Moving Large Sums from Canada to Japan

[Butterball]

Yatsushiro, I know a bit about this only because my own personal experience is similar to yours, not because I'm especially educated about these tax issues.

First, I believe RRSPs are only a valid tax-avoidance instrument for residents of Canada. If your residency if going to change, you should find out what that will mean for your RRSP accounts, ideally before the fact. Properly handled, I believe you'll be able to keep your capital gains up until your residency change tax-free. Withdrawing from an RRSP while a resident of Japan may incur a 25% withholding tax (from the CRA, not the JTA). Worst-case scenario is getting slapped by the CRA for back-taxes and penalties some years down the line. I'm just painting a picture for you, not saying any one of these things is definite. Get professional advice, or at least call the CRA's help line about what to do. Don't trust your bank or whatever institution is holding your RRSP to give correct guidance about this.

Second, to be even more vague, because of tax treaties, in general you don't need to worry about being double-taxed in the sense of Canada & Japan both taxing you on the same thing. Taxes paid to the one country can be written off the taxes due to the other country.

If you're moving around June, I don't know whether you'll be considered a tax resident of Japan or Canada for 2024 -- the matter of when exactly one's tax residency changes is kept purposefully unclear by the CRA -- but because of the treaty, you will end up being considered a tax resident of one or the other, not both.

You'll be filing a Non-Resident Tax Return to Canada for your Canada-sourced income. You may have to do this the old-fashioned way, on paper & through the mail. Make sure the CRA, your banks & other financial institutions know you're moving and make sure they know you're a non-resident as soon as you get clarity on that question.

[Yatsushiro2]

Thanks Butterball.

I have read that Japan taxes an RRSP in the same way as an IRA (from USA) - only the withdrawals (income payments) are taxed.

I am going to try to find a tax professional who can provide exact answers though, as I read it on Reddit.

[Tsumitate Wrestler]

Are you sure liquidating your retirement savings to buy a house is the right call?

[Yatsushiro2]

Are you sure liquidating your retirement savings to buy a house is the right call?

We aren't. I guess I wasn't clear.

We have most of the money to buy the house in liquid cash already. We are about 3,000,000 yen short, so we will be borrowing that from MIL and repaying her in August when GICs in TFSA mature and become liquid. We do not plan to touch our RRSPs, or Corporate RSPs until later in life. We'll only dip into our TFSAs (tax-free savings accounts) a bit for this purchase.

We'll probably both work part time for something to do - for maybe 10 years or so - which will cover our very low estimated living costs. Our buffer of liquid savings will cover anything unexpected. Then we'll begin receiving income from Canada Pension Plan, Old Age Security, Corporate RSPs and convert RRSPs into RRIFs. We bothmay be elligble for a small pension from Japan at that point as well (if we work for 10 years). In fact my wife has about 5 years paid into the Japanese pension system already.

Besides, the house is perfect for us. 9DK (two toire) sitting on 250 tsubo. Very private. Massive garden potential. Right across the road from a major river, but high enough to avoid the flood zone. We are both extremely excited. We will be able to host many guests, both local and from abroad, at once.

[Tsumitate Wrestler]

Are you sure liquidating your retirement savings to buy a house is the right call?

We aren't. I guess I wasn't clear.

We have most of the money to buy the house in liquid cash already. We are about 3,000,000 yen short, so we will be borrowing that from MIL and repaying her in August when GICs in TFSA mature and become liquid. We do not plan to touch our RRSPs, or Corporate RSPs until later in life. We'll only dip into our TFSAs (tax-free savings accounts) a bit for this purchase.

We'll probably both work part time for something to do - for maybe 10 years or so - which will cover our very low estimated living costs. Our buffer of liquid savings will cover anything unexpected. Then we'll begin receiving income from Canada Pension Plan, Old Age Security, Corporate RSPs and convert RRSPs into RRIFs. We bothmay be elligble for a small pension from Japan at that point as well (if we work for 10 years). In fact my wife has about 5 years paid into the Japanese pension system already.

Besides, the house is perfect for us. 9DK (two toire) sitting on 250 tsubo. Very private. Massive garden potential. Right across the road from a major river, but high enough to avoid the flood zone. We are both extremely excited. We will be able to host many guests, both local and from abroad, at once.

Alright, best of luck! Remember as a non-resident you cannot add to that TFSA again, without huge penalties. So that tax-free space is gone forever.

You will get access to a NISA/iDeco here though as a resident.

You will have to decide how best to balance these retirement accounts, considering future taxation.

[Deep Blue]

My (Japanese) wife and I are currently planning to retire in Japan (from Canada) in June (approximately). We have found a home remotely and we are going to try to purchase and close it remotely. We've made an offer but the seller does not want to wait several months to finalize the deal. This isn't ideal, but I understand that it can be done.

It isn't that hard, we bought our house when we were non-resident in Japan and closed it while still living abroad. We did both view it in person (twice) before pulling the trigger though. Once the decision was made we were able to finalise it without coming back. There was a requirement the "important matters concerning purchase" are explained in person but the agents helpfully flew out to us to perform this task. I think they were delighted by the short overseas trip! This was 2014 so I don't know if the rules have changed.

We also got a full survey of the property and a written report (at our cost) to make sure they were not any nasties lurking in the structure or hidden issues - fortunately it came up clean and ten years later we've still problem free.

[Silversurfer]

What you need is professional financial advice from a certified accountant familiar with taxes. This will cost you money. The advice on this board is well-meaning and given in a generous spirit, but ultimately not the final word.

Anecdotally, I move large sums between Japan and other countries via wire transfer all the time. No real tax ramifications so far. I pay competent accountants to handle things for me. That’s my case. That’s what I do. You don’t have to do what I do or pay attention to what I have written here. I’m a complete non-professional. Avoid amateur blowhard advice givers, especially if they’re out of work and supported by their elderly in-laws.