As U.S. persons residing in Canada are subject to the federal U.S. estate rules, the provisions become more complicated when one spouse is not a U.S. person. The IRS code and regulations need to be examined in conjunction with Article XXIX-B of the Canada/U.S. Tax Treaty to determine the tax effective manner to transfer wealth.read more
As of July 2013, you can defer receiving your Old Age Security (OAS) pension for up to 60 months (5 years) after the date you become eligible for an OAS pension in exchange for a higher monthly amount. If you delay receiving your OAS pension, your monthly pension payment will be increased by 0.6% for every month you delay receiving it, up to a maximum of 36% at…read more
U.S. citizens or long term residents who are covered expatriates who gift property during their lifetime or have bequeathed property upon their death, to a U.S. citizen or U.S. resident will cause the recipient of the gift to pay gift tax to the extent that the taxable gift exceeds the annual exemption. For 2015, the annual exemption is $14K. For this purpose, resident is one…read more
If you have accounts receivables from a U.S. entity, you may get the request for a W8-BEN or a W8-Ben-E form. Without this form, the U.S. entity that pays your accounts receivable will withhold a non-resident tax. The only way to get the refund of the tax is to file a U.S. non-resident return, either a 1040NR for individuals or a…read more
Confirmation that the “SURFACE TRANSPORTATION ACT OF 2015” in Section 2606(3)(11) makes reference to Regulation 1.6081-5 of the IRC which confirms that the due dates will conform to the June 15th automatic extension if one resides outside of the U.S. on April 15th. One may file IRS Form 4868 to extend the date to October 15th. The Secretary may waive penalties for first…read more
Canadians who wish to reside in the U.S. for the winter months should be aware of the U.S. residency rules. If you fall into these rules, you could be subject to U.S. tax on your world income unless you file the appropriate forms for exemptions.
Like U.S. citizens, green card holders are considered lawful permanent residents of the U.S. and must file annual federal personal income tax returns U.S. 1040….read more
If you are not eligible to file Form 8840 because you were present in the U.S. in the current year for a period of 183 days or more or you hold a green card, you must look to the Canada/U.S. Tax Treaty on the definition of residency to support your case on non-resident status for U.S. tax purposes and file…read more
Numerous immigrants to Canada or those residing in Canada but have worked for say U.S. employers have entitlements to U.S. pensions such as 401K plans and in some circumstances they have U.S. IRAs. The Income Tax Act has provisions to allow transfers including a claim for any U.S. withholding tax or for applicable early withdrawal penalties.
Examination of both the U.S. and Canadian tax…read more
In a ruling, the CRA confirmed that a series of transactions designed to monetize the cost base created by the deemed disposition of shares on death were not offensive. The ruling summarized the factors the CRA considers in determining whether to apply the various anti-avoidance provisions that could be relevant.read more
Make sure you have the correct amount withheld from US income received. Generally amounts withheld in excess of treaty rates will not be creditable in Canada. In order to get the a refund from the IRS, you will need to file a U.S. 1040NR return and apply for an ITIN (individual taxpayer identification number) with the ITIN office.
Waiver forms such as the W8BEN should be submitted to…read more
CANADIAN PRIVATELY-OWNED INVESTMENT CORPORATIONS SHOULD NOT LATE FILE THEIR CORPORATE T2 TAX RETURNS
Companies that earn passive or investment income such as capital gains, interest or rental income pay corporate tax at a higher rate than the low rate on active business income. To ensure integration of the tax system, part of the Part I tax and where applicable Part IV tax goes into a notional refundable dividend tax account (“RDTOH”) that is…read more
Those who wish to wish to explore expatriation by giving up U.S. citizenship or their green card will have to timely file IRS Form 8854 and compute if applicable, an exit type tax if they are considered a “Covered Expatriate” (“CE”) under Section 877A of the IRS Code.
The exit tax is composed of a market to…read more
I AM A U.S. CITIZEN AND HAVE RESIDED IN CANADA FOR YEARS AND HAVE NOT FILED U.S. RETURNS. WHAT CAN I DO OR WHAT COULD HAPPEN IF I DO NOTHING?
U.S. persons including U.S. citizens or green card holders residing in Canada who are not up to date with their U.S. filing obligations should consider the available programs in an effort to become tax-compliant.
The updated streamlined procedures announced on June 18, 2014 modified changes…read more
Alternative to the SFOP is filing under normal assessment procedures or applying under the 2014 OVDP (“Offshore Voluntary Disclosure Program”).
The OVDP is generally reserved for taxpayers who may possess higher risk such as those who may have difficulty in determining or be concerned that their conduct may not be non-willful. If one’s conduct was willful then all bets are off causing civil and…read more
The 2015 Federal Budget proposals to section 55 may cause otherwise tax free inter-corporate dividends to be subject to taxation as proceeds of disposition (ie., capital gains) that previously were exempt from the ambeit of section 55. Computation of safe income or post-1971 tax retained earnings may now be required in every instance to ensure one is not caught. Timely section 55(5)(f) designations…read more
APPLICATION EXTENSION OF TIME TO FILE APPEAL GRANTED – APPLICANT AS SOON AS CIRCUMSTANCES PERMITTED
The applicant was seeking an order to extend the time within which to appeal his assessments for the 2007 and 2008 taxation years. The applicant filed paperwork to appeal six months after notices of reassessment were issued, in the belief that he had eighteen months to appeal. In fact, appeals must be filed within ninety days.
The application for an…read more
US citizens residing in Canada are not taxable on their US social security for US tax purposes in accordance with Article XVIII of the Canada/U.S. tax treaty. The country of residence taxes the other countries social security payments to 85%. Likewise CPP or OAS from Canada is excluded on the US 1040 if you reside in the US. If the particular social security payment is included in a country’s…read more