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Comment by ne0flex | Hacker News Reader

Being a Canadian, I started a tax-free savings account "TFSA" (similar to a US Roth IRA but with way less restrictions)when I turned 18 and was investing heavily in it. A few years later I would get a green card and move to the US and didn't touch the account afterwards except make a few rebalances here and there. My brokerage asked me to update my information and asked me if I was a "US" person to which I answered yes because of my greencard. A little while later I get a notification that I owe US taxes... on an account that I opened before I had anything to do with the US and that is considered a tax-free account in Canada.

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Yes, most people in this situation liquidate them. Dual US / Canadian citizen here living in Canada.

While you can keep a TFSA around you'll end up paying taxes on the gains back to the states as well you need to file additional paperwork come tax time. If your TFSA gains exceed the filing requirements it might still be worth keeping. Historically you needed to file a TFSA as a foreign trust however recently the IRS has deemed them a foreign disregarded entity which reduces the filing requirements thus making it cheaper.

In your situation you could open up a US based fund with that money and Canada won't care so that's likely your best option.

its clear how your situation could be abused. i am not suggesting that you have done this, but that it creates an interesting loophole for the wealthy by harboring investements into other countries capital.

Lets say you are a 0.1%er who happens to live in canada. Invest everything on canadas terms, then move to the USA. receive foodstamps, welfare checks and the likes for XX years. Go back to canadian citizenship and cash out. Darn, looks like tax payers supported the ultra wealthy while they just got richer eh?

The TFSA is not something that can be abused by a high income individual.

It has a $6,000 yearly contribution limit.

Canada, if anything, has an investment tax scheme which favours middle class investors. For someone making millions of dollars Capital gains tax is tied to your income tax bracket in Canada so it is very likely that you would end up paying higher taxes.

Canada also has a tax and income information sharing with the USA, so someone making big bucks in investments in Canada could not benefit from means tested programs in the US.

The scenario you proposed is entirely impossible.

> It has a $6,000 yearly contribution limit.

I haven't looked into the exact details of Peter Thiel's IRA, but those have a contribution limit too, and look at all the press recently about him "abusing" [0] that.

[0] I can't claim to know enough of his specific situation and the exact regulations to have an opinion on whether that's a fair characterization.

He bought paypal stock privately when it was almost worthless, which the roth ira allowed, then the stock exploded. I mean, sure, if you can tell the future you can do what Peter did.

I don't have an axe to grind against him or what he did to be clear.

My point is that he bought private stock, something that is privileged, so it's not entirely accurate to say that all people benefit from a roth IRA equally.

I personally don't think that the average person has the ability to take similar advantage, even though they both have the same limitations on paper.

> you are a 0.1%er

> move to the USA. receive foodstamps, welfare checks and the likes for XX years

Does this seem like a good use of your time, as a 0.1%er? Collecting foodstamps?

The general advice is to liquidate your TFSA, ISA etc. before moving to the US.

TBF that is within expectations. You’d have similar issues the other way around or between different countries. It’s rather frustrating (especially because of the different standards in tax freedom) but unsurprising.

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