I recently tried to restart buying mutual funds through HSBC. They called me after I placed my order and said according to Canadian rules, I am not allowed to buy mutual funds any longer. The new regulation apparently took effect last November. I’ve got my ARC through my wife, and several investments already sitting in their accounts. I’m also a non resident of canada for going on 14 years.
I wonder if anyone else is experiencing the same situation. I for one, don’t believe that revenue Canada has issued such a ruling. I have not found anything on the internet stating the same. I assume the person I am dealing with is a “lazy ass” and doesn’t know where to confirm her findings.
Update
From my inquiries,
Canadians can not buy mutual funds outside Canada(HSBC TW and HSBC HK/Taiwan Cooperative Bank/CITI)
Can not buy asset linked insurance outside Canada (HSBC TW and/Taiwan Cooperative Bank/CITI)
Can not open online brokerage accounts outside Canada. (ETrade said no)
Canada is one of the most financially regulated countries in the world. It’s amazing how many Canadian related investments become more complicated for non residents so it wouldn’t surprise me if there is some truth to what the agent told you. Mutual funds are regulated by the MFDA in Canada and they decide who is a qualified mutual fund dealer. If you don’t reside in Canada there may be some funds you can’t buy through certain schedule II banks like HSBC. You could try buying a similar fund, or if you really want that specific fund you could try going through a different mutual fund dealer or one of Canada’s schedule I banks. For example, ask an agent at the Royal Bank if they can buy that fund for you. If they also say no, well hey that’s Canada for ya.
I recently tried to restart buying mutual funds through HSBC. They called me after I placed my order and said according to Canadian rules, I am not allowed to buy mutual funds any longer. The new regulation apparently took effect last November. I’ve got my ARC through my wife, and several investments already sitting in their accounts. I’m also a non resident of canada for going on 14 years.
I wonder if anyone else is experiencing the same situation. I for one, don’t believe that revenue Canada has issued such a ruling. I have not found anything on the internet stating the same. I assume the person I am dealing with is a “lazy ass” and doesn’t know where to confirm her findings.[/quote]
It makes total sense to deny non residents from buying. If you are buying Canadian mutual funds as a non resident, you are still required to pay Canadian taxes on the capital gains. After all, Canada, unlike many countries, taxes its citizens on worldwide income. However, most non-residents don’t fill in tax returns.
Most Canadians in Taiwan that have minimal ties to Canada (no property, cars, second homes, investments in Canada etc.—having a bank card is ok though) become automatic non-residents after being in Taiwan 6 months (180 days) and become a Taiwan resident for tax purposes.After reaching this status, most non-residents are not required to fill in tax returns because they are non residents and are not making a Canadian income. However, if you are maintaining investment accounts (not freezing them),are making profits from these investment accounts, and not filling in income tax forms and paying capital gains taxes, that is tax evasion.
My advice for non-residents is to not increase your ties by having such investment accounts. Or if you have such assets before coming to Taiwan or another overseas country, you should divest or sell them (e.g., sell your house, sell car, freeze RRSP contributions, freeze RESP contributions etc.)
Seems to be some misunderstanding here. Buying Canadian funds is not the issue.
HSBC Taiwan is saying Canadians can not buy mutual funds from them. They claim the mutual fund house insists this is this is according to Canadian regulations,similar to US restrictions, and the mutual fund company’s policy.
That said the same mutual fund company said come on down and open an account with them. They have no issues selling mutual funds to Canadians residing in Taiwan, with ARC, HOUSEHOLD REGISTRATION and Passport.
I’ve also consulted with a big four CPA Firm, scoured the internet, and asked the CTOC. No indication any such regulation exists. I imagine this would be a significant development for Canadian expats, so would be fairly well publicized.
[quote=“ski”][quote=“dan2006”]Or it could be HSBC pulling made up regulations out of their a**
Call and ask them to send you a letter detailing the regulations in question. Did you ask to speak to your RM at HSBC yet?[/quote]
Very much suspect this is the case. I asked for them to send the policy via email. No one could help.[/quote]
I got this alot with HSBC in the past. They say there is a policy but if you ask them to send it to you, you just get apologies.
