The MapleMoney Show » How to Make Money » Career

Advice for Canadians Who Want to Work Overseas, with Kyle Prevost

Presented by Wealthsimple

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

The very thought of leaving a comfortable career, uprooting your family, and relocating overseas is a scary one for most people. But sometimes adventure calls, and you have to answer. This is what happened to this week’s guest

Kyle Prevost is an author and founder of the website, Million Dollar Journey. He’s also a longtime educator. Recently, he and his wife left their home in small-town Manitoba and relocated to Doha, Qatar, in the Middle East. I sat down with Kyle to discuss the reasons for his move, and how relocating overseas can impact your Canadian residency and income tax status.

Kyle explains that while he had a stable career as a teacher in Canada, he always knew that he didn’t want to work a 9-5 job, or a 7-7 as Kyle puts it, until age 55. By developing a side gig and investing substantial sums of money early on, Kyle and his wife were able to leave their jobs and relocate to Qatar, where they’ve continued their teaching careers.

Kyle and I discuss how Canadian residency status is affected when you leave Canada to work in another country. When living and working overseas, you have to be careful about your residency for tax purposes. The CRA will take a close look at your individual situation, to determine if you should be paying taxes in Canada.

What If you’re living out of the country and are ready to return to Canada? Kyle lays out the steps you should take to make sure you reestablish your Canadian residency status.

In a couple of weeks, Kyle will serve as a long-distance co-host at the 2021 Canadian Financial Summit, which kicks off on September 22nd. If you want to hear more from Kyle, or you’re just looking for some straightforward financial advice, grab your free ticket here, courtesy of MapleMoney!

Do you prefer to invest in socially responsible companies? If so, our sponsor Wealthsimple will help you build a portfolio that focuses on low carbon, cleantech, human rights, and the environment. To get started with Socially Responsible Investing, head over to Wealthsimple today!

Episode Summary

  • Why Kyle gave up a gold-plated teachers pension
  • From small-town Manitoba to Doha, Qatar
  • What drew Kyle and his family to the Middle East
  • The basics of teachers’ compensation in Qatar
  • Kyle explains how tax reporting works for Canadians working overseas
  • Understanding how Canadian residency works
  • The dangers of falling into double taxation
  • What happens if you decide to return to Canada

Read transcript

Have you ever thought of leaving a comfortable career, uprooting your family and relocating overseas? It’s a scary one for most people, but sometimes adventure calls and you have to answer. This is what happened to this week’s guest. Kyle Prevost is an author and runs the website, Million Dollar Journey. He’s also a long time educator. Recently, he and his wife left their home in small town Manitoba and relocated to Doha, Qatar, in the Middle East. I sat down with Kyle to discuss the reasons for his move and how relocating overseas can impact your Canadian residency and income tax status. 


Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Do you prefer to invest in socially responsible companies? If so, our sponsor, Wealthsimple, will help you build a portfolio that focuses on low carbon, clean tech, human rights and the environment. To get started with socially responsible investing head over to today. Now, let’s chat with Kyle… 


Tom: Hi, Kyle, welcome back to the Maple Money Show. 


Kyle: Thanks for having me, Tom. 


Tom: Since you were on last, you’ve gone through some changes in your career and living situation and I just wanted to walk through some of that. Just to set it up from where you were before, what did your previous teaching career look like while you were in Canada? 


Kyle: Despite the beautiful background behind me here, which is an international setting to signal that I am, in fact, Canadian, my wife is a kindergarten teacher and I teach a little bit of variety of courses, business, personal finance, econ in high school. We had spent our whole career in the province of Manitoba in a couple of different schools. For me it was 10 years. For my wife, I believe she was entering her seventh year. We enjoyed our time and, obviously, were happy to make use of the post-secondary education we took. But we were interested in maybe something a little more. 


Tom: I know (at least here) everything “teacher” from a career standpoint seems to be a union with what I believe is a great pension. Why would you change that? When you have a pension like that, you work whatever you need to in order to get the full thing and that’s the “gold” in this kind of career. 


