2016 Articles

As you may be aware of there is a federal tax withholding requirement on the sale of U.S. real estate by non-U.S. persons. This does not exempt the vendor from filing a U.S. tax return to report the sale and paying any tax payable or requesting a refund for excess federal tax withholding. There are […]

Revisions to Section 55 of the Income Tax Act (“ITA”) may prevent the tax-free payment of inter-corporate dividends within a related corporate group. With the exception of Part IV tax where applicable, the related party exemption per S55(3)(a) will no longer be available to allow cash dividends say paid from Opco to Holdco unless there […]

The taxation of corporate income from the rental of storage facilities appear to be a common business under regular review just like the motel/hotel and rental management business. Basic tax rate concepts The Canadian concept of integration is based on the premise that it should cost more to earn income directly or indirectly through a […]

On May 23, 2016, Internal Revenue Bulletin 2016-21 was released which proposes amendments to the regulations governing IRC 6038A. The regulations are proposed to be applicable for taxable years ending on or after the date that is 12 months after the date these regulations are published as final regulations in the Federal Register. IRS Form […]

On August 4, 2016, the IRS released Notice 2016-48 outlining the renewal procedures pertaining to the implementation of the changes to the ITIN process as required by the PATH ACT, passed in December 2015.  There were also changes to requirements for dependents. Only ITIN holders who need to file a tax return may need to […]

Recently I heard that U.S. citizens residing in the UK are receiving FATCA letters advising them to get in touch with their financial advisors. This is a signal that the sharing of information on foreign financial accounts of U.S. persons residing abroad is in full force and that the OVDP or streamlined domestic and foreign […]

The T1134 and T1135 are a sample of Canadian foreign information returns like the U.S. 8938, 5471 or 8865. A number of Canadians are investing in the U.S. real estate market with a U.S. limited partnership whose limited partners are solely Canadian residents and the general partner is a U.S. C corporation whose shareholders are […]

Last fall the IRS announced the increase in the expensing limit with respect to the safe harbor limit contained in Regulation 1.263(a)-1(f) from $500 to $2,500 per substantiated invoice. The increase commences in 2016. The election basically allows taxpayers without an AFS (applicable financial statement) audited by a CPA, to expense items that would otherwise […]

FINCEN114 due June 30th for the 2015 taxation year, reporting beneficial interest or signature authority in non-U.S. financial accounts where the annual aggregate highest balance is greater than $10K U.S., may have to be filed by Canadian taxpayers. Those who meet the substantial presence test for residency in the U.S., regardless of a claim under […]

U.S. citizens (or even green cardholders) resident in Canada who are contributors (or a joint contributor) to their children’s RESP (“registered educational savings plan”) may have U.S. reporting issues. Should the RESP be regarded as a foreign trust by the IRS (as they do with RRSPs), then the RESP would be regarded as foreign grantor […]

Regulation 102 of the Income Tax Act (“ITA”) requires payroll withholding on income derived by virtue of employment. This applies to say a U.S. employer sending its employee to Canada to work on an assignment. Withholding would include income tax and contributions to the Canada Pension Plan (“CPP”) and Employment Insurance (“EI”). CPP is not […]

The Income Tax Act provides a time period in which one may appeal a notice of assessment or reassessment. It is not unusual for a taxpayer not to have received the NOA. Although the taxpayer should advise CRA of any change in addresses or to correct an incorrect address on file, this case was decided […]

Section 2004 of the “SURFACE TRANSPORTATION ACT OF 2015” implements new reporting or what may otherwise be called “stepped up basis conformity”, for executors to ensure basis of assets inherited by heirs of an estate is in agreement with the value determination for federal estate tax purposes. Section 6035 of the IRC is the NEW […]

The updated Streamlined Program that was revised in June 2014 is a simplified method of allowing delinquent U.S. taxpayers to become tax compliant. If certain conditions are met, tax and information return penalties could be waived. Refer to my article on the website and the IRS site for additional information on the program. On December […]

On December 18th, President Obama, signed H.R. 2029, the tax (the “Protecting Americans from Tax Hikes Act of 2015”) and spending bills (Consolidated Appropriations Act, 2016) to fund the government for its 2016 fiscal year. The December The Act increases the rate of withholding from dispositions of U.S. real property interests under §1445 from 10% […]

On December 18th, President Obama, signed H.R. 2029, the tax (the “Protecting Americans from Tax Hikes Act of 2015”) and spending bills (Consolidated Appropriations Act, 2016) to fund the government for its 2016 fiscal year. The Act requires individuals who were issued Individual Taxpayer Identification Numbers (ITINs) before 2013 to renew their ITINs on a […]