Often, U.S. citizens who move to Canada are shareholders of U.S. S Corporations. This can potentially create double tax problems. Under Canadian tax law, the S Corporation is just like any other foreign corporation. Dividends received are generally fully taxable. In addition, if the S Corporation is a “controlled foreign affiliate”, the shareholder can be… Continue Reading
Category Archives: Canada/US tax issues
HOLDING CANADIAN VACATION PROPERTIES IN A US ENTITY AVOIDS EXPOSURE TO CANADIAN TAXES ON DEATH
Many Americans hold interests in vacation or recreational properties in Canada. Often such properties are intended to be passed on from generation to generation. Canada taxes U.S. residents on capital gains from the sale or other disposition of Canadian real estate, even if such real estate is held for recreational or vacation purposes. Canada’s ability… Continue Reading
S CORPORATIONS BEAT-OUT LLCs FOR AMERICANS CARRYING ON BUSINESS IN CANADA
As a general rule, U.S. residents are only subject to Canadian tax on business income to the extent that such income is earned via a permanent establishment (“PE”) in Canada[1]. If a U.S. C corporation earns profits that are taxable in Canada, such profits will be subject to federal corporate taxation under Part I of… Continue Reading
THE TAX IMPLICATIONS OF SPIN-OFF REORGANIZATIONS OF US PUBCOS FOR CANADIAN RESIDENTS
It is very common for U.S. public corporations to “spin-off” their holdings in other US corporations, so that their shareholders own such holdings directly. If properly implemented, a reorganization of this nature should be tax-free for US tax purposes as result of the application of IRC Sec. 355. The Canadian Income Tax Act (“the Act”)… Continue Reading
CANADA-US CROSS BORDER TAX ISSUES IN CONNECTION WITH EMPLOYEE STOCK OPTIONS
Canada and the US both tax employees who receive benefits from options they are granted to acquire shares in their employer or a related entity. This article will focus on the Canadian tax implication of employee stock options (“ESO”), and how these rules apply in certain Canada-US cross-border situations. As a general rule, stock options… Continue Reading
THOUSANDS OF CANADIAN EXPATS IN THE U.S. NEEDLESSLY PAY CANADIAN TAX!
Thousands of Canadian expats living in the U.S. needlessly pay Canadian tax! How do I know that? Well, I don’t really know for sure, but I can tell you that, over the years, I have seen dozens of situations where that is the case, and I have to assume that what I am seeing is… Continue Reading