Canadian International Tax

NON-RESIDENTS INVESTING IN CANADIAN REAL ESTATE CAN CUT TAXES ON CAPITAL GAINS BY PROPER USE OF FORCO

In this troubled, chaotic world we are living in, Canada remains a politically and financially stable locale that is an attractive destination for foreign investment. I have little doubt that, in the years ahead, investment in Canadian real estate by non-residents will continue to be quite substantial. Over the years, I have found that most… Continue Reading

CANADIAN TAX ISSUES WITH ALIMONY PAYMENTS TO AND FROM NON-RESIDENTS

Under the Income Tax Act (“the Act”) alimony[1] paid by a separated or divorced spouse will generally be deductible in computing income of a Canadian resident. This assumes that it is paid pursuant to a written agreement or court order, and paid as an “allowance” on a periodic basis. Similarly, a Canadian resident recipient of… Continue Reading

CANADIANS CAN DEDUCT US TAX PAID RE LLCs EVEN IF NO INCOME REPORTED

As a general rule, a Canadian resident can claim of credit against his/her/its Canadian income tax liability for foreign income taxes paid (“foreign tax credit”-“FTC”). The rules relating to claiming FTCs are generally found in section 126 of the Income Tax Act (“the Act”). Unless the foreign tax is related to a business carried on… Continue Reading

CANADA’S OFFSHORE TAX INFORMANT PROGRAM-THE CRA PROVIDES SOME UNIMPRESSIVE STATISTICS ON RESULTS

On January 15, 2014, the CRA launched the Offshore Tax Informant Program (OTIP). As described on CRA’s website, this program “offers financial rewards to individuals with specific and credible information about major cases of international tax non-compliance resulting in more than $100,000 of additional federal tax being assessed and collected.” In that connection, Question 14… Continue Reading

CRA CONFIRMS THAT PENALTIES FOR FAILURE TO FILE FOREIGN PROPERTY INFORMATION FORM CAN BE STATUTE BARRED

Under subsection 233.3(3) of the Income Tax Act (“the Act”), Canadian residents are generally required to file form T1135 for any year in which they have “specified foreign property” with a total cost base of more than $100,000 at any time in the year. This form is generally due at the same time that the taxpayer’s normal… Continue Reading

TAX ISSUES FOR CANADIAN EXPATS WITH OFFSHORE TRUSTS

As a general rule, if a Canadian resident (“the contributor”) contributes property to a trust that would otherwise be non-resident (“NRT”), the trust will be a deemed resident trust (“DRT”). A DRT is subject to an extremely complex set-of rules in the Income Tax Act (“the Act”) generally found in section 94. As outlined in… Continue Reading

CANADIANS WITH FOREIGN REAL ESTATE CORPORATIONS CAN FACE SURPRISING FAPI ISSUES

A Canadian resident who is a shareholder of a “controlled foreign affiliate” (“CFA”) will have special Canadian tax issues if that CFA earns “foreign accrual property income” (“FAPI”). Any corporation that is not resident in Canada (“Forco”) will be a CFA of a particular Canadian resident if it is controlled by that Canadian resident.  However,… Continue Reading

CANADIAN NON-RESIDENT WITHHOLDING TAX ISSUES IN CONNECTION WITH PAYMENTS TO PARTNERSHIPS

Tax under Part XIII of the Income Tax Act (“the Act”) applies to many types of payments received by non-residents of Canada from Canadian residents[1]. Most commonly this can apply to dividends paid by Canadian corporations; royalties paid by Canadians for the use of property in Canada; rents paid by Canadians for the use of… Continue Reading

MORE HOGWASH ON OFFSHORE TAX AVOIDANCE FROM TORONTO STAR/CBC DUO-CANADA’S TIEAs GET A BUM RAP!

Most readers of the June 17, 2016 edition of the Toronto Star could not have failed to notice the headline of a prominently featured article: “Tax loopholes cost Canada billions in lost revenue” This was followed by the following subheading: “Canada used agreements meant to crack-down on tax evasion to open-up tax loopholes” What a… Continue Reading