TaxConnections


 

Tag Archive for tax treaty

Payments To Foreign Persons And 1042 – March 15 Deadline

The Internal Revenue Service today reminded non-U.S. citizens who may have taxable income, such as international students and scholars who may be working or receiving scholarship funds, that they may have special requirements to file a U.S. tax return.

The IRS also reminded withholding agents — such as payroll professionals or universities — that accurately filed Forms 1042-S help speed any refunds due to their non-U.S. citizen taxpayers. Errors on forms or returns could result in some refunds being delayed.

Read more

Sending Non-Canadian Resident Employees To Canada

Larry Stolberg

Regulation 102 of the Income Tax Act (ITA) requires payroll withholding on income derived by virtue of employment. This applies to, say, a U.S. employer sending its employee to Canada to work on an assignment. Withholding would include income tax and contributions to the Canada Pension Plan (CPP) and Employment Insurance (EI).

Read more

Reporting A “Treaty-Based Position”—Internal Revenue Code S. 6114 Using Form 8833

John Richardson

The United States has many tax treaties with many nations. As a general principle the “savings clause” prevents Americans abroad from having the benefit of treaty provisions. That said, there are situations where a U.S. citizen abroad can benefit from the specific provisions of a specific treaty.

Read more

Part 2: Why Justice Martineau’s Decision Has Handed @ADCSovereignty The Framework For Ultimate Victory – The Importance of “Staying The Course”

Introduction – what this post is about …

I attended the hearing in Vancouver, B.C. on August 4, 5 2015. At that time I wrote a group of posts (here and here) discussing my perception of the hearing. Those posts included expressions of my opinion that Justice Martineau was highly engaged, was working hard on understanding the issues, and was affording all parties a fair hearing. Although, disappointed with his decision (handed down on September 16, 2015), and not agreeing with his conclusions, I reaffirm my sentiments in the previous posts.

This post is more about the “system” than it is about Justice Martineau specifically. In a judicial system, it is possible for “reasonable people” to have “reasonable Read more

Part 1: Justice Martineau Provides @ADCSovereignty The Only Thing Worse Than A Root Canal

This post is Part 1 of my thoughts on Justice Martineau’s decision.

I  left my root canal appointment this afternoon to a message announcing that Justice Martineau had rendered his decision. We did not win round 1. Notice that I did NOT say that the Government won round 1.

Here is the decision:

T-1736-14 decision sept-16-2015

Before, I comment specifically on the decision, I want to be clear on the following points: Read more

BEPS And Planet Mars

NASA recently announced that your name can be put on the planet Mars. This is incredibly great news for the people with good fortunes who are thrilled by the opportunity to gain their foothold in the universe and enhance their fame. However, in another space mission, scientists are attempting to find out if any life exists in other planets.

Think about it. If they indeed were able to find the life on Mars and if the inhabitants there happen to be much more advanced than the humans on earth, they are likely to have a tax law that can tax such inbound activities. Beware and think before you make that tempting decision.

Putting your name on a planet may have its other side. If “cross planet” law applies and Read more

U.S. Law Firms Consulting In India – Trap For The Unwary

International legal and independent professionals consulting in India often have issues receiving funds from their clients in India. India has stringent exchange control regulations contained in the Act called Foreign Exchange Management Act – FEMA. Accordingly all foreign remittances must go through certain procedures. Additionally, Income Tax Department asks for “Tax Residency Certificate” (TRC) from the US service provider so that the treaty benefits can be allowed. If TRC is not produced, the payer must withhold tax from the income remitted to US service provider. This is true regardless of where the services were provided.

Until recently, it was mandatory that TRC issued by foreign tax authority must contain all items required by the government of India in order to exempt any tax withholding Read more

Green Card Holders: Residency In Foreign Country And Treaty Benefits!

Tracking Storm Linus on the weather websites, watching the storm blow around the white stuff all day long, snow piling up 16 inches and more on it’s way, sneaking peeks at the Super Bowl while trying to write up this post- I realized how far we have come–long, long ways from being Green Card holders.

But I do remember that the transition to Green Card holder from a visa holder can be a somewhat exhilarating, somewhat frustrating journey. This process can take a long time and comes with a lot of trials and tribulations.

The tax rules for a green card holder remain fairly the same as a US citizen or a long time US resident for most purposes. The complications come into play when the Green Card Read more

Investments In Foreign Pensions And Annuities

I always liked the interestingly unique name, Phileas Fogg from “Around The World in Eighty Days”. Having traveled the world through books, I always wondered how different life would have been if I had the chance to live and work in many different countries!

Not so much any more as I encounter clients, many US citizens who were based out of the country for a few years. Especially those who could have contributed into or had employers contribute into their then resident country’s retirement accounts. These were either mandated by the resident’s country’s employer rules or were used as a tax saving strategy.

What is a foreign pension or foreign annuity?

Read more

The OECD v. Tax Havens: Part III – New Concerns

On July 13, the OECD issued a new paper titled, Action Plan on Base Erosion and Profit Shifting. The purpose of this paper was to outline the OECD’s new round of concerns regarding tax havens and their use in international tax planning. It is important to understand first what is behind the issuing of this new report:

Over time, the current rules have also revealed weaknesses that create opportunities for BEPS. BEPS relates chiefly to instances where the interaction of different tax rules leads to double non-taxation or less than single taxation.

One of the central purposes of the OECD’s original tax treaty was to divide taxing rights and Read more

REITs – A South African perspective as an OTC investment option

iStock_ Africa Money and Flag XSmallReal Estate Investment Trusts or REITs is a well known internationally known appropriate business structure yet South Africa only adopted its tax law as of April 1st, 2013 and its stock exchange listed or publicly listed trading rules to accommodate REIT’s as of May 1st, 2013.

Since then many property groups not only converted to a listed REIT but also restructured their balance sheets to remove the debt linked to a unit or a share. Now, on September 6th, the first American Depositry Receipt (ADR) status was granted to a South African listed REIT. One ADR unit equals 10 REIT units on the Johannesburg Stock Exchange. Despite the ZA Rand being at a 3 week high, the more recent currency exchange is circa R10=1U$D.

Real Estate Investment Trusts (REIT)

REIT’s are tax transparent or tax through flow investment vehicles that invest in and derive their income from real estate properties and mortgage, without necessarily paying tax on their trade result. To qualify for the South African REIT dispensation, a the REIT (either a company or a trust) must be tax resident in South Africa and be listed as an REIT in terms of the JSE (Johannesburg Stock Exchange) listing requirements.

REIT profits are distributed as tax deductible expenses (effectively pre-tax income) which is then received and taxed in the investors’ hands as taxable dividend income. As of 1 January 2014 the SA dividend withholding tax at 15% or the treaty governed rate where the investor is resident in a treaty country, will apply to nonresident investors. Read more

TaxConnections