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Tag Archive for Canada

Canadian Citizens Moving To China – Can You Answer Their Tax Questions?

Tax Question

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QUESTION

My spouse and I are Canadian citizens and are currently visiting China. Although we are not residents of China, we are planning to stay here for a minimum of 3 to 4 years before returning to Canada. During these years living outside Canada, we are planning to file our income tax as a non-resident. We don’t have any significant residential ties to Canada (i.e. we don’t own a home or vehicle in Canada, nor do we have any dependents living in Canada.) For secondary residential ties, the only tie that we currently have is a bank account with RBC, TD and money is sitting in Meridian Credit Union high interest saving accounts. We are still using our Canadian Credit Cards while visiting China.

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IRC Section 965 Transition Tax – Part 9

John-Richardson- Investigating the Transition Tax

From The “Pax Americana” To The “Tax Americana”

This is the ninth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by taxpaying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen.

Introduction – The purpose of this post is …

to demonstrate that the “transition tax” is an example (particularly egregious) of the principle that (1) not only does the United States impose “worldwide taxation” on the “tax residents” of other countries, but  (2) it imposes a separate tax regime on certain “tax residents” of other countries that is different and far more punitive than the regime imposed on Homeland Americans. Yes, you read correctly!

It is the “Tax Americana”– a “form” (no pun intended) of an “empire” which is colonizing other countries through taxation.

A recent and most important example of the “Tax Americana” is the “transition tax” : A U.S. resident who has undistributed earnings in a U.S. corporation will NOT be subjected to the “transition tax”. A Canadian resident who has undistributed earnings in a Canadian corporation will be subjected to the “transition tax”!

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IRC Section 965 Transition Tax – Part 8

John-Richardson- Investigating the Transition Tax

This small business thought it was saving to invest in business expansion – Wrong, they were saving to be robbed by America!

This is the eighth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by taxpaying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen. Read more

Canada Tax – Books And Records Kept Outside Of Canada

Grant Gilmour Books And Records Kept Outside Of Canada

Is a non-resident corporation that is registered for a Goods and Services Tax/Harmonized Sales Tax (GST/HST) account with the Canada Revenue Agency (CRA) required to keep records and books of account in Canada?

The Canadian Income Tax Act (ITA) requires everyone who registers for a GST/HST account to keep records and books of account in Canada in either English or French. However, CRA does allow the books and records to be kept outside of Canada in some circumstances. Read more

IRC Section 965 Transition Tax – Part 4

Canada, Transition Tax, John Richardson, non-US residents, tax laws

This is the fourth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by tax paying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen.

Last night I was discussing the “transition tax” with an “individual” who is impacted by the tax AND is a Homeland American. He is a “tax resident” of ONLY the United States. For Homeland Americans who are subject to ONLY the U.S. tax system the “transition tax” is NOT a bad thing. Read more

IRC Section 965 Transition Tax – Part 3: The US Wants Your Pension

Canada, Transition Tax, John Richardson

This is the third in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by tax paying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen.

Those who fail to learn from history are doomed to repeat it Read more

IRC Section 965 Transition Tax: Part 2

John-Richardson- Americans Abroad, Transition Tax, IRC Section 965, Canada,

The possible use of the Canada U.S. tax treaty to defeat the “transition tax”

Beginning with the conclusion (for those who don’t want to read the post)

For the reasons given in this post, I believe that there are grounds to argue that the imposition of the Sec. 965 “transition tax” on Canadian resident/citizens DOES violate the Canada U.S. tax treaty. It is my hope that this post will generate some badly needed discussion on this issue. Read more

IRC Section 965 Transition Tax: Resistance Is Futile

transition tax, americans abroad, expatriate, canada

“This legislation is being interpreted by a number of tax professionals to mean that individual U.S. citizens living outside the United States are required to simply “fork over” a percentage of the value of their small business corporations to the IRS. Although technically “CFCs” these companies are certainly NOT foreign to the people who use them to run businesses that are local to their country of residence. Furthermore, the “culture” of Canadian Controlled Private Corporations is that they are actually used as “private pension plans”. So, an unintended consequence of the Tax Cuts Jobs Act would be that individuals living in Canada are somehow required to collapse their pension plans and turn the proceeds over to the U.S. government” Read more

Canada: Speculation Tax On Real Estate

Grant Gilmour, Speculation Tax, Canadian Tax Help

What Is The Speculation Tax?

The 2018 budget released by the B.C. Government introduced a new tax on Real Estate effective in the 2018 tax year called Speculation Tax.

Real estate prices in B.C. have increased substantially in the last couple of years and there is increased interest and ownership of B.C. real estate by foreign parties. The speculation tax has been introduced by the B.C. Government as an attempt to help address this. The speculation tax is designed to target foreign and domestic home owners in B.C. who hold non-owner occupied properties which are not qualifying long-term rental properties. This tax will initially apply to homes in Metro Vancouver Regional District (excluding Bowen Island), the Capital Regional District (excluding the Gulf Islands), Chilliwack, Abbotsford, Mission, Nanaimo, Lantzville, Kelowna and West Kelowna.

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Security Deposit Required By Canadian Revenue Authority For Non-Resident Corporation

Grant Gilmour- Canada Revenue Authority Requires Security Deposit For Non- Resident Corporations

A non-resident corporation who is registered for GST/HST is required to provide and maintain a security deposit with the Canada Revenue Authority (CRA). However, if under a specified threshold of sales and net tax payable or refundable, a corporation may be exempt.

Discussion

The minimum amount of security is $5,000 CAD, but can be as a high as $1 million CAD. The initial security deposit amount is based on 50% of the estimated net tax for the year. Net tax is calculated using the company’s Canadian net profit (Canadian sales less Canadian expenses) for the year, multiplied by 5% GST rate (or HST if selling in provinces with HST — see International FAQ #39). Then 50% of the net tax amount is your required security deposit.

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Canada: Goods And Services Tax On Residential Real Estate

Grant Gilmour- Goods And Services Tax

In real estate, the beneficial owner of the property has the responsibility to collect GST and remit to Canada Revenue Agency (CRA). If the property is held “in trust” by another corporation or entity, the beneficial owner is still required to register and file GST returns. It is common for third parties such as agents or property managers to be designated to collect GST on rental income. There is a special election that allows the agent to remit GST on behalf of the owner, but responsibility is still on the beneficial owner.

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Tax Obligations For Holding Foreign Real Estate

Grant Gilmour, Canadia Tax Expert

If a Canadian corporation holds foreign real estate, there are certain reporting requirements:

  • T1135 return must be filed if you own property with a cost of $100,000 Canadian dollars or more (see International FAQ #12).
  • If a Canadian corporation owns 10% or more in shares of a non-resident corporation (foreign affiliate), then there is a requirement to file a T1134 return (see International FAQ #34).

These reporting requirements are just information returns. Any additional tax liabilities are reported on corporate or personal tax returns.

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