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The Business of Moving to a New Country

March 19, 2016

travel-money-passportMoving to a new country may seem like it’s a life full of fun and adventure, but there is a lot of work to do, including getting administrative and financial matters in order. Here are a few things we’ve been doing this week to get ready for our move.

Passport

A passport is an official document issued by a government, certifying the holder’s identity and citizenship and entitling them to travel under its protection to and from foreign countries. Most Canadians are familiar with the blue passports with which they use to when they go on vacation abroad.

Because military members are government officials they are entitled to carry a green “Special Passport” for the time they are serving outside the country. Family members (spouse and children under 21 years of age) of Canadian Forces members are also entitled to carry a green passport. Some military positions abroad require Forces members to hold red “Diplomatic” passports.

For our posting to the England in 2013, we applied for and were issued green passports. Green passports are required for our move to the U.S. Fortunately we do not need to make any passport changes for our move to the U.S.

Visa

A visa is an endorsement on a passport indicating that the holder is allowed to enter, leave, or stay for a specified period of time in a country. There are many different types of visas. Some countries require you to have a visa just to visit for a few weeks (tourist visa). Other visas allow you to visit for several months as long as you do not work or earn income during your stay. Some visas allow you to work as a volunteer for room and board but not earn income. Student visas allow you to study at a recognized school. As far as I know, every country requires you to have a visa to work or earn income in that country. There are also different types of special visas for visiting foreign Forces and of course, there are diplomatic visas.

We had to apply for NATO visas to live in England for the length of our posting. We will also have to apply for NATO visas to live in the United States for the length of our posting. We cannot apply for our visa until we have a home address in the U.S. so the application process will start after our house-hunting trip.

Regardless of the type of passport and visa we have, we are considered guests in a foreign country. We MUST abide by all laws and regulations of all levels of government: municipal, state/province, and federal.

Financial History

Generally speaking, when you move to a new country your financial history (credit score) does not follow you. You may not be able to apply for a credit card. You may have to pay large (possibly refundable) deposits for utilities, cell phone and/or rent.

Most employers will provide a “letter of employment” that states the duration of your employment and your salary. It can be used to open a bank account and sign a lease or rental agreement. However, businesses are not necessarily required to accept the employment letter as proof of a positive credit score.

It is important that all adults (even older teenagers) have some type of bill (telephone, cable TV, etc.) in their own name to establish a positive credit score in the new country. Here in England, I have the utility bills in my name. My children each have their own bank account and a cell phone in their name.

If you have lived or worked in the “new” country previously, or visited the country long enough to open a bank account or pay monthly bills, you may already have a financial history. (Let’s hope it’s a good financial history!). There may be some reciprocal agreements between two countries or financial institutions that allows for financial score information to be exchanged. Each case must be looked at individually.

Banking

We must open bank accounts in each new country in which we are posted. We opened accounts here in England and we will open accounts in the United States. A U.S. dollar account at our Canadian bank is not sufficient for military families living in the U.S. The account must be at a U.S. bank.

Some Canadian banks and financial institutions have divisions in other countries. For example the Bank of Montreal operates as BMO Harris Bank in the United States. HSBC has an international banking centre and operates in many countries around the world.

It is important to pay attention to fees regarding international transfers. Many banks will charge for transferring money from one country to another in addition to paying fees on foreign exchange. Note that cheques drawn on Canadian bank accounts will probably not be accepted in foreign countries.

Income Tax

Income tax obligations to Canada are based on an individual’s residency status. You need to know what your residency status is so that you know if you are responsible for filing income tax in Canada. Generally speaking, government employees (including military) posted outside of Canada are considered factual or deemed residents. Canadian Armed Forces members have Canadian income tax deducted from their pay and must file an income tax return by 30 April every year.

This may not be the case for family members because residency status is determined for each individual (not couple or family). The individual’s whole situation and all the relevant facts must be considered. If you are moving out of the country, contact Canada Customs and Revenue Agency (CCRA) for advice on how to determine your residency status.

If you, as a spouse, decide to work outside Canada, it may affect your residency status. You will also have to file an income tax return in the country in which you are living/working AND in Canada, reporting your worldwide income. You may be able to claim a foreign tax credit if you paid foreign taxes on income you received from outside Canada and reported on your Canadian tax return. Canada has tax treaties with a number of countries (including the U.S.) so it is advisable to check the CCRA website.

Note that some countries consider certain Canadian held investments (TFSAs, RESPs) or Canadian property as a possible tax shelter and you may be required to report ownership and interest earned on these investments.

Since each individual situation is different, I strongly recommend consulting financial expert (not your cousin Donnie who “knows a guy”) such as a tax accountant with experience in cross-border/foreign residency and taxation.

Wills and Powers of Attorney

Generally wills and powers of attorney (POA) that are legally valid in Canada, will be valid in a foreign country should you die or become incapacitated. However, they may not cover any investments or properties you may own in a foreign country. Consult a legal professional (again, not your cousin Donnie who “knows a guy”) to help you determine if you need a basic will and POA drawn up to cover these matters.

Remember that the executor of your estate or whoever is named in your POA must obtain a valid passport (and possibly visa) and be able to travel to the country in which you need care/have died. In some cases your executor may have to be bonded (i.e. prove he/she does not have a criminal background including fraud and theft) before he/she can perform his/her duties.

Life Insurance

Some life insurance policies are automatically voided when you take up residence in a foreign country check your policy and speak to your insurance advisor (again, not your cousin Donnie who “knows a guy”). You may decide to cancel or amend your current policies.

There’s more administrative work where this came from. We’re just getting started!

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