What Happens To Your CPP & OAS If You Retire Abroad?

hi my name's adam welcome to the channel thanks for joining us today today we're going to talk about retiring abroad and specifically looking at oas old age security benefits and cpp the canadian pension plan so we're not going to dive into other topics in this video but retiring abroad we're going to cover those in future videos um we've had a lot of feedback from our viewers from you guys asking for you know expat stuff retiring abroad what happens if i travel all this kind of stuff as far as you know what happens to your government benefits what happens to rrsp or defined benefit pension plan uh taxes all that kind of stuff so we're gonna start over the next few months doing a top or doing a video every say a week or two on retiring abroad traveling abroad spending time outside of canada in retirement or even before retirement what that looks like how it works and also if you have accounts elsewhere so let's say you spent some time in the united states and you built up a 401k you move back and retire in canada what do you do with that account so we're going to cover that as well in a future video but today's video we're going to talk about old age security and cpp if you're retiring abroad can you still get these benefits if you can how much is there withholding tax does it depend on what country so we're going to cover all of that in this video before we jump into the content if you haven't already subscribed to the channel please hit the subscribe button it takes one second join our community we release three brand new videos every single week on financial retirement estate and tax planning for canadians whether you're living in canada or abroad and again a lot of our content covers people outside of canada as well just pure financial planning tax planning strategy so please join our channel hit the subscribe button and at the end of this video if you enjoy it if it helps you out in any way please share with a friend or hit the like button we really do appreciate it thank you so a lot of you that we talk to whether it's through comments or have set up a call with us we're doing planning for whatever it is a lot of you have talked about retiring abroad so not just traveling i mean a lot of you talk about you going down to florida or phoenix or somewhere hot in the winter time to get away from the canadian winters i get that but what happens if you actually retire abroad and actually move whether it's the states or elsewhere a lot of you lately we've been talking to or looking to buy in portugal retire own portugal whether it's a vacation home some of you some of you are looking to relocate there permanently we talked to someone yesterday that retired being a nurse in ontario and is retired permanently out to the philippines so we see people kind of going everywhere and now i will say this depending on the country that you relocate or retire to the tax treaties are going to be different okay so canada has tax treaties with many countries about 50 actually so you know quite a few countries now those tax treaties help with making sure that you get your benefits like oas and cpp it also helps with you know tax treaties as far as you know where you claim the taxes so for instance in the u.s if you're living in the u.s you would file a u.s tax return first and then do a canadian tax return if needed if you have income from canada but you get a credit for any taxes that you pay in the u.s so again we'll cover a lot more of this in detail down the road we're also going to get attacks at a cross-border tax accountant on the channel as well and share their thoughts as well on on strategies concepts and what they see people bump up against when looking at tax border stuff so let's look at oas first so old age security so old age security is a benefit pay to canadians whether you paid into it or not it's based on time spent in canada okay you can start collecting your cpp as early as 65 and you can delay it all the way up to age 70 and we've covered other videos in oas um if you delay it's it's increased by 0.6 percent every single month that you delay that till age 70. so there is a benefit to delay a financial benefit but again how it fits into most your financial plans most of our clients do take it around 65 they might delay their cpp but so for the oas 65 is the earliest you can delay up to 70. but what happens if you retire abroad do you still get your oas so in general terms as long as you've spent at least 20 years in canada since the time you were 18 that's the threshold okay so from the day you turned 18 until now have you spent at least 20 years in canada and if the answer is yes then you will be able to collect your old age security if you retire abroad now for most of you you probably qualify into that you've lived here for at least 20 years you hit retirement you know others cost a living or whatever it is you want to spend time and retire elsewhere outside of canada so you would meet the threshold and your oas payments would come to you and we'll go into this a bit more detail in a second now what happens if you didn't spend 20 years in canada well you still may qualify so if you lived or worked for a company if you worked abroad for a canadian company that could count as credit towards those 20 years or some countries also have a social security treaty in place with canada okay and we'll put a link below to that but there's about 50 55 countries that have a social security treaty with canada meaning that if you've paid into their social security program it's credited as if you've paid into canada now with the social security agreements with other countries there's obviously some fine print that you need to read in there if you fall under this category do your research we're not going to cover all the details in this because there's too many countries and everyone's a little bit different but if you haven't met that 20-year threshold in canada but you worked in a country where there's a social security agreement with canada take a look you probably will get credit for that you hit that 20-year uh requirement again if you're unsure about this the best place to reach out to is a my service canada center and they'll be able to walk you through do the calculation and make sure that you're going to be able to qualify for old age security if you retire abroad now your old age security payments are going to work much like they would if you retired in canada so if you qualify for oas retiring abroad your payments will work the same as here as far as you know if you were here for 50 or 