How to secure your assets abroad to reduce the risk of loss

November 23, 2014

From a vacation home to shares in a company,owning assets abroad can be both risky and rewarding. Here's how to keep your assets safe and reduce the risk of loss.
For many, holding assets abroad carries financial and personal advantages. For that reason, Canadian citizens must ensure their assets are safe and well-protected. Regardless of the type of asset, the right measures and precautions will ensure you don't lose out financially.

How to secure your assets abroad to reduce the risk of loss

Make sure the assets are protected

Don't make investments that aren't protected by agreements. Take the necessary steps to ensure your asset is 100 per cent secure.

  • When you open a bank account, take time to look over the terms and conditions.
  • If you invest in a business, hire a local lawyer to make sure everything is legitimate.
  • If you buy a home, research local laws about foreigners buying property.

Always check the policies of the government before investing in any major asset in that nation.

The Canadian government has entered into bilateral agreements with many foreign governments to ensure the assets of Canadian citizens are protected in their countries. Known as the Foreign Investment Promotion and Protection Agreement, this contract guarantees that Canadian investors abroad have certain legal rights and are protected by legally-binding obligations.

  • Many nations, such as Venezuela, Thailand and Egypt, have cooperated with Canada, which should make Canadian investors feel safer about investing abroad.

Have an exit strategy

This is especially important in countries where political turmoil, economic collapse or war is a concern. It's also crucial if you are engaging in a risky investment. You must be certain that, when the time comes, you can liquidate your assets and move them back home.

  • If you invest in a business, consider whether you will be able to sell your portion if the company is failing or not heading in the direction you want.
  • If you have money in a foreign bank, make certain that money can be taken out if economic collapse threatens its existence.
  • If you buy a holiday home, pay attention to the housing market and try to sell when the time is right.

Prior to making any investment, you not only want to analyze its potential, but also its risk. Only place major assets abroad if you have a solid emergency exit strategy.

Know how to handle taxes

It's vital that you report any income earned abroad. This can be anything from money made teaching English in a developing nation, or dividends from stocks in the United States. This income must be reported to the Canada Revenue Agency (CRA).

  • If you fail to report the income from your assets abroad or purposely avoid doing so, you risk having those assets seized. The good news is that you most likely won't get double-taxed. The Canadian government offers a credit on taxes paid to foreign governments.

Assets abroad can be something as standard as a bank account or as large as multiple acres of land. Protecting those assets involves not only entering into legitimate contracts, but also paying appropriate taxes and having an exit strategy if things go awry.

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