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David, feel free to edit + put this on your mailing list if you feel
appropriate.
My question is for Canadian citizens currently working in the US, who =
want
to make a real estate investment thru me in Canada. I have one client in =
who
has already bought, another interested. The 3rd tells me he can't make =
any
significant investments in Canada because it would cause him to have to =
pay
tax as per Canadian tax rates instead of US (he explaied that he'd =
actually
pay the differece to CCRA).
Can you please clarify this for me?
The investment in mind would not provide a profit until sale, which =
would
likely be 5-7 yrs away.
If he is correct, sre there any structures to ensure he pays at US tax =
rates
only?
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=3D
david ingram replies:
The land that you are selling or the share of the land will always be =
subject to Canadian Tax first and US tax second.
Your potential client is afraid that a Canadian investment will make the =
Canadian CCRA (Canada Customs and Revenue Agency) try and tax him on his =
world income as a resident of Canada because of his Canadian investment. =
Fortunately, Article IV of the US Canada Income Tax Treaty deals with =
this and I reproduce it here. If he is the US more than 183 days in the =
year and has a home in the US and NOT in Canada, he will be taxable on =
his world income in the US and his Canadian income in Canada. He (and =
you) should go to www.centa.com and read the US / Canada Taxation =
Section on the top left.
CANADA / UNITED STATES INCOME TAX TREATY 1980=20
Article IV - Fiscal Domicile - (it is the same number in most treaties) =
For the purposes of this Convention, the term "resident of a Contracting =
State" means any person who, under the law of that State, is liable to =
taxation therein by reason of that person's domicile, residence, =
citizenship, place of management, place of incorporation or any other =
criterion of a similar nature, but in the case of an estate or trust, =
only to the extent that income derived by the estate or trust is liable =
to tax in that State, either in its hands or in the hands of its =
beneficiaries. For the purposes of this paragraph, a person who is not a =
resident of Canada under this paragraph and who is a United States =
citizen or alien admitted to the United States for permanent residence =
(a "green card" holder) is a resident of the United States only if the =
individual has a substantial presence, permanent home or habitual abode =
in the United states and that individual's personal and economic =
relations are closer to the United states than any other third State. =
The term "resident" of a Contracting State is understood to include:=20
(a) the Government of that State or a political subdivision or local =
authority thereof or any agency or instrumentality of any such =
government, subdivision or authority, and=20
(b) (i) A trust, organization or other arrangement that is operated =
exclusively to administer or provide pension, retirement or employee =
benefits, and=20
(ii) A not-for-profit organization that was constituted in that =
State, and that is, by reason of its nature as such, generally exempt =
from income taxation in that State.=20
2. Where by reason of the provisions of paragraph 1 an individual is a =
resident of both Contracting States, then his status shall be determined =
as follows:=20
(a) he shall be deemed to be a resident of the Contracting State in =
which he has a permanent home available to him. If he has a permanent =
home available to him in both Contracting States, he shall be deemed to =
be a resident of the Contracting State with which his personal and =
economic relations are closer (centre of vital interests);=20
(b) if the Contracting State in which he has his centre of vital =
interests cannot be determined, or if he has not a permanent home =
available to him in either Contracting State, he shall be deemed to be a =
resident of the Contracting State in which he has an habitual abode;=20
(c) if he has an habitual abode in both Contracting States or in neither =
of them, he shall be deemed to be a resident of the Contracting State of =
which he is a national;=20
(d) if he is a national of both Contracting States or of neither of =
them, the competent authorities of the Contracting States shall settle =
the question by mutual agreement.=20
I would oviously need more information to properly deal with your client =
but the above should assauge his worries.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321=20
[email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed =
information or consultation and is to be regarded only as general =
comment. Nothing in this message is or should be construed as advice =
in any particular circumstances. No contract exists between the reader & =
the author and any and all non-contractual duties are expressly denied. =
All readers should obtain formal advice from a competent financial, or =
real estate planner or advisor & appropriately qualified legal =
practitioner, tax or immigration specialist in connection with personal =
or business affairs such as at www.centa.com. If you forward this =
message, this disclaimer must be included."
This from "ask an income tax and immigration and bankruptcy expert" from =
www.centa.com or www.jurock.com or www.featureweb.com. Canadian David =
Ingram deals daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate problems for the =
United States, Canada, Mexico, Great Britain, the United Kingdom, =
Kuwait, Dubai, Saudi Arabia, South Africa, Thailand, Indonesia, Egypt, =
Antarctica, Japan, China, New Zealand, France, Germany, Spain, Italy, =
Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, =
Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, =
Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, =
Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and =
Canadian and Mexican and any of the 43 states with state tax returns, =
etc.
income tax wizard wizzard guru advisor specialist consultant taxman =
Alaska, Alabama, Arkansas, Arizona,=20
California, Colorado, Connecticut, =20
Delaware, District of Columbia, Florida,=20
Garland, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky,=20
Louisiana, Maine, Maryland, =20
Massachusetts, Michigan, Minnesota, =20
Mississippi, Missouri, Montana, Nebraska, =20
Nevada, New Hampshire, New Jersey,=20
New Mexico,New York, North Carolina, =20
North Dakota, Ohio, Oklahoma, Oregon.=20
Pennsylvania, Rhode Island, Rockwall,=20
South Carolina, South Dakota, Tennessee, =20
Texas, Utah, Vermont, Virginia,=20
West Virginia, Wisconsin, Wyoming,=20
British Columbia, Alberta, Saskatchewan,=20
Manitoba, Ontario, Quebec City,=20
New Brunswick, Prince Edward Island,=20
Nova Scotia, Newfoundland, Yukon and=20
Northwest and Nunavit Territories, =20
Mount Vernon, Eumenclaw, Coos Bay=20
and Dallas Houston Rockwall Garland=20
Texas Taxman and Tax Guru and wizzard=20
wizard -=20
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