20 of the 40 years in canada uh leading up to retirement you would get a 50 if you were if you lived in canada your whole life from 18 to 65 you're gonna get the maximum old age security benefit okay so that's that's all the same so as far as how much you get it will work out to the same as if you were retiring canada versus retiring abroad again the big factor is making sure you hit those 20 years so that you qualify if you retire abroad so quickly looking at old age security payments and taxes so what kind of taxes do you have to pay if you retire abroad is there more taxes to pay is there withholding tax so in general oas payments will just be added to your worldwide income okay so if you get paid you know five thousand dollars in oas benefit that's added to your income just like if you were retiring canada so the same thing apples to apples okay now some countries have a tax treaty with canada so let's say for the us for instance let's say you retire down to florida okay or phoenix or somewhere hot that's much nicer in the winter than canada then the u.s has a tax treaty with canada and there would be no withholding tax now remember withholding tax is not a penalty tax it's just they're withholding some of the tax you're pre-paying some of the tax much like you know employer remittance comes off your paycheck every month okay there's not an additional tax it's withholding tax if you're not sure what withholding taxes how it works we'll link that video up above here go through that video it talks about withholding tax how it works to raise that kind of stuff now in general most countries will not have a tax treaty with canada there are a lot that do but most don't so if you move to a country that does not have a tax treaty there will be a withholding tax on ois payments anywhere between up to 25 most are 15 or 25 so check the country you're moving to and see what that withholding tax again it's a withholding tax it's you're just pre-paying some of that tax okay now again a lot of countries i think there's about 45 or 50 that do have a tax treaty with canada and there will be no withholding tax at source on your oas payments okay so that's how that's going to work so if you're retiring to a place with a tax treaty when you collect your oas it's going to be much the same as if you were retiring in canada the same thing so again moving down to the u.s retiring down there your payment from oas is going to be received much the same as if you had retired in canada now another question we got from a viewer is if i retire abroad and i'm able to collect oas is there still the recovery tax or what's called the oas claw back because most of you wouldn't know it okay so yes there is for the majority of countries there's going to be os claw back so the same numbers it graduates differently every year so for 2021 if you make roughly net income above about 78 000 you're gonna start getting clawed back on your oas and if you make over about 126 thousand dollars you're going to have full oas call back so it's started at 78 000 full club back at 126. that still qualifies it you runs the same if you retire abroad so if you have a good income um again this is net income uh retiring abroad there will be an oas claw back so be aware of that that still stands in place so when we look at the oas recovery tax or oas claw back there are quite a few countries that actually if you relocate to and your income is above that threshold again above 78 thousand dollars there's actually tax treaty that the many countries have with canada where there is no recovery tax so even if you're above that threshold moving to one of these countries is going to allow you not to have to pay that recovery tax meaning that you could earn you know you can move to argentina earn 150 000 a year and collect full old age security and not have to pay any of it back so keep that in mind so there's some rules around that if you fall into this category do your research we're not going to go into a depth here but i'm going to quickly show you the screen actually so here's your list of countries that actually provide so again argentina australia barbados colombia ireland mexico spain taiwan many more so these are countries that have tax treaties we'll put a link to this below but if you relocate to one of those countries you are going to fall into a bit of a better tax situation because canada has a tax treaty so again you can move to one of those countries have income above that oas threshold and still collect your full oas and not have recovery tax so again if you have a big income and you don't want to lose your oas relocating and retiring to one of these countries might be a way around it now again there's other tax considerations you need to consider you may not be further off ahead even though you win on the oas there may be more tax elsewhere but as far as oas goes that's something to keep in mind so some of you might be wondering about gis or guaranteed income supplement again most of you watching these videos don't apply but for those of you that do and are considering retiring abroad it's important to know that you must be a resident considered a resident of canada to collect gis okay so that means that if you retire abroad so you're away from canada for more than six months and not considered a resident of canada you will stop collecting gis payments okay so if you're collecting gis which can be substantial you may want to reconsider moving abroad again you could move somewhere where cost of living is cheaper and you're better off so again there's a lot of math and calculation to do here to figure out what's the best decision for you but be aware that if you relocate you can continue to collect your oas but that gis payment will terminate so the same rules apply for the gis as the allowance and the allowance for survivors so if you're collecting the noas allowance or allowance for survivor those also terminate if you're not in canada for six months or more so if you're not a resident of canada your gis allowance and allowance for survivor or also all three of those will be terminated if you relocate elsewhere retire elsewhere retire abroad so keep that in mind so again allowance allowance for surprise and gis again most of you aren't collecting those but if you are this is something you need to consider before you just jump ship and move elsewhere so let's look at the canadian pension plan so we've gone through oas if you can get it how much if there's withholding tax some things to consider before jumping ship out of canada and retiring abroad now looking at canadian pension plan or