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 IRS Form 8833.

U.S. forms are available on the IRS website (at http://www.irs.ustreas.gov/pub).

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 provisions should be dealt with before any transfer takes place to ensure the rollover is available in Canada.

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.

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 the payor prior to the anticipated receipt of any US income to ensure the lower treaty rate (which could be 0%,5%, 10% or 15%) in lieu of the US IRS code withholding rate of 30%. Interest, dividends, royalties, pension are usually the types of income that are overlooked.

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 refundable when a taxable dividend is paid to the shareholder or to a recipient corporation. The dividend refund also results in a reduction in the RDTOH of the payor corporation.

In order the obtain the dividend refund, the corporate returns of the payor must be filed on a timely basis and no later than 3 years after the end of the year in which the dividend refund arose. Annual filing due dates of the T2 is within 6 months after the end of the taxation year.

There have been a number of court cases on this and it is advisable to always file the annual T2 on time to avoid problems. If the dividend has been paid, the recipient pays tax on the dividend (T5 has been issued), if the dividend refund is disallowed, the combined tax personal and corporate for the year in which the dividend was paid will be considerably higher.

The question would be is if the disallowed dividend refund which is otherwise a reduction of what you would pay on filing, does it stay in the RDTOH account if you filed beyond the 3 year limit.

Answer-Absolutely not.

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 market tax on certain unrealized gains in excess of $690,000 (2015) and a 30% tax on future receipt of certain deferred items. The market to market tax may be deferred if you meet certain conditions.

Covered expatriate status which is otherwise dependent on an average federal income tax liability greater than $160,000 (2015) for the 5 years ending before the date of expatriation or having a net worth of at least $2M at the expatriation date will be automatic if you have not complied with 5 years of tax returns prior to expatriation. There are certain exceptions to CE status for certain dual citizens and minors.