In my experience, it is hard to find a US brokerage that will hold a taxable (called “non-registered” here in Canada) account for a Canadian resident. So when you move, you’ll likely by moving your US taxable investments to Canada with you. The good news is that it’s easy to find a Canadian brokerage that will hold this for a US citizen, and provide you with the tax documents that you need to do both your Canadian and US taxes.

This article will just cover how to move US taxable investments to Canada. Moving retirement accounts (e.g. an IRA to an RRSP) is significantly more complicated and needs to be done very carefully. I’ll cover that in a future post.

Step 1: Track the Adjusted Cost Base for your Holdings

This warrants its own post, but it’s important to track the adjusted cost base (ACB) of your non-registered investments from both the US and Canadian perspective. For the US side, the ACB is based on the price you paid when you bought the assets. On the Canadian side, though, the ACB is set to the value of your assets on the day you move to Canada, and then continues to adjust as additional sales or purchases are made.

Note that this is the day you move to Canada, not the day your account moves to Canada, thus you’ll almost certainly need to track it yourself, rather than relying on your Canadian brokerage.

A popular tool for tracking this is the aptly named adjustedcostbase.ca. If you use this, I strongly encourage you to backup your data whenever you make updates, just in case.

Step 2: Prepare your US Holdings for Transfer

If you hold individual stocks or ETFs already, you should be OK. It wouldn’t hurt to check with the Canadian brokerage you’re going to use (see step 3), but unless you’re holding something unusual it shouldn’t be an issue.

If you hold mutual funds, you’ll want to convert them to their ETF equivalents, if possible. The reason for this is that you likely won’t be able to hold US mutual funds in your Canadian brokerage account. So if you’re invested in something like VTSAX, you’ll want to contact Vanguard and ask them to convert it to the equivalent amount of the ETF version — VTI. This won’t be a taxable event.

If you hold mutual funds that don’t have ETF equivalents, your options are limited. You could check with your Canadian brokerage about holding the mutual fund, but the answer will likely be no. In that case, your best option may be to sell the fund and buy a similar ETF, but this will be a taxable event.

And just to be clear, even though US mutual funds are typically off-limits for Canadian residents, the same rules don’t generally apply to US ETFs. In fact, because they have lower fees, US ETFs are popular among savvy Canadian investors without any particular ties to the US.

Step 3: Open a Canadian Brokerage Account

I discuss this in more detail elsewhere but, in brief, my recommendation is usually Wealthsimple or Questrade. Both of these brokerages periodically offer a sign-up bonus (e.g. some % of cashback on the incoming assets) so it’s worth checking both when the time comes to transfer your account.

When you create your account, you’re going to set up a non-registered (meaning taxable) USD account. By keeping the account in USD, you’ll both have a place to transfer your US holdings into and make it easier to avoid inadvertently buying something (e.g. a Canadian ETF) with PFIC filing requirements. This does open the door to potential currency risk but, in my opinion, the advantages outweigh the risks in terms of transferring in a US taxable account.

You likely won’t be able to make your Canadian brokerage account until you have a Canadian address, but that’s OK. You shouldn’t have any trouble initiating the transfer after you move, so long as you do not preemptively update the address on your US brokerage to something Canadian. If you do this, the brokerage could potentially freeze the account or force a quick liquidation. Thus, rather than updating the address on your US account, my advice would be to simply set up a Canadian brokerage once you have an address, and then initiate the transfer from your US account. Once the transfer goes through, you can download your historical statements and close the US account.

Note: if you were looking to set up a non-registered brokerage account in Canada from scratch (meaning you weren’t transferring in US assets) I might recommend a different approach. For example, you could potentially set up a CAD account and invest in individual stocks to avoid PFIC requirements, depending on your goals and other asset allocation.

Step 4: Initiate an In-Kind Transfer

This is where we actually move our US taxable investments to Canada. The exact process will depend on the brokerage, but the key is to do an in-kind transfer. That means your US brokerage will transfer the holdings to your Canadian brokerage, as opposed to selling them and sending the cash. If you do it as an in-kind transfer, it is not a taxable event. If you liquidate your US holdings and send the cash, it’s taxable.

Here are the steps for Questrade.

Here are the steps for Wealthsimple.

After you initiate the transfer, it takes a while (around 20 business days). Because it’s an in-kind transfer, though, you aren’t out of the market during this time.

Final Thoughts

That’s it! Moving taxable investments from the US to Canada is quite easy (although a bit slow). And if you’re already invested in ETFs (or mutual funds with ETF equivalents), you should be able to do it in a way that doesn’t trigger any taxable events. If you have any questions, though, please don’t hesitate to post them in the comments.

Two other things I want to mention:

1) Exit Tax — Canada charges an exit tax when people who were Canadian tax residents move away. For your taxable account, this tax would be on the gains since you moved to Canada. In other words, Canada treats your taxable account as if you bought it the day you moved to Canada and sold it the day you moved away.

2) Estate Planning — This is definitely outside the scope of this post, but as you transfer your assets from the US to Canada, you’ll need some sort of Canadian estate plan to cover these assets. A quick and dirty option if you want to keep your US estate plan intact and add a separate will for your Canadian assets could be something like MyExpatWill from LegalWills. This undoubtedly wouldn’t work for all situations, but it may be a good solution for some.