Can I keep my stocks if I leave Canada?

Here we’ll primarily explore:

• Can I keep my stocks if I leave Canada?
• Should I keep my stocks?
• Are Canadian stocks a good investment?
• Pros and cons of investing outside of Canada

For those accustomed to offshore investing, the idea of being able to keep your Canadian stocks investment while living abroad might sound like a really good deal.

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).

This includes if you are looking for alternatives or a second opinion.

Some facts might change from the time of writing. For updated guidance, please contact me.

When making an international investment, it is particularly important to take regulatory regulations and tax effects into account.

Investors that are aware of such factors will be better able to make decisions and take advantage of whatever prospects are available. 

Investing in Canadian Stocks

For investors wanting a diversified investment basket, both domestic and foreign investors find investing in Canadian equities to be an attractive prospect.

Major leaders in the oil, financial, and tech sectors are among the many well-known businesses that call the Toronto Stock Exchange, the biggest stock exchange in Canada, home.

But what happens if you’re moving abroad, are you allowed to keep your stocks?

Can I keep my stocks?

Yes, this is permitted.

However, do note of important considerations like taxes.

Capital gains are not subject to taxation unless the stocks fall under taxable categories such as resource properties or Canadian real estate.

When you stop being a resident of Canada, you become subject to a deemed disposition rule, which means that your global assets are deemed to have been sold on the day of your departure at fair market value. 

If you have assets that you haven’t sold but whose value has improved since you bought them, you can be liable to a departure tax on any capital gains you made before leaving.

Some assets might be exempt from this considered disposition regulation, including tax-free savings accounts, registered retirement savings plans, and other designated investments.

You must disclose on Form T1161 when filing your tax return for the year of leaving Canada if the total fair market value of all your properties at the time of your exit goes over 25,000 dollars.

By filing a request with the Canada Revenue Agency, you might be able to postpone paying the departure tax until after you dispose the assets or go back to Canada.

It’s important to educate yourself with the tax laws in your new nation in order to prevent double taxation, as certain jurisdictions tax offshore investments.

Should I keep my stocks after leaving Canada?

Even though you can keep your stocks after you leave Canada, there can be significant tax ramifications to your choice, so you should plan ahead and give it careful thought.

Holding onto your equities could be a smart move if you are confident in the prospect and long-term growth of Canada’s strong sectors like technology.

However, considering the platforms that are accessible and the legal and regulatory environment in your new nation, managing investments from outside may provide extra challenges.

As an alternative, you might wish to look at investing options in markets that provide stronger growth potential or that are more compatible with where you’re moving.

Are Canadian stocks a good investment?

Pros of Investing in Canadian Stocks

• There are several benefits to owning Canadian equities, particularly in terms of stability. When compared to markets such as the US, the Canadian market is recognized for its greater resilience in times of economic crisis.
• A reliable source of revenue is provided by the regular dividends that many Canadian businesses offer. For investors in Canada, these dividends are taxed favorably.
• A portfolio can be made more diversified by exposure to important industries like mining, oil, and materials thanks to Canada’s rich economy.
• Managing investments in Canadian stocks is made simpler for investors by their knowledge with the country’s laws and economy.

Cons of Investing in Canadian Stocks

• Comparing Canadian stocks to US stocks, they have occasionally lagged as well.
• Furthermore, there is a risk associated with currency fluctuations, since they have the potential to impact returns for foreign investors holding Canadian and US currencies.

Pros and cons of investing outside of Canada

Purchasing Canadian equities even if you currently reside overseas might still be a wise decision, but there are a few key things to take into account:

Acquiring Canadian stocks puts you at risk of exchange rate fluctuations if you’re a Canadian living overseas. Your ownership of these stocks will lose value when converted back to your home currency if the Canadian dollar depreciates in relation to it. Your investment choices should take this risk into account.

Tax implications might be complicated. It’s possible that taxes apply to you in both Canada and your new country of residence.

You could only be able to trade Canadian stocks with a restricted number of Canadian brokerages or pay more for doing so, depending on where you live. It’s important to find out about the fees and limitations before trading Canadian stocks, even though some foreign brokers might allow it.

It is normally advised to keep a well-diversified portfolio that includes assets in both your home country and other international markets, even though Canadian stocks are still allowed to be a part of it.

Such can lead to exposure to a wider range of opportunities, while country-specific risks are reduced.

Investing in Canadian stocks might yield benefits provided that you possess a thorough understanding of the country’s economy and stock market.

Making wise investing decisions can be aided by your knowledge of the industry and particular businesses.

Pained by financial indecision? Want to invest with Adam?

Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.