Kyle: I definitely get that question for more than a few people, including my parents, especially in the in my age cohort where the idea of a pension— gold plated, so to speak, is difficult to come by. And absolutely, it’s one of the major benefits. It’s one of the best parts of the compensation plan for teachers in Canada. You’re going to put in some money, quite a substantial amount of money and the government is (in most cases) depending on the province is going to match that dollar-for-dollar. And then it’s going to be handled in a very index-friendly, long-term horizon. And, of course, you’re going to get some sort of longevity annuity caps to your pension plan because, in that situation, you’re pooling your long-term, mortality risk with other teachers. So you get a pretty generous payout every month. That was a benefit. And the cool thing for myself and my wife is that what we put into Manitoba’s teachers’ pension plan, that’s not going anywhere. It’s going to sit there and compound for us. And when we are 55 or 65, depending when we want to start taking our pension, there will be a nice chunk of change coming to us every month. We’ve been pretty good with managing our money outside of our pensions and thought that even though it was a bit of a high price to pay, it was an acceptable price to pay to hop across the world and try to broaden our horizons a little bit. 


Tom: I expect, obviously, you knew enough to make these other investments. Whether it’s teaching or other similar careers that seem so “pension” focused (and are your only source of retirement) because you’ve already assumed you’re going to work this career until you retire and that’s going to cover it, you were already doing additional things to set you up to not be as “locked” into that career. 


Kyle: I didn’t love the idea of working one job until the age of 55. Whether that means financial independence or doing something on the side—I’m not sure totally what it means yet, but I knew that I did not want to work nine-to-five. But as teachers, it’s often a nothing to nothing, which is very nice months of the year (if you add up all our holiday times). Or, in my case, it’s more like a seven-to-seven during the school year with coaching responsibilities and stuff like that. I knew I didn’t want to do that sort of thing until I was 55. I had set up doing some side things online, which your listeners probably know a little bit about. And I had looked at investing substantially over my first 10 years in the profession. 


Tom: So you’ve made a change now. Can you tell us about that? How did this come up? And what was this slight bit of a career change? 


Kyle: I decided to make the hop from teaching in small town Manitoba to the international city of Doha, Qatar. And if you’re worried about how to pronounce Qatar, don’t be worried because they’re not worried about it. I spent five minutes before I went over, practicing it. I went on YouTube and looked up how to say it but they don’t expect Westerners to try and pronounce this correctly. And actually, you just sound kind of dumb when you try. So Qatar is generally what we go with, despite that not being anywhere near an authentic Arabic way of saying the country’s name. But anyway, we’re in Qatar and loving life there. Obviously, it would be a little bit better if Covid would quit getting in the way in terms of just making ease of travel nice. Because one thing we learned very quickly when we started down this journey was, we looked at different travel options. With international teaching, that’s one of the big draws. You get to live in a brand new city but you’re also very close to many, many new places. And this is especially true for Canadians, I find. In Manitoba, you basically have to take a flight to get somewhere before you can fly anywhere. So, you’re either going to Calgary or Toronto or even Vancouver, Montreal before you can then get to your international destination. In my case, I was having to drive three hours to an airport first, whether that was the Regina Airport, the Saskatoon Airport, the Winnipeg Airport, or Minot, North Dakota airport. I was having to drive there and then start my vacation journey. And of course, Canadians know how expensive travel can be. Then when my wife and I took out a little compass and we’re looking at all the different stops within our 4-hour direct flight—and there are a ton of direct flights out of Qatar Airport. It’s a very popular hub destination. Dubai and Doha are kind of fighting to be the preeminent hub in the Middle East in terms of transfers. That was a huge draw as well as just this international “teaching” world that I had no idea about until a couple of years ago. I actually talked to Andrew Halam a couple of times and thought it was really neat. There are basically schools for various types of children, but mostly English (as a first language children) in other countries where expats go to work. For example, in Doha, there’s many Canadians whose parents are professors at the College of the North Atlantic. Or they teach at the University of Calgary which actually has a nursing school in Qatar, as well as many other things in the resource extraction sector. There are actually many Albertans in Qatar. Their children presumably would not be able to go to school in Arabic. It might be a bit difficult, that would be my guess. So there are these international schools that pop up. In many cases, many locals want their children to learn English as a first language too (alongside of expats) in that setting. These schools exist pretty much all over the world where expats are. They are mainly English-based but there’s some French, German, and Spanish ones as well. There’s over 1,000. They hire teachers to come live there and teach children. 


