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Canada’s common sense - 25 February 2009

Our government is taking a host of measures to try to help the country claw its way out of recession, and all economic experts are in agreement that regardless of the success or failure of such measures, taxes will rise significantly in the future to cover costs. With this in mind, the Daily Mail last week proposed some destinations in which to buy property abroad where the tax regime takes less from your wallet than the UK.

However, the article failed to mention the one major economy that seems to be weathering the storm better than any others – Canada. Canada is alone among industrialized nations in not suffering a single bank failure and not having to make a single state intervention into the financial or mortgage sectors. Common sense has dictated that, unlike Europe and the US, Canada has kept old-fashioned financial rules for its banks and mortgage lenders.

The results are clear – 12 years of budget surpluses, a sound pension system, and healthcare that is both cheaper and better than that of America. Canada is now pushing other countries to adopt similar banking rules.

While avoiding paying higher taxes in the UK is perfectly valid, people buying a property in Canada at least are unlikely to have to pay more tax in order to cover bail-outs and state support for private companies. This stability will make the country cheaper to live in on a global scale as other industrialized nations become more expensive.

For those looking to reduce their tax burden, the article outlined a variety of destinations across the world. One of the options mentioned, the Caribbean islands, which offer tax-free living for many residents, have suffered their own unwelcome scrutiny in recent days with the collapse of the Stanford banking empire. Despite this, buying property in the Caribbean is likely to remain as popular as ever for those with the funds available.

Other possible havens with favourable tax rules mentioned in the piece were in Central and South America. Retirees have been encouraged to buy property in Belize by a relaxation of the tax and import duty laws for anyone over 45 with a monthly income above £1,350.

Panama, one of the emerging markets for overseas property buyers in recent years, has favourable rules for those who stay for the five years needed to qualify for residency. However, the even bigger attraction is that all investment income from outside the country is tax-free.

Malaysia has other advantages for the purchaser of property abroad, with the Malaysia My Second home programme offering visas for residency and tax advantages. However, for anyone looking for an overseas haven a little closer to home, Cyprus is seen as a good option as the tax levels are lower than in the UK, and there are no inheritance or wealth taxes.

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