I would go into the branch and see the relationship manager who can call them to see what the scoop really is.
Well, it looks like there is some truth to this. Canadians are now left out in the cold when it comes to investing outside Canada. I’ve not located the actual regulation, but I think it is part of FINTRAC, the Canadian laws on Terrorist Financing and Anti Money Laundering.
I’ve been in touch with HSBC TW, CITI Bank and HSBC HK (Offshore), Etrade.com (HK). All have confirmed according to their compliance department, Canadians can not buy mutual funds through them.
Taiwan Cooperative bank said, yes, but I assume, the fund houses will veto that. As they are required to follow the same rules, and will not sell. Allianze, Pimco, Black Rock. …See the pattern.
So, in short, the Fucking Canadian Government has injected itself into our financial affairs half way around the world. The regulations are even more strict for Canadians than Americans, who can buy mutual funds, but must declare the investments to the IRS.
This leaves Canadians with 2 options.
Invest under your spouses name in Taiwan
Invest in Canada and end up liable for your Taiwan income to become Taxable. Investments are a quick way to lose non residency status.
Just a general comment… You hear people complain a lot about the lack of regulation in the financial industry and talk about how it’s going to bring down the whole system, and then turn around and complain when a country like Canada institutes the exact types of financial regulation that those same people were hoping for in the first place. :loco: There may be some small inconveniences when it comes to what Canadians can and can’t buy, but it’s those same inconveniences that helped shelter our banking system during the last crash, and what will possibly save us when the next inevitable one comes.
I’m an investor living outside Canada, no issues at all. Who wants to buy mutual funds these days anyway? ETF’s do exactly the same thing at a fraction of the cost. Just saying…
I do invest in stocks regularly from outside Canada and I was deemed a non-resident years ago. However, I had already had my brokerage account set up before I left and once deemed a non-resident they changed the account type to non-resident. They don’t allow me to buy mutual funds or buy on margin, and they take 25% off the top on dividend payouts, but as far as selling stocks it’s all mine and I don’t get dinged any capital gains tax.
I’ve looked into other non-residents setting up these accounts though and that seems significantly more difficult. I guess since mine was already open before I left I got lucky.
Setting up a foreign brokerage account is no more difficult than setting one up as a Canadian. I have two, with TD Ameritrade and Interactive Brokers and it couldn’t be simpler. I’m not sure why you can’t trade on margin but it doesn’t have anything to do with your residency. Margin requirements are determined by the strength of equity within the account and international accounts are just as eligible as any other for margin. As long as you meet the requirements, full margin and trading authority for options, futures, bonds, and mutual funds gets approved in minutes. My guess is you have either not applied and filled out the correct forms, or the brokerage house you are using is a bad one. If you stick with one of the more established ones, I’ve never heard of anybody getting denied a margin account.
If you want the best full service brokerage house and do dividend trading I’d suggest TD Ameritrade. Not only do they have nice looking software, but they offer DRIP plans that buy partial shares and don’t charge commissions on dividend re-investments. If you have third party trading software already and only need to execute trades yourself, Interactive Brokers has much cheaper commissions. Both are a breeze to apply for as a non Canadian resident.
FYI, if you want to stop getting ‘dinged’ 25% for dividend payments, fill out a form called a W8-BEN. It will be available for download with whatever brokerage house you use. It’s a form that states you are a tax payer in another jurisdiction and they can no longer withhold any of your dividend payments. ( And yes you get all the previous withholdings back once the form is signed ) Again, this isn’t because your residency changed. Dividends are withheld for everyone in every country until you fill out that W8-BEN. So is a portion of sales from ETF trading so even if it’s not related to dividends you’ll have to fill out that form so your ETF disbursements are fully yours as well.
