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* Editor's note: This column is the second part of a series which explores the potential benefits of transferring your assets held abroad in Canada.

Obtain local service and advice, with a Canadian perspective

At the time of writing, very few financial institutions within the United States or abroad have demonstrated an ability to provide advice regarding how assets held in an account outside of Canada fit in the context of a Canadian resident's overall retirement plan. Also, providing customized advice by telephone and e-mail can be challenging.

Simplify your tax reporting and possibly reduce associated costs

A major disadvantage to earning investment income from assets held outside of Canada is that a foreign financial institution will not issue the standard tax slips that are familiar to Canadian investors (such as T5 and T3 slips for federal income tax).

Under Canadian tax rules, Canadian residents are required to report and pay tax on their worldwide income, including investment income, regardless of where the investments that produce it are located and regardless of whether a tax slip is issued.

Receiving tax slips that you are not familiar with, or no slips at all, means that you may have difficulty classifying and correctly reporting your investment income earned abroad. As a result, your tax-return preparation fees may be higher.

In addition, investment income earned on securities of a foreign issuer will generally be subject to non-resident withholding tax at source. In many cases, you will be able to claim a credit on your Canadian income tax return for the foreign tax paid, which will reduce or eliminate the impact of double taxation.

However, in some cases, the amount of foreign tax withheld at source may exceed the amount of Canadian tax that would have been payable had you earned a similar type of investment income in an account held with a Canadian financial institution. For further details on this, you should consult a professional tax advisor.

Ease of administration in the event of incapacity or death

While estate planning and planning for potential incapacity are not pleasant topics, it makes sense to have a plan in place to ensure that you and your loved ones are properly provided for in the event that something unexpected should happen to you.

If you hold assets in a foreign jurisdiction at a time that you become incapacitated or at the time of your death, an already difficult situation can become much more difficult, stressful and complicated for everyone involved.

If you have a properly drafted Will that reflects your current wishes and a power of attorney (or mandate in Quebec), you can be relatively sure that things will go smoothly when these documents are needed - once their validity has been recognized by the financial institution holding your assets.

While there are many compelling reasons to transfer your assets held abroad to Canada, you should consider the tax implications of selling your investments and converting them to Canadian currency before you proceed.

Note that certain types of investments can be transferred into an account in Canada without selling them. This would include most securities that trade on a major U.S. stock exchange.

Before you transfer investments held abroad to Canada, you should consult a professional tax advisor to be sure that the transfer will not result in any undesirable tax implications. In some cases, it may be best to simply leave the foreign investments where they are.

Note: The strategies, advice and technical content in this publication are provided for the general guidance only.

This column is not intended to provide specific financial, investment, tax, legal, accounting or other advice for you, and should not be relied upon in that regard.

Readers should consult their own professional advisor when planning to implement a strategy to ensure that individual circumstances have been considered properly and it is based on the latest available information.

* David Konning is an investment and retirement planner at Royal Bank. If you would like to reach him, please e-mail him at David.Konning@rbc.com or phone 856-0406.