Tom: As a teacher, is this something that you went out of your way to research, find, stumble upon or was it something that all teachers just know about? How did you realize this was a thing? 


Kyle: I had no idea, to be honest. I don’t think most teachers have any idea in Canada, because like you were saying, Tom, the teaching profession is very well compensated in Canada in terms of being, above-the-line in “dollar” figure. It looks quite large before you get into deductions. You work very hard because it’s very difficult to get a full-time, permanent job or even a full-time, non-permanent job in most Canadian provinces. You work hard to get that. Then you make sure to hang onto that until you’re 55. Then you sort of cruise into the sunset. Honestly, I thought international teaching was teaching English specifically, and I knew a lot of people that didn’t have teaching degrees that had went overseas to Thailand, China. I knew one in Egypt and maybe a couple in Mexico. I thought that’s what it was. You go and teach English—basically the same lesson repeatedly. I had no idea you could go to an international school and teach your subject area, not English, but your subject area. It might be with a slightly different curriculum, but it’s in your subject area. So I talked to Andrew and sought out several other people that had taught everywhere from Hong Kong to Europe, although Europe can be difficult to get into. And even a couple who taught in the Middle East, in Kuwait, the UAE and then Qatar, obviously, and Saudi Arabia as well. 


Tom: You mentioned that here in Canada you would make a decent salary, but then there’s deductions. Is it true that you don’t have to pay any taxes? What’s happening there? 


Kyle: When I Googled Qatar international teacher, zero percent income tax was one of the first things that popped up. And of course, if you’re a personal finance guy or gal, that obviously catches your eye very quickly. Not only is it zero percent, but their deductions are often handled a bit differently. The school pays them on your behalf in almost all international schools. Definitely, all of them in the Middle East that I’ve seen. They’ll pay for your insurance, your health insurance, life insurance policy. The life insurance policy isn’t quite as large as the automatic one I got here in Manitoba but given that it’s just my wife and I, the life insurance was more than adequate for our needs. Your accommodations are almost always paid for. Again, this depends. If you’re going somewhere in Europe, they might not be, but pretty much all of Asia and the vast majority of schools in the Middle East will pay for your accommodations. Now, that accommodation can vary widely, but it will be paid for. There’s no union in most schools that I’m aware of. Certainly, not in the Middle East. Therefore, there’s no union dues. There’s no pension in most schools. Some schools have some sort of a pension program. But in place of that, there’s usually an end of contract bonus instead of a pension. So basically, when you look at the “above-the-line” my wife and I got paid in Canada versus what we make over there, it’s pretty similar in terms of our gross income. But we basically have no deductions of any kind and no housing costs. That means no house insurance, no maintenance, no land taxes, anything like that. The savings can rack up pretty quickly in that regard. 


Tom: We’ve been talking a lot about being a teacher. Do you know if these countries are attracting other people? Obviously, most people listening aren’t teachers, but is there anything for someone lower in a corporation all the way up to an executive? Are they looking for those kind of skills as well? 


Kyle: They are. Obviously, it depends on each country and what they’re looking for. From my limited experience, I tend to see a lot of people in specialist fields such as medicine. Nurses aren’t predominantly taken from Canada just because there are lower cost options but there are a lot of doctors, pharmacists, and various different niches within those professions. As well as a lot of accounting for certain different businesses. In the Middle East there’s going to be a lot of synergies there with Canada’s resource sector in terms of bringing folks over. I know for Saudi Aramco—the major Saudi Arabia oil producer, there’s quite a few folks from both Alberta and Houston that end up over there. And depending on where you are, there’s a lot in the banking and insurance industries. There are probably some other “country specific” ones too. There are a lot in the post-secondary world where you’d be looking at several different universities and colleges bringing Canadians over as well. Those would be the primary ones. Not to say that there are never any other options. I met a librarian working for the College of the North Atlantic, which is a Newfoundland college. That is big in Qatar. Don’t ask me how that happened, but it’s pretty cool because that means there’s more Tim Hortons in Doha. We can actually get Tim Hortons delivered, which was a new experience for me. Anyway, she made double what she would have made in Canada and it was all tax-free. 


