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Will John Tavares have Double Tax Trouble?
NHL player John Tavares’ well-publicized litigation pending before the Tax Court of Canada demonstrates the principle that resolving cross-border tax disputes in a purely domestic fashion can be problematic. The facts of the case are straightforward and worth...
An update on the US Net Investment Income Tax for US citizens in Canada
For many US citizens who are resident in Canada, the Net Investment Income Tax (NIIT) is the only US tax they pay every year. Without a foreign tax credit or exemption, the imposition of the NIIT results in double taxation since the investment income is also subject...
Canadian tax changes double the tax exposure for Canadian private companies with US subsidiaries
In the April 2022 federal budget, the Canadian government proposed significant changes to the Canadian international tax rules (specifically the “foreign accrual property income” or “FAPI” rules).
US LLCs Cause Canadian Tax Problems
The limited liability company (“LLC”) is a very common US business entity that unfortunately can cause Canadian tax problems for its owners. These problems primarily arise from a fundamental difference in how many LLCs are taxed in the US and Canada. For a Canadian...
An Update on Form 3520 + 3520-A for the TFSA
The resolution of three recent cases at the IRS Independent Office of Appeals support our longstanding view that no Form 3520 or 3520-A are required to report a TFSA to the IRS. As background, last year the IRS released guidance that exempted taxpayers from filing...
Foreign Life Insurance for US Taxpayers
In the previous installment, we discussed the potential Canadian tax problems when a Canadian tax resident purchases a US life insurance policy. In this installment, we examine the same scenario in reverse – what happens when a US taxpayer purchases a Canadian life...
US Life Insurance for Canadians
Many Canadians own some form of life insurance on the assumption that the insurance would provide tax-free funds to support their beneficiaries. While this is generally true, complex tax rules can lead to a different result in the cross-border tax context. What is...
Is the Perfect Storm Brewing for Non-Compliant US Taxpayers Abroad?
There are, by one estimate, 825,630 US citizens in Canada. Even if they owe no tax, nearly all are still supposed to file US federal income tax returns. Despite the penalty risk, many US citizens outside the US do not file US tax returns. To date, the consequences of...
Estate Planning in the COVID-19 Context
Recently, the world woke up to the health risks posed by COVID-19. Society at large is taking steps to curtail the impact of the virus. Closer to home, the virus should prompt people, especially those who are older, to make sure their affairs are in order. People...
IRS Update on COVID-19 Relief
The IRS has just announced limited relief for certain taxpayers due to the COVID-19 pandemic (Notice 2020-17). However, as currently drafted, this relief would not apply to US citizens or residents residing abroad. In particular, section III of Notice 2020-17 grants...