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My family and I are relocating from Calgary, Canada to Stavanger, Norway as a result of a career opportunity with my current employer. Although this is an absolutely fabulous opportunity for my family and I, it does have some implications on my dividend reinvestment program.
As you know if you have been reading this blog for awhile now, I use the Canadian Shareowner’s Association as my primary broker. The reason I like them is for two reasons – they reinvest dividends into additional shares of the companies I hold AND they allow investors to hold fractional shares. In other words, ALL dividends I receive are plowed back into additional shares. However, as a result of my move to Norway I will become a non-resident of Canada and the CSA’s policies are not to allow investors to maintain accounts for non-residents. In other words, their initial position was that I was going to have to transfer all my assets to another broker who will allow non-residents (most of them seem to). I am sure you can imagine how dramatic this was for me!
It took some time to convince them what they were doing was really silly – I was not leaving forever (2 years) and would be back in Canada and would continue to invest through my entire accumulation years. Basically they were going to fire me as a customer and risked losing all my business. They seemed to agree and have allowed me to keep my accounts open in a suspended status, with a catch.
While my account does not need to be closed, all dividend reinvestment will not be allowed. I will still receive all my dividends however they will not be reinvested while I am a non-resident. This is tough to take, however at least I do not have to close the account. When I get back I will have some work to do to reinvest these dividends but at that point my dividend reinvestment will be reinstated as it was before.
Although I am not totally happy with this solution, it is the better alternative. Transferring all the securities would be a large pain as well as it can be expensive. I think the CSA needs to start thinking more global on this matter – how does it work for baby boomers who buy winter homes in the U.S.? I am sure it comes down to some stupid Canadian regulation that is supposed to “protect” us, but it is definitely behind the times.
(Photo: Rodolfo Clix)
Have you given any thought to sharebuilder? They are the broker that I use. They do all the same things your broker does. Partial shares and free dividends reinvestments. I am not sure if you can use them in any country but you should definately look into it.
What is the definition of non-resident they are using? For instance, for tax purposes, you are probably still a resident. I suspect you can find a loophole that makes you a resident.
I can understand your frustration. I use Halifax Sharebuilder here in the UK which also allows fractions of shares and dividend reinvestment.
I hold two accounts, one for reinvestment and one to hold dividends received in cash. I usually mirror the shares I buy in both as the dealing fee is very low at £1.50 a trade.
I’ve found that although the returns of my reinvested account is more than acceptable, the cash one is better as I have liquid assets to target quicker at new opportunities as they become available. So just think of the liquidity you’ll have to play with after two years dividends have built up – something to look forward to indeed!
All the best with your move
The Dividend Seeker
It’s not expensive to move to another broker – most brokerages will pay the fees involved so you shouldn’t have to pay a dime.
Mike
Your facing the same problem every expat faces. Where to invest. I’ve been living in the euro zone for almost 10 years (hint once you move you may never come back) I love living in over here but I wouldn’t know where to start when it comes to investing, so I’ve stuck with CDN DRIPS great when sending money to Canada but when it comes time to bring money back it will hurt.
I’ve thought of investing state side but same issue, strong euro.
BTW why did you tell them you were moving? What they don’t know won’t hurt them.
BBTW you can invest in everything but MFs and the withholding tax is 15%
I’m with Rob, why did you tell them? They aren’t the government, its not a crime to lie to the Canadian Shareowner’s Association or not keep them informed about your every move. Perhaps its time to call back and tell them the trip was canceled? 🙂
One option might be to take Mike’s suggestion, move to another broker, setup a margin account, and buy enough on margin such that your margin loan will be paid off over the next two years. You’ll be paying a bit of interest, but your dividends will be applied immediately as they come in (and two years worth of dividend payments will be a fairly small amount of margin debt).
Hi,
I would advise you to see a good tax lawyer 3 months BEFORE you leave to arrange matters for you
Also dont broadcast this to every body
Rev Can allows a non resident status to you only if you are ` leaving for ever and have no intention of returning’ If you stand on a pedestal and proclaim you are going to be back in 2 years you will definitely NOT be a non resident as far as rev can is concerned Result you will have to pay Canadian income tax overseas
Just be quiet and private about this see a lawyer and arrange your affairs . Of course be forthright with the legal dude
moneyman