear.
Maybe after them to sell your home or maybe not. And again, every situation is different, but don’t do it on your own when it’s, you know, such an important step in your life, specifically when you’re retiring. Specifically when you kind of actually risk your life saving if you make some mistakes.
Todd: Yeah, I couldn’t agree with that more.
Take your time. And most people are trying to move south, I find, for two reasons, weather and finances. And your finances honestly will go a lot further south in Mexico, for example, than they will in Canada, but the place to try to save finances isn’t on introduction, introducing yourself to the country and buying real estate.
It’s on living and quality of life after you do the things correctly, because it’s very hard to reverse these things. It’s even like I have clients that we just sold a condominium in Panama. And, what came back from Panama was surprisingly less than what the condo sold for because there were taxes they didn’t know about and they didn’t use a lawyer.
They just wanted to do it cheaply and I think the cheaply often results in more expensive long term. Pay what you need to pay to get good advice and then save your money later on on your Lifestyle, which you will
Emily: do for sure. Absolutely agree with you. So to buy property in your country It’s quite kind of one box of work to sell it.
It’s a different kind of issue and keeps your taxation and all financial kinds of goals intact. You really need an international taxation advisor, and you need to connect with people who have experience of doing it and who have your kind of well being, financial well being and health in mind in order not to have stress, not to have, you know, losses, financial.
Losses and as well as, you know, personal disappointments and mistakes along the way. Thank you very much, Todd. And I believe that people would understand more now about this process. And people would connect with you. And I would like to outline again that Todd Schmekel regardless of living in Alberta, has licensed to serve clients.
In Alberta, British Columbia and Ontario, correct?
Todd: Correct. In fact, about a third of my clients are in each of those locations.
Emily: Or, or even by the way, they’re relocated to Mexico, you can still serve them, correct?
Todd: Oh, I have, I have many clients in South America, primarily Mexico, and also n like I said, Nicaragua, Panama, Costa Rica.
And some of them are snowbirds and some of them are permanent residents.
Emily: And the situation might change. Yeah, I mean, they might reconsider their plans. And again, there is a case when you need again to connect with your financial advisor and to check, do you have enough finances to do it? Maybe you need to wait, maybe you need to reconsider something in your plans.
So regardless of what we have, we think that, you know, with life, we already have financial education and we should have, but we cannot know all the rules. And the rules are changing.
Todd: Yeah, I agree. And it’s always good to have somebody else sort of give your, your thought process a once over sort of thing and point out some flaws.
Like, I’m not trying to stop people from relocating. I’m trying to help people relocate. But there are ups and downs and there are sort of some things to consider long term and short term in terms of financial planning and savings.
Emily: Yeah, different strategy. Different strategy. Let’s work together, Todd.
Let’s help our Canadians not to make mistakes. Avoid mistakes. And I will help them to land in the best kind of matching place for their circumstances. Because, again, there are more expensive places. In Mexico, there is less. There are places with, you know, hot climates and there’s places with more moderate climates.
For example, I prefer this kind of climate and the country is big with different regions, with different infrastructure and with different cost of living and even. Financial system, not the system would change but Mexican states, they are kind of different like American states. I mean, there are differences between states as we have in Canada, differences between provinces.
All should be considered and I’m learning a lot. I’ve been learning about Mexico for five years. I’m traveling, you know, every year I’m connecting with many local professionals and I’m still learning. So don’t do it alone. Do it with professionals. It’s what I would advise everyone who is considering relocation, even part time life abroad.
Todd: And if people want to connect or. If you have further questions, you can connect with me on or through Emily, whichever you’d like, and I have no problem answering some questions.
Emily: Thank you very much. Thank you, Todd, for your time. Thank you to our listeners who have time and attention to listen to all.
I believe that we provided a lot of value in our advice, a lot of food for thought. So don’t hesitate to reach out to ask questions, to connect with Todd Schmekel and with me, Emily Bron. Thank you and see you in a couple of weeks speaking about another topic, how to prepare for relocation abroad.
Bye.
My goal is to help my clients from the medical industry to create financial goals and strategize to achieve them. I help them to strategies in the most effective ways in order to save for retirement pay off mortgage, reduce debt, save for education and other goals.
✓ Creating financial goals and strategies
✓ Optimization of existing savings
✓ Budgeting
✓ Achieving financial goals
Relocating from one country to another is an exciting yet complex endeavor that requires careful planning and consideration, especially when it comes to your finances. For Canadians who are contemplating a move to another country, there are crucial financial factors to understand to ensure a smooth transition. From taxation to pension benefits, property purchases, and more, this podcast explores the key considerations that Canadians should keep in mind when planning a possible relocation.
In this episode, we have a special guest, Todd Schmekel, a financial advisor and partner at Kraft Berger LLP, a firm that specializes in cross-border tax and financial planning. Todd has over 20 years of experience in helping Canadians who move or invest abroad, and he shares his insights and tips on how to handle your finances when you leave Canada.
One of the biggest things to think about when moving abroad is your taxes. Different countries have different tax rules and deals with Canada. You need to know how your Canadian income and assets will be taxed in your new country. For example, if you get benefits like the Old Age Security (OAS) or the Canadian Pension Plan (CPP), you might lose some of them if you move away for good. Tax deals between countries can affect how much tax you pay and what benefits you can get.
Todd explains that your tax situation will depend on your residency status, which is not the same as your citizenship or immigration status. He says that you need to look at various factors, such as your physical presence, your social and economic ties, your intention, and your tax treaty status, to determine whether you are still a Canadian resident for tax purposes. And if you are a Canadian resident, you have to pay taxes on your worldwide income, no matter where you earn it. But if you are not a Canadian resident, you only have to pay taxes on your Canadian income, like interest, dividends, or rent.
Your residency status decides what Canadian accounts you can use from abroad. You can keep accounts like Tax-Free Savings Accounts (TFSAs) from abroad, but you might not be able to add more money to them if you stop being a Canadian resident. Registered Retirement Savings Plans (RRSPs) have their own rules for putting money in and taking money out, and you need to know these rules before you move. Also, make sure you can work with financial advisors who know how to help clients who live abroad.
If you want to buy property in your new country, you need to know the legal and tax rules. Todd noted that buying property in your new country can be a smart and lucrative investment, but it also requires due diligence and caution. Different countries have different rules about owning property, leaving it to someone, and planning your estate. Talk to professionals who know how to help people buy and sell property and plan their estate in other countries.
When you move away from Canada for good, you might have to pay a departure tax on some of your assets, like real estate. This tax can affect your financial plans a lot, so you should talk to an accountant to find out how departure taxes might affect you and how to plan for them.
Keeping filing Canadian taxes, even when you live abroad, is important to make sure you keep getting Canadian benefits and avoid problems with your Canadian income, like OAS and CPP. Filing Canadian taxes can also make it easier to get foreign tax credits and manage your money.
From Todds`s experience moving your money and protecting your interests when you leave Canada can be a complex and confusing process, especially for foreigners who are not familiar with the system and the language. That’s why you need professional help from experts who know how to deal with taxes and money in other countries. A financial advisor with experience in international taxes and money planning, and legal experts who know the laws of your new country, can give you useful advice and help you make smart decisions.
Moving from Canada to another country can be a great opportunity, but it also comes with many money issues that you need to plan for. To make sure you have a smooth transition and make the best of your money, work with experts who can help you with the complex process of moving your money and protecting your interests. Remember, everyone’s situation is different, so you need personal advice for a successful and happy international move.
Location: Toronto, ON, Canada, Email: info@emilybron.com
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