We had the honor of listening to Robert Ward of WardChisholm, P.C. speak about the Tax Cuts and Jobs Act of 2017 and its impact on Canadians doing business in the US and US citizens living in Canada. On December 22, 2017 President Trump signed the Tax Cuts and Jobs Act into law. This is the most significant piece of United States tax legislation in over 40 years making meaningful changes to the ways in which individuals and businesses in the United States are taxed.
What have we learned?
- U.S. tax reductions do not help if the same income is taxable in Canada.
- U.S. tax planning is critical if the United States taxes assets or income Canada does not.
- When the tax effect of different structures is approximately the same, non-tax considerations become determinative
- Limit liability
- Limit U.S. tax reporting
- At death, Canada taxes unrealized gain. The United States taxes the entire fair market value.
- U.S. citizens living in Canada have to contend with both countries taxation of world-wide income while alive and world-wide assets at death.
- Residents of Canada who are not U.S. citizens only have to pay U.S. taxes on:
- U.S. source income while alive and
- Assets present or deemed present in the U.S. at death:
- Shares of U.S. corporations
- Debt obligations
- Taxable property
- Estate, Gift, and Generation-Skipping Transfer Tax Exemptions of U.S. citizens doubled in 2018, but will be halved in 2026.
- For Canadian citizens owning U.S. assets, the higher one’s net worth, the lower the US Estate Tax Exemption provided by the Canada-US Tax Treaty.
- U.S. Real Estate is best acquired through a Trust, properly designed and funded.
- U.S. Real Estate purchased without a Trust can be mortgaged to avoid U.S. estate tax. Must be non-recourse debt.
About the speaker
Robert E. Ward, JD, LL.M., is a nationally recognized authority on tax, business and estate planning. Mr. Ward has taught law as an adjunct professor at the George Mason University School of Law, where he conducted classes in Estate and Gift Taxation, Estate Planning, and Business Planning from 1986 until 2015. He has also taught as an adjunct faculty member at the University of Baltimore School of Law: Fiduciary Income Taxation (1988) and at Golden Gate University’s Masters in Taxation Program: Taxation of Corporations and Shareholders (1982). He currently teaches US Taxation in the Graduate Tax Program at UBC’s Allard School of Law.