cpp it's different than the os in that old age security is based on time spent in canada you don't have to pay into it it's based on time spent now looking at cpp that's based on how much you put into it okay so it's actually a dollar amount that you've paid in so when you look at retiring abroad your cpp payment will continue to you no matter where you go it's something that you paid into it'll be a payable benefit to you regardless of where you retire okay and that amount will be based on you know what you paid in so whatever you would receive from cpp if you retired in canada would be the same as if you retired abroad there are some countries that don't have a tax treaty you're gonna pay a bit of tax withholding tax on that again it's withholding tax you're pre-paying some tax you'll get credited back for most or all of that so just be aware of that but there is a withholding tax again anywhere it can be as low as zero it can be as high as 25 so you know again do research if you're looking to retire abroad you know these videos will kind of help give you some guidance but you need to dig into and hopefully talk to a cross-border accountant or tax professional on what this looks like if you're looking to retire in argentina you know what does that look like you know what has to happen before you go and then what has to happen as far as when you're there do you have to file taxes there and canada where your income is coming from you need to do the research you can't just jump ship and hopefully it all works out that can be a very expensive mistake so just one thing to note with that tax treaty even if a country falls under that list of tax treaties there can still be a withholding tax so for instance barbados has a 15 withholding tax so it's not guaranteed that it has a zero percent withholding tax but usually it's lower so just uh do your research again we'll put the link below and you can look through that list figure out what uh withholding taxes would be on any cpp payment so i want to quickly go through one last question we were asked just the other day on one of our um videos someone left a comment below saying can i still receive cpp survivor benefit and the child benefit while living abroad and the answer is yes so if you are getting a survivor benefit a monthly payment or you have kids 18 or under that are getting a child benefit through the cpp those will continue even if you move abroad okay again that's something that you paid into so the benefit continues to pay out to you even if you move outside of canada so lastly how do you receive payments so if you've retired abroad and you need to start your oas and cpp payments like how do you receive them do they go to a canadian bank account a local bank account where you're at so the canadian government will pay your oas and your cpp to a local bank account and also in local currency okay so there'll be a conversion there in local currency if you want to paid to a canadian bank account you have to talk to my service canada center reach out to them figure out how to set that up and you're going to want to talk to your accountant if you have payments go into canadian bank account that could be earned income now in canada there could be more tax filings and issues there so talk to a tax professional on that to make sure that you know having payments go into a canadian bank account doesn't add more steps for you um so but again they can pay into a local bank account where you're living in the local currency if you're living somewhere remote and you think like i don't have a bank account here i don't know how i'm gonna get this payment if um the canadian government can't get payment to you in a local bank and local currency they will issue a check in canadian dollars and mail it to you so kind of the old school way to do it a little snail mail there but that would be the other alternative so again if you have questions about this stuff as far as receiving payment and you know the calculation on oas around the 20 years do i qualify i've worked elsewhere does that credit in go speak to a my service canada center those are it's a resource where you can go in they have all this information they have all the calculations they can grab your specific data and information and run those numbers for you so they're a great resource center again we're here just kind of say hey here's some things to think about but when you want to dig into it uh my service canada center is a great place to start if you're looking to retire abroad so hopefully this video helped you out again if you're looking to retire abroad oas cpp both payments if you qualify in canada here and you've been here for over 20 years you should have no issues collecting those again there might be some withholding tax and whatnot but collecting those payments shouldn't be much of an issue no matter where you go again if there's a tax treaty with the country that you're moving to and canada there's probably going to be a bit more benefit to that so look at that list see how that works withholding taxes tax structure all that i know a lot of you are looking to retire abroad because it's a cost cost of living it could be a weather thing uh it could be a health care thing it could be many things people retire abroad for many different reasons but before you just jump ship and think hey it's cheaper to live out here there's things that you have to do before kind of going there right so uh you know healthcare you know how's the healthcare currency is a big one um but oas and cpp like what your retirement benefits like where is your income coming from that needs to be a primary focal point and discussion with your tax accountant with a my service canada center with your financial planner on what this looks like how it rolls out and can i actually relocate there and still have the income i need to you know provide the lifestyle that you're looking to have so thanks for joining us in this video i really do hope it helps out and we'll put more of these like i said we'll put more of these kind of retiring or even traveling abroad in retirement videos together moving forward so thanks for joining us we'll see in the next one

Channel: Parallel Wealth

Views: 462,210

Keywords: Financial Planning, Retirement Planning, Retirement, Tax Planning, Investing, Savings, Wealth, Parallel Wealth, retiring abroad, retiring abroad tax situations, retiring abroad on social security, canadian retiring abroad, retiring aborad OAS, retiring abroad CPP, best places to retire abroad

Id: tq4jbE957Yw

Length: 18min 14sec (1094 seconds)

Published: Mon Sep 20 2021