U.S. job creators who want to pull up stakes and move to Canada face hurdles

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In a summer that seems beset by a series of bad news stories from the United States, onlookers have noted a spike in talk among U.S. residents interested in packing up and moving to Canada.

But how serious are they, and does that interest extend to wealthier U.S. citizens and job creators?

While Canada generally welcomes entrepreneurs and immigrants with businesses, immigrating involves navigating a maze of about 100 different visa and immigration programs run by the federal and Quebec governments. Some programs are tailored for business investors bringing wealth and jobs into the country.

But the differences between Canadian and U.S. corporate structures and tax laws can catch wealthier migrants in a squeeze, says Sharon Conrod, co-owner and managing partner of Hanson Crossborder Tax Professional Corp., based in Oakville, Ont.

“If you’re super-wealthy and your gut reaction is that you want to change your citizenship, you might want to give it a second thought,” she says. “You basically have to restructure your entire corporation before you come to Canada. If you don’t, you could be looking at tax rates of more than 70 per cent between the two countries.”

It’s different for companies based in one country setting up a branch in the other, but doing so doesn’t let those who want to leave one country achieve their goal of getting out completely.

Despite such hurdles, it’s clear nevertheless that in recent weeks, more U.S. citizens than usual have at least mulled over the idea of picking up stakes and moving north.

In the first hour after the U.S. Supreme Court released its decision on June 24 overturning the Roe v. Wade case, which had guaranteed women a constitutional right to abortion, the phrase “how to move to Canada from U.S.” jumped by an astonishing 550 per cent in Google searches.

It’s not the first time that interest has surged. Following the 2016 U.S. presidential election, when Donald Trump prevailed over Hillary Clinton, not only did web searches for moving to Canada jump substantially, the Canadian government’s citizenship and immigration website crashed. A significant uptick also occurred in 2003 when then-U.S. President George W. Bush sent troops to invade Iraq while Canada declined.

And of course during the Vietnam War in the 1960s and ‘70s, tens of thousands of Americans moved to Canada to evade the U.S. military draft. Those who did so or deserted were pardoned in 1977.

‘Implications can be incredibly complex’

The exact number of U.S. citizens in Canada is hard to determine, but it’s estimated that at least 1 million Americans live in Canada either as sole U.S. citizens, dual citizens or permanent residents.

Even so, interest in relocating to Canada is not necessarily spreading among high- and ultra-high-net-worth Americans, say experts who work with wealthy individuals and families.

“It’s very rare,” says Robert Bezede, director of corporate finance at Norton McMullen Corporate Finance Inc. in Markham, Ont., who works with wealthy individuals and families on business transition. “There aren’t a lot of people I know who will just walk away from the world’s biggest market.”

Mike Finger, founder of U.S.-based Exit Oasis Inc., a business transition advisory firm, gives a similar answer.

“I deal with people all day, every day, who are seeking to sell or move a business, and I have never met anyone doing that [selling and relocating completely to Canada],” he says. “Even for a business that’s staying put in one country, the financial and tax implications can be incredibly complex as is.”

The appeal of another land

For starters, even the highest-net-worth prospective newcomers have to navigate Canada’s immigration system before they can stay. After that, they’ll need to contend with individual and corporate tax laws and treaties and differing business regulations in the two countries.

To Canadians grumbling this summer about our own problems, such as lost luggage at the airport, noisy trucker protests or endless waits at hospital emergency rooms, the idea that some Americans would consider moving to Canada might seem puzzling.

But people living in the United States might think differently. Mass shootings are nearly a weekly occurrence, abortion is now banned in many states even under the direst of circumstances, and the 2020 U.S. election keeps being refought in the news, in court and in Congress as former President Trump claims that he did not lose — without evidence but with considerable backing.

“Canada’s appeals are obvious: the nature, the livable cities [Calgary, Vancouver and Toronto are in the Economist Intelligence Unit’s Top 10 list], the publicly funded health care, the diversity, the lower crime rates,” writes senior contributor Laura Begley Bloom in Forbes. “Also helping drive the recent interest: Abortion is legal in Canada.”

Bezede, who works with families and businesses worth anywhere from $5 million to $500 million, says that for wealthy U.S. residents who move to Canada, “the inflection point that gets them to move is not usually political; it’s more family considerations. Wealthy people tend to be pretty thick-skinned about politics, regardless of what the politics are.”

‘Buyer’s remorse’

Another problem for high-net-worth people can arise when the source of their wealth is tied up in the history and culture of a particular community, so they don’t want to sever all their ties.

“I guess you could simply decide to live in Canada, but your investments and the sources of your revenues will still be [in the U.S.],” Bezede says.

Those who do move to Canada sometimes have buyer’s remorse, adds Conrod. That can bring its own complications.

“I’ve had situations where clients move to Canada, and then they want to move back and they find out that Canada has a departure tax,” she says.

If anything, she adds, there does seem to be some interest among U.S. citizens who are already here in making it permanent, Conrod adds. “I find more Americans who are already in Canada saying that they don’t like what’s happening down there, that they’re done and they want to renounce their citizenship.”

“But that can be complicated too, especially if you’re wealthy.”

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