Brent, I just confirmed with TD Waterhouse that you are incorrect in your information concerning dividends and trading on margin if you have a Canadian brokerage account (if it’s an international brokerage, well I don’t know, but that wasn’t what I was talking about anyway) - even if you fill out the W8-Ben (which I did, and the CRA is now asking all non-residents to do so). In fact, I even linked directly to this thread and the resource officer there indicated that “Taipan1975 is correct on all points” (and I hadn’t even mentioned that was me).
Are you sure about this? My understanding was that you owe tax in the US on US dividends no matter what, but that if the US has a tax treaty with your country of residence, it may be reduced or exempt – so the purpose of W8-BEN is to establish whether that’s the case. Taiwan has no tax treaty so I think anyone resident here is going to owe 30% to the IRS.
Please correct me if I’m wrong – I’m avoiding US securities completely, on this basis.
Q08. How can I perform mutual fund transactions at HSBC (Taiwan)? Are there citizenship restrictions?
A. Clients can invest in mutual funds in person at branches, via phone banking service and by personal internet banking at HSBC(Taiwan).
If clients want to invest in mutual funds through HSBC (Taiwan), they must meet the following conditions:
Must have opened demand deposit and trust accounts at HSBC (Taiwan) (if the investor is a minor (under 20 years old), the investor requires approval from a legal agent and must open demand deposit and trust accounts at HSBC (Taiwan))
Must not be a US citizen (please see HSBC (Taiwan)’s general agreement for the definition of a US citizen)*
Must not have Canadian citizenship or reside in CanadA. *When aliens invest in mutual funds, they must abide by the tax laws of their respective countries. When necessary, they should pay taxes directly to their country of citizenship.
Must not have Canadian citizenship or reside in CanadA. *When aliens invest in mutual funds, they must abide by the tax laws of their respective countries. When necessary, they should pay taxes directly to their country of citizenship.[/quote]
That doesn’t seem right. You can have Canadian citizenship but be deemed a non-resident by being a resident of another country and by removing your attachments to Canada (freezing mutual funds, RRSPs, RESPs, selling houses, car etc.). If you are a non-resident of Canada and have residency in another country such as Taiwan, then you have no requirement to file taxes or report worldwide income in Canada, including capital gains in Taiwan. I think HSBC is wrong here.
I was surprised when I applied to open a trading account at HSBC today to get the same reply regarding HSBC’s policy not to open trading accounts for Canadian citizens. I explained I’ve been a resident of Taiwan for over 20 years but I was told it had to do with my citizenship, not my residency. I’m still confused as to the reason behind it. If this is a Canadian gvt decree, then why have I been able to trade mutual funds from my HSBC Hong Kong account all those years.
On another note, Brent, are you sure the W8-BEN form allows me to retain the 30% tax on dividend income? I believe I have filled out and submitted that form, but still get the 30% tax withheld. I invest through etrade. Do you have any experience with them?
[quote=“Taipan1975”]Brent, I just confirmed with TD Waterhouse that you are incorrect in your information concerning dividends and trading on margin if you have a Canadian brokerage account (if it’s an international brokerage, well I don’t know, but that wasn’t what I was talking about anyway) - even if you fill out the W8-Ben (which I did, and the CRA is now asking all non-residents to do so). In fact, I even linked directly to this thread and the resource officer there indicated that “Taipan1975 is correct on all points” (and I hadn’t even mentioned that was me).
Just so all the Canadians out there know…[/quote]
I’m not sure it matters what tangent you were going off on with your already existing Canadian brokerage account and how they changed it on you when you left Canada. The thread was about buying Mutual Funds from outside of Canada. I couldn’t have been more clear that I was talking about non Canadian residents opening international brokerage accounts, which I have. Also, things have changed dramatically in both Canada and the US in the past few years. Both countries have been introducing laws that make residents file things they never used to have to, and get money withheld that never used to. And far more than that. New laws defining what residencies of managers can invest for what residency of clients, for types of assets and funds that can and can’t be purchased, how taxes both domestic and potentially across borders are treated, how dividends are treated and withheld, reporting and money laundering laws, updating your residency status and account settings more often, increases in confirmations of trade transactions, commissions and fees treated differently, even down to what data feeds non residents can pay for.
