Thousands of Canadian residents hit by #Trump #tax get temporary reprieve as battle begins for permanent fix https://t.co/j379IO5RPm #cdnpoli #IRS #TaxReform
— Elizabeth Thompson (@LizT1) June 13, 2018
The above tweet references CBC reporter Elizabeth Thompson’s latest article on the U.S. “transition tax”. While reporting on the delay (referenced at the Isaac Brock Society here), Ms. Thompson’s article offers the tantalising possibility that the “delay” may be linked to a desire for a legislative fix.
Her article at CBC includes:
Brian Masse, an NDP MP who sits on the Canada-United States Interparliamentary Group, said U.S. lawmakers were very much aware of the tax reform’s unintended consequences when MPs and senators met with them in Washington last month.
Masse said he was told legislation to fix the problem could be introduced in the coming weeks.
“There seemed to be a genuine understanding and appreciation that these are victims.”
By the way, the comments to the article are (as usual) not off to a good start. (In fact they are indescribably ignorant.) It appears that the average Canadian:
1. Hates corporations; and
2. Hates U.S. citizens (even when they are also Canadian)
But, when you have (1) “U.S. citizens” (2) owing Canadian “corporations” these people lose any semblance of rationality. (You can actually see their abilities to reason and process information implode in real time.)
It would be helpful to add some comments (calling all Brockers) that would provide some balance and education. Seems like a number of commenters don’t believe that “dual” citizens (usually they call them “duel” citizens) are actually Canadians.
There are a couple of really good comments from one “Karen Alpert” (a familiar name) which includes:
Technically, yes. It applies to any US citizen who owned a foreign corporation when the tax reform bill was signed last December. Anyone who renounces after that point would be liable for the tax. However, I suspect that a number of affected Canadian citizens will decline to comply with this tax and will hide behind the tax treaty provision that states that Canada will not help the IRS collect in Canada on tax liabilities that arose when the taxpayer was a Canadian citizen,
Ms. Alpert is absolutely correct – the issue of the “Canadian citizenship” defence to collection was recently explored at the Isaac Brock Society here.
Elizabeth Thompson’s article about the “transition tax” have been featured on Brock as follows:
As a dual citizen, I could have incorporated my business in the US and invested its earnings in the US while living in my other country.
I’m not so sure I could have persuaded my EU clients to pay me for my work by transfer to a foreign country because that seems like the kind of arrangement that would be likely to run up against AML and SEC regulations.
However, I may be mistaken. It would be the payer’s worry, I imagine – not the payee. The simplest way for the payee would be to open a basic payment account and get paid into that, and then use TransferWise or similar to send to America the money to be invested, while retaining in the local bank account the money needed for living costs.
Not quite sure how it would work for the transition tax, as the liability was incurred before the EU corporation was dissolved. Moving to the US would just make it possible for the tax to be collected.
EU/US Friend: what you describe has been on my mind for a while, and is one reason why I haven’t renounced. I am, after all, very highly taxed where I live, and if push comes to shove I don’t see why I should shut the door to the greatest tax haven in the world, right? You have an interesting argument as to not being protected by the EU (or the EU country in question). In fact, you are acting as people of means do — find the most effective legal arrangement, who cares where you reside? I can’t work from afar, so it wouldn’t yet work for me, but when the time comes for retirement, why not get the best of both worlds?
The world is full of pensioners living where they want to live on pension income from a different country – not just Americans.
I know a person who has pensions from four different EU countries plus US SS.
I think the germans just had to have Boris watched for a while – check on telephone bills and utilities in his Munich apartment- that tells if he lived more time in Switzerland or more time in Germany. The usual treatment is 6 months and one day in your country is proof of tex residence. It is actually a physical presence thing.
Becker seems to have relied on just saying he lived in Monaco when he actually didn’t. As his lawyer said, he is not a sophisticated individual. I believe he’s now trying to get himself appointed as a “sports attaché” in the hope of claiming diplomatic immunity.
There’s no need for a dual US citizen living abroad to do anything illegal – let alone fraudulent – in order to invest in the US rather than in their country of residence. Lots do. Whether it works out more profitable, I don’t know.