ARTICLE
21 December 2013

A Note For Individuals With Property In The U.S.

MR
McLennan Ross LLP

Contributor

McLennan Ross LLP is a well-established law firm committed to serving the legal needs of Albertans and Northerners for over a century. McLennan Ross is a full service law firm with over 100 lawyers located in Calgary, Edmonton and Yellowknife.
June 30, 2014 will mark a new era in Canada - US sharing of information on movement of individuals between the two countries.
Canada Real Estate and Construction
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June 30, 2014 will mark a new era in Canada - US sharing of information on movement of individuals between the two countries. The result for Canadians with homes in the US is that they must be even more vigilant about counting the days they spend in the US to ensure that they do not exceed the 180 days in a rolling twelve month period rule. There is also a 120 day rule respecting reporting of income in the US.

The consequences of living in the US for longer than the allowed period can be very oppressive. As there are both Canadian and US tax and non- tax consequences, the individual who breaches the rule may be in for a number of nasty surprises.

From a US perspective, you can be banned from travel into the US for a three to ten year period, depending on the number of days by which you exceed the 180 day allowance. You may also be liable for US income tax on worldwide income and US estate tax on worldwide assets at your death. In Canada, you could be liable for a departure tax whereby a capital gain would be deemed on all of your assets and tax payable on that gain. You could also forfeit your entitlement to provincial health care services.

These are all fairly dire consequences, so it would be wise to pay attention to days spent in the US. While the program has been in place for a period of time, the record keeping by each government has not allowed them to precisely monitor an individual's movement. After June 30, they will be able to do so with accuracy.

Take care with your record keeping – we're sure that there is an app for that!

June 30, 2014 will mark a new era in Canada - US sharing of information on movement of individuals between the two countries. The result for Canadians with homes in the US is that they must be even more vigilant about counting the days they spend in the US to ensure that they do not exceed the 180 days in a rolling twelve month period rule. There is also a 120 day rule respecting reporting of income in the US.

The consequences of living in the US for longer than the allowed period can be very oppressive. As there are both Canadian and US tax and non- tax consequences, the individual who breaches the rule may be in for a number of nasty surprises.

From a US perspective, you can be banned from travel into the US for a three to ten year period, depending on the number of days by which you exceed the 180 day allowance. You may also be liable for US income tax on worldwide income and US estate tax on worldwide assets at your death. In Canada, you could be liable for a departure tax whereby a capital gain would be deemed on all of your assets and tax payable on that gain. You could also forfeit your entitlement to provincial health care services.

These are all fairly dire consequences, so it would be wise to pay attention to days spent in the US. While the program has been in place for a period of time, the record keeping by each government has not allowed them to precisely monitor an individual's movement. After June 30, they will be able to do so with accuracy.

Take care with your record keeping – we're sure that there is an app for that!

ARTICLE
21 December 2013

A Note For Individuals With Property In The U.S.

Canada Real Estate and Construction

Contributor

McLennan Ross LLP is a well-established law firm committed to serving the legal needs of Albertans and Northerners for over a century. McLennan Ross is