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Old 04.05.2019, 20:03
klausenhauser klausenhauser is offline
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Re: Lump sum payments of Pillar 2 and 3a after leaving to Canada

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Thanks for the interpretation... that is kind of what I thought, but I was not sure how to interpret it.

Do you know if Canada taxes foreign pension plan lump sums as normal income or if there is a special (lower) tax on it? If it is taxed as normal income, then that would pretty much negate any tax advantage of using the 3rd pillar here if one's intention was to move to Canada.

About the being in Thailand or elsewhere, I guess that, legally, one would have to declare oneself resident in this 3rd country and pay taxes on pension income there. I don't think there is a way to be a resident of no where for tax purposes... if so, it is probably only available to people with much deeper pockets (to pay tax lawyers) than me!

How Canada taxes pension income... I'm not up to date but I think it counts as regular income. If i remember correctly if you have a Canadian RRSP (pillar 3 equivalent) it is pretty much a tax shelter. You get a tax deduction upon buying in to your RRSP but you get taxed the same when you cash out. The benefit is your earnings are tax free and when you cash out, we are assuming that the RRSP is your only income so you will be taxed at a much lower bracket.

I cannot see how the Canadian government will treat a 3e any differently. The treaty will just allow Switzerland to take but what is theirs, then Canada will tax the remaining to their rate, taking into account that you already paid a few percent to Switzerland.

It will still benefit even if youre moving back. Just cashout your 3e pillar here and then transfer back to Canada before retirement, that isnt income so not taxable. Re-invest back into an RRSP in Canada.
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