Oanda - why you could lose all your funds

[tar]

Hi, It is possible to open a canadian bank account if you are a UK citizen (as i am) and fund your oanda account this way. There is only a small cost in sending the money to and back between uk and canadian accounts.

However i am wondering what the law is as far as tax in concerned. Will you have to pay any canadian taxes since any profits will be payed into the canadian account and then transferred back to the UK where you must pay CGT. Would you be doing anything wrong by moving money this way? Can anyone shed any light on this as i can't find much researching on the web.

mmm, i wonder 2 ?

 

[screw_jack]

Hi, It is possible to open a canadian bank account if you are a UK citizen (as i am) and fund your oanda account this way. There is only a small cost in sending the money to and back between uk and canadian accounts.

However i am wondering what the law is as far as tax in concerned. Will you have to pay any canadian taxes since any profits will be payed into the canadian account and then transferred back to the UK where you must pay CGT. Would you be doing anything wrong by moving money this way? Can anyone shed any light on this as i can't find much researching on the web.

Capital gain is not taxable by the Canadian government as long as you are not deemed to be a Canadian tax residence. Since you don't live here, you won't be taxed. (As a side note you can be a Canadian citizen and not a tax residence if you fulfil certain criteria.) And it also seems they have eliminated the non-resident withholding tax on interests a couple years ago, so there should be no tax implication for foreign residence holding an Oanda account. Obviously you still need to report your gain s to Her Majesty's Revenue and Customs, but I doubt they will check that unless you have a lot of money.
The tricky part I suppose is how you can open a Canadian bank account from UK as normally Canadian banks only open a bank account in their branches. But even if you walk in, they will still need some sort of proof that you are living in Canada, so this probably doesn't work for most people.
Off the top of my head, possibly the easiest and cheapest way to open a Canadian bank account is through HSBC Premier, and, if I remember correctly, they will also open an overseas account for anyone who is willing to pay a fee.
I'm curious though. Why did you say there is only a small fee sending money between Canadian and UK bank accounts. Presumably you do it via telegraphic transfer, which incurs ghastly bank charges on the sending and receiving end. Wouldn't it be cheaper if you deposit and withdraw directly from Oanda?

 

[kcomplex]

Hi Jack,

Thanks for the tax information.

Upon further investigation and talking to Oanda, the main obstacle in seems to be opening an account with Oanda Canada in the first place. If you manage to do this then
you can fund the account straight from a UK account without having to transfer the funds via a canadian account. The problem is you need to have had a canadian bank account for 6 months and have a credit history in canada. Oanda rufused to elaborate on what exactly constitutes having a 'credit history' when i asked them if having and using a bank account for 6 months would be enough to qualify by itself. They also would not tell me the exact requirements needed to qualify for a canadian account. They did however say it would not be a problem if i lived in the UK.

HSBC is exactly the route i would be going and i have already spoken to them about this. At that time i assumed i would have to fund my oanda account via my canadian account and thus have to send money to and from the uk and canada. This is why i mentioned the charges which were about 17GBP a time when sending between hsbc accounts. Now i know i would be able to fund the account straight from my uk account provided i could find a way to qualify for Oanda Canadain the first place.

 

[Masquerade]

Just migrated my account to Oanda Europe, funds are now held in segregated accounts and the FSA covers up to £50k. It's not that much but should give people some peace of mind if they read this thread.

 

[t2wfx]

I have never doubt Oanda though. But yeah, thanks.