Tom: Really, anyone that might have the right skill set, just has to see if a match is out there. That’s probably like any country’s immigration plan. You’re trying to attract the skills that you actually need. Some of these countries just have a little extra available money to kind of sweeten the deal. 


Kyle: Yeah, available money and the infrastructure to bring in huge numbers of expats. In Canada, temporary foreign workers are a politically controversial issue, I guess you would say. There’s pros and cons, obviously. Different sides will focus on different areas. In many other countries, temporary foreign workers are just a very well accepted way of life when you’re making a deal because both sides understand the deal. You don’t get a lot of permanent residences, citizenship rights or perks, but you get a somewhat generous compensation package, ranging from “somewhat” to a “very lucrative” compensation package to go over there. Everyone knows the score. And in my limited experience, no one really questions the ethics of it. 


Tom: You mentioned not having to pay any tax there but you’re still a Canadian citizen. Do you have to pay Canadian tax? 


Kyle: This was definitely the main question I got asked, Tom. The short answer is, no, I don’t have to pay Canadian tax. If you move out of Canada and are working in another country you do not owe the Canadian government tax. But you need to make sure that you are no longer living in Canada. That may sound a little weird or odd, but it’s very important as far as the Canadian Revenue Agency is concerned. What I mean by that is a lot of people don’t understand that outside of the USA—the USA is totally its own animal and there probably aren’t too many Americans are listening. But if they are, don’t listen to me because the American tax system is based on citizenship. If I were American and decided to go work overseas, I would have to file taxes. I may not have to pay taxes, but I would have to file and stay aware of what was going on in the American tax world. Pretty much every other country in the world taxes its residents. It taxes you based on your resident status. Where do you and your family live? Where do you earn an income? Where is your center of economic interests? If you’re a wealthy individual with investments all over the place, you can kind of play a lot of games with where you’re residing. I’ll just leave it at that because that gets into some pretty interesting loopholes. But for most people, what you have to understand is when you move overseas, you want to make sure that you are no longer considered a Canadian resident. Things that might trip some wires, some residency rules that the CRA will look at are things like, do you still own a house in Canada? And if you do, is there a rental contract, because if that house is available to you in Canada and you live in that house when you come home for a holiday, the CRA is going to say, “Look, you didn’t actually leave the country. You’re just doing some side work overseas and we’re still going to tax you based on that because if you’re still a resident of Canada, it doesn’t matter if you make your money in Qatar or Canada, we’re going to tax it.” I know some folks, especially in the resource extraction sector, will go two weeks on, two weeks off, six months on, six months off. If that’s the case, you’re going to have a hard time saying you’re no longer a resident. You’re also going to have a hard time if your nuclear family stays back home in Canada because they’re going to say, “Your life is still in Canada. We’re going to say that you’re making your home in Canada still.” And then there’s a bunch of smaller things they call secondary ties. Things like having a mailing address, certain memberships… Do you still own a car? Do you still have personal possessions in Canada. Things like that are secondary. No single one of those is going to make you a resident in the eyes of the CRA. But what the CRA has done is said, “We’re going to look at every single person that claims nonresident status as a one-off decision. We are not going to provide a standard algorithm that says if you do this, this and this, you’re in the clear. Instead, what we’re going to say is everything is a balance. We’re going to look at your situation and decide on balance. If you have more of these ties then you are going to be considered a resident and we’re going to tax you on your full, worldwide income. And if you’re not, then you are essentially free to live and work in another country.” And this can get fairly complicated. But in my case, it’s pretty straightforward. Both my wife and I moved overseas. We sold our house. We’re earning our income in Qatar. We might visit Canada for a few weeks every year, but it’s pretty obvious where we’ve established our home at this point. 


Tom: You mentioned that you don’t have to sell your house. You could rent it if you have a rental contract to prove that. I guess that kind of counts as a business, though. Would there be tax on that at least? 


Kyle: You do have to file a tax return in that situation. It’s the same thing if you own corporate shares within Canada in terms of a small business or something like that. You still have to file Canadian tax. And obviously, if you have rental income, then you have the offsets of the housing costs and stuff like that. You basically get into a landlord’s tax situation, which is fine. It’s just that you will not be taxed on your income earned outside of Canada. You’re probably going to pay a withholding tax of 25 percent. And again, even that depends because each country has the option to create an agreement. The technical name for that escapes me at the moment. But essentially, it is a part of most free-trade agreements at this point. Those agreements spell out exactly what will be used to determine your residency between the two countries. Those two countries will sort of use that process to fight over how much tax you owe. In general, Canada is more likely to have those tax treaties with countries that also charge similar tax rates to Canada. There is no tax treaty with Qatar so I have to pay the full 25 percent withholding tax on any income that is Canadian generated. 


Tom: Obviously, you’re not paying any income tax there. If you had to pay Canadian taxes, it wouldn’t be great, but it is what it is. What if you were in a country where there was an income tax but there wasn’t a free-trade type agreement? Could you ever find yourself in a situation where you had to pay tax in both countries? Could you fall into some crack where you really get nailed? 


Kyle: Yeah, you can. Usually, there is a process (almost always from what I’ve read) to get some of your tax back from one country. Most countries will try to avoid double taxation, which means you get taxed twice on the same dollar earned. But you can definitely fall into it. Especially if you don’t understand the accounting processes and tax filing processes on both sides where Canada is still going to consider you a resident. They’re still going to want you to pay tax. And some people don’t even know this. They don’t find out until seven or eight years later when they move back to Canada or when Canada finally gets around to looking at their tax return. They’ll say, “Yeah, you haven’t been a resident for eight years so you owe us taxes on everything you’ve made overseas. Please bring documents showing how much you’ve earned overseas.” This can happen if you’ve never properly severed your Canadian tax residency. For example, last year my wife and I filed our final tax returns as Canadians. We said we left the country on this date. After that, we were no longer Canadian. That was our signal to the CRA to say, “Hey, we are no longer this…” The CRA has obviously accepted our declaration on that so we are non-residents as of right now. But if you didn’t do those steps… Let’s say you were working Sweden and earning money there as a teacher or a banker and they were withholding for their income tax. You hadn’t properly explained to Canada what was going on, your family was back home in Canada and you owned a home that you used for three months every summer—that could be a potentially really bad situation where you could fall into a “double taxation” trap. 


Tom: Well, it obviously pays to follow the process. When you told the CRA that you’ve left the country and you’re no longer a Canadian resident, do they actually give you something that confirms that or you always kind of at risk? When they do this process of deciding if you’re a resident or not, is that something they actually do or do they wait to audit you in the future? Like a lot of tax situations, everything’s good until you get audited. 


Kyle: There’s nothing binding them to this. They could go back and say, “You declared it and we accepted it for that tax year but upon a further look at this, you were a Canadian resident. You either misrepresented something or didn’t read the rules properly. In any case, you owe us some money.” That certainly could happen. I believe the form is called an NR-73. I’d have to check on that, Tom. But you can apply for it. It’s sort of a pre-approval process where you answer some questions and submit it to the CRA ahead of time and they’ll say, “Hey, based on this, you will be considered a non-resident,” or you won’t be. In saying that, the vast majority… Actually, now that I think about it, every single accountant I talked to said they do not recommend filling out that form. It’s a complicated form and most people fill it out incorrectly. At that point, the CRA basically uses that form to say, “This is not what you told us,” so file your final tax return and you are free. If you want the pre-opinion, just pay attention to what you’re doing on that form. It’s not really a pre-approval. It’s like a prejudgment almost on what your residency status would be. But most of them recommend to just file your final tax return. Do it the right way. And for me, when I log into my ICRA accounts, I can clearly see that I have a nonresident status as of right now.  


Tom: You mentioned how they recommend not filling out that form because they can use it against you if things don’t line up in the future. But I’m also thinking that if you fill that form out and they say you’re still going to be a Canadian resident, then you’ve lost the opportunity to go, move, and ask for forgiveness later if you need to hash it out with them a bit on some small details. 


Kyle: That’s pretty much the long and the short of it, Tom. I wouldn’t say don’t ever use it. If you want the peace of mind, I think for a lot of people, there’s peace of mind that comes with holding a document that says, “Yeah, you won’t have a problem with nonresident status.” I would say, contact a specialist accountant and go over every question with them because you want to make sure you’re completely accurately representing yourself and what your tax situation is about to become. And don’t make any mistakes with terminology. You want to make sure you’re saying exactly what you’re meant to be saying without making any errors. With wait times, especially when you’re an expat, it may take several months and possibly even several years to try and correct any errors you may have made. In the meantime, there’s going to be some pretty scary correspondence going back and forth saying you owe taxes you don’t think you should owe. It’s one of those things where it’s pretty important to pay attention to the details and get it right whether you fill out the NR-73 or just wait and file your tax return at the end of the year like any other Canadian would. 


Tom: To go to the opposite side of double taxation, a very dark gray thought I have is, could you travel so much that you’re not a resident of anywhere? Or is it the majority, no matter what? Can you just disappear into the world and not pay any taxes? 


Kyle: That’s a crazy question that I asked when I started looking at this. I don’t know that I’d ever want that lifestyle personally, but I think there are people who’ve done it illegally, Tom, or at least mostly illegally. The truth is, most international tax accountants I’ve talked to will say, theoretically it is possible. In practice, no country has said it’s legal to do that. In practice, most countries legal systems will say, our practice as of right now is that you must be a resident of somewhere. Now, whether that’s enforceable or not is an interesting question. There’s whole books written on this. Perpetual Traveler is kind of the buzzword. If people Google and they get into this thing called flag theory, where you have citizenship’s, residences and corporate accounts in different countries, there are people that are trying this. The far more common approach and safer approach most experts are now advocating for—and I’m only reporting what I’ve read because I’m certainly not a tax accountant, say you should go to a low-tax country and establish residency first. A popular place to do that was Panama. That’s becoming a little more difficult as we record this. August is the last month for a specific type of Visa program that Panama had. Another country I’ve become a big fan of over the last years is Georgia. You can move to the country of Georgia and depending what you do for a living, pay one percent tax on your income. You also pay no tax on any investments that you’ve made. It’s the same for me in Qatar. It’s described as something like an unlimited TFSA, essentially. Basically, any country that has a territorial taxation system, will not be interested in taxing your investment portfolio if it’s invested in the normal types of investments like indexes, ETFs and common shares of publicly traded companies. So, is it possible? I think theoretically it’s possible. And certainly if you look online, you’re going to find people who think it’s possible and totally legal. Many of these people are backpackers that wouldn’t do tax anyway, frankly. I’m not sure how much revenue the Canadian government’s worried about missing out on there. But in practice, I would not recommend it. I wouldn’t recommend trying it. I would recommend establishing a base, a residency in a country if you’re trying to legally pay as little tax as possible. The phrase usually is, “Go where you’re treated best.” It’s sort of this somewhat cheeky phrase these folks use. Just keep in mind though, with those low taxes, come low services. That health care you’re used to as a Canadian and various legal protections may not be the same standard in every country. There are many things those tax dollars get you in Canada. You just have to be aware of the tradeoffs there for your particular situation. 


Tom: If you’re trying to not be a Canadian resident, you have to have your family with you, get rid of your house or rent it. What about the investment side? Do you have to cash out your whole RRSP? What did that look like as you were leaving? 


Kyle: For me, it was pretty simple, Tom. Basically, your RRSP and TFSA, not much should change or has to change for you in that regard. Going forward, you’re obviously not going to get any new RRSP or TFSA room. There’s certain weird, weird situations where you might actually get a little more RRSP room, but it’s not really worth talking about in depth. Essentially, those are put on freeze. Now, if you’re a super active trader, the CRA may say, “You are employed in Canada, essentially, if you’re actively trading all the time,” essentially, day trading. But, if you’re just a couch potato index investor, buy-and-hold, dividend investor, you can do that within your TFSA or RRSP and that money will just continue to compound for you tax-free. You’ll still owe money if you take money out of that RRSP. As an expat you’ll owe a 25 percent withholding tax on it. But if you eventually move home to Canada, it’ll just be subject to the same tax rules that everyone’s RRSP is. Now, where it gets a little more complicated is if you have a non-registered portfolio. If you have a non-registered portfolio and you go to leave Canada, you’re going to pay what’s called an “exit tax” so you’ll want to look into the details on that. Basically, you’re going to be assessed as more or less having sold those equities at the current market rate. You’re going to have to pay a capital gains tax on them. And if you continue to have dividends within your non-registered portfolio, depending on the tax treaty with another country, you’re going to end up paying a withholding tax on those investments. Of course, if you check out the Canadian Financial Summit, which we’ll talk about later, I go into more details on how I legally avoid those by using Horizons ETFs, which is kind of like turning water into wine—turning dividend water into capital gains wine. You can avoid that withholding tax through those ETFs that way. That’s basically the long the short of it for the exit tax. Now, if you’re a relatively young person and your assets are all within an RRSP or TFSA, then you don’t have to worry about much of any of that stuff. 


Tom: If you can’t actively trade in those accounts, what does investing look like for you now? My world view of brokers is very small beyond Canada and a little bit of the US. Where do you go? Do you have to find a broker that’s located in your country or is there some international broker? How does that work? 


Kyle: There are many international brokers, but one thing you realize quickly is that Canada— I don’t know if we are sort of piggybacking on the American trend, but Canada has some of the best brokerages in the world. They’re low cost and very user friendly. They’re just really excellent options. I’ve decided to keep my Canadian brokerage account. Some people do open an account. Probably the most popular one would be IB International Brokers, although there’s some tradeoffs involved with that company as well. Another popular one would be Saxo, which is based out of Dubai. And then there’s a couple based out of Europe and Singapore as well. But I’ve decided to keep my account. When I say actively trade—let me give you an example. The CRA has rules within your TFSA if you’re a just regular Canadian resident. If you’re buying and selling every day, the government’s going to say, “That’s actually your job. You’re doing that as an income not as a means of saving for retirement, which is actually what the TFSA was set up for,” and you can actually trip tax wires when you do that. It’s kind of a similar idea if you’re getting into that world of day trading. But if you’re doing the vast majority of trades that 99 percent of Canadians do like buying and selling 10 dividend stocks a month, couch potato ETFs, all-in-one ETFs or whatever. For me, my super simple ETF portfolio, I make probably five or six buys a year and maybe one sale if I want to rebalance or something like that. I did change some of the ETFs in my non-registered portfolio just in terms of making a Horizon’s ETF versus a Vanguard ETF at that point. But it’s still the same index return. There are options there if you want to move your money outside of Canada. If you’re worried about keeping Canadian taxation laws, there are options available. For me, the pros do outweigh the cons and the low fees and just my usability advantage because there’s something to be said for keeping it simple as you move overseas. There are just so many variables that you want to keep the process as simple as possible. My Canadian brokers did the job and continues to do the job and has no problem with me there as a nonresident Canadian. 


Tom: When you’re making these new investments into your account, are you just a non-registered account or are you still just using additional RRSP room because it’s not growing anymore. But if you have extra room, can you save into any of these accounts? 


Kyle: Again, that appears to be a gray area, Tom. In terms of putting money into TFSA, NASSP, I would say no, don’t. And the vast majority of accounts I talked to say not to put money in there once you are a nonresident in Canada. My wife and I are using exclusively non-registered accounts. Just the most simple basic brokerage account you can use. 


Tom: That seems like it would get less attention anyways because if they’re collecting withholding tax and all that, they’re getting their piece of it. 


Kyle: Yeah, it’s the simplest way to do it. It’s communicates the CRA that I’m serious about being a nonresident. I don’t enjoy the same privileges as a Canadian resident does as far as RRSP and TFSA room. Certainly no more will be added. I’m not adding to it. I’m not a resident. I don’t intend to use it. So here’s my account. If there’s dividends, feel free to tax them. Of course, if they’re Horizons ETFs, then they’re all capital gains as opposed to dividends. I don’t have to worry about that at all when I use those ETFs. 


Tom: If you can manage to summarize this whole episode in reverse, what happens if you decide to return to Canada? You mentioned that you’re paying capital gains on the way out with your investment. You had to sell your house, becoming a resident again. How does all this happen the day you decided to come back? 


Kyle: It should be noted that many Canadians— I was shocked to actually talk to Andrew Halam about this. There’s a higher percentage than you’d guess of people who, once they decided to break residential ties with Canada, decide not to come home. It’s an interesting idea of almost permanently or semi-permanently for the foreseeable future being a resident of another country. But if you do decide to come home, what you have to understand is you’re dealing with two countries taxation systems. So it’s the country you’re moving from that you’re looking at their residency taxation rules. Then coming back to Canada and establishing residency in Canada again. There may be an “exit tax” in your country. In Qatar, there’s not so I’m not worried about it. And a lot of expat heavy countries are this way. If you look at Singapore, the UAE, many countries in Central America, there isn’t a lot of expat “exit tax” systems in place. But you’ll have to make sure your taxes are settled up in that country, and then separately, that you are now establishing your residency in Canada. I think that form is called an NR-74. You’re going to want to establish those residential ties. You need to get a mailing address. You need to show which domicile you’re living in. You need to probably get your Manitoba Health Card. In my case it’s a Manitoba Health Card, but you’ll need your provincial health card back again. You’ll want to reestablish a Canadian driver’s license and all those different things. And when you fill in your tax filing for that year, you’re going to say, “Okay, I came into the country on this date. I will be a resident of Canada going forward.” And from that point onward, you will be responsible for paying tax on all your worldwide income. Some people mistakenly think, “Oh, if I leave all this money back in Switzerland, the CRA won’t find out about it. I can just get offshore money.” That’s not legal. Maybe you will be able to successfully (illegally) avoid taxes. But obviously, I’m sure you nor I would advise any illegal strategy like that. And if you do get caught, the CRA is going to do their best to punish you. I can only assume going forward, given the realities of “tax and spend” in much of the world going forward after Covid and the deficits that we’re in, that every country’s revenue agencies and tax agencies will be quite aggressive in pursuing people trying to illegally dodge taxes. I would not recommend that. But be aware that if you have money, whether it’s in equities or a basic high interest savings account, just because it’s offshore in another country, you still owe taxes on that money. Whatever the Canadian tax code says you owe, you owe it on your worldwide income once you’re a Canadian resident. The cool part is you get all those benefits of Canadian residency back again in terms of health care. And you’ll begin establishing RRSPs and TFSAs and all the other good stuff that comes with being a Canadian resident. 


Tom: Great. Thanks for walking us through all of this. It’s very interesting. I think anyone, depending on what profession they’re in, should at least consider this. Just look it up and see what’s out there. Can you let people know both about your website and the summit that’s coming up in a couple of weeks? 


Kyle: Yeah. You can catch me at Million Dollar Journey. I do a lot of writing there. But most pressingly right now in 2021, we are launching this year’s version of the Canadian Financial Summit. You can see me talking in depth a little bit more about what we just talked about. Everything from recruitment strategies that are used to how to set things up to get yourself overseas. A little bit more on the investing side of things, I discuss some countries that have territorial taxation and stuff like that. And of course, there’s 40 plus other talks at the Canadian Financial Summit this year. We’ve got stuff on investing. Your very own, Tom Drake, will be doing a great piece, a great session on working from home,  some of the benefits, some of the tax advantages you should make sure you’re using, especially if you’ve just started this year and inspired by Covid to do a little more work at home. There is a ton of great stuff. You can check that out for free at If you head there, you can register for your free tickets. You can check the summit out completely for free for 48 hours. We’ll obviously do our job and say, “Hey, if you want to check this out after that, there’s an all access pass. If you buy it before the summer it’s $97.” I think it’s a great value, but we’re not here to make a hard sell. Feel free to come and check it out. You can decide if you want it afterwards or not. If you want to dedicate your whole weekend to watching the Canadian Financial Summit totally for free, you can do that. That’s our gift to you. 


Tom: Thanks. I think there’s some great speakers and great information there. People can just view it all over a weekend and take all that in. Thanks for being on the show. 


Kyle: Thanks for having me, Tom. We’ll see everyone at the Canadian Financial Summit. 


Tom: Thank you, Kyle, for the helpful tips on navigating Canadian residency status when making the decision to relocate to another country. You can find the show notes to this episode at Also, don’t forget to get your free tickets to the Canadian Financial Summit, which is co-hosted by Kyle and happens later this month on September 22nd. To get your free tickets, head over I hope you’ll join me there. I look forward to seeing you back here next week when Andrew Chow joins us to share how technology is challenging the Big Five. See you next week. 

I thought, honestly, that international teaching was teaching English specifically, just English...I had no idea that you could go to an international school and teach your subject area. - Kyle Prevost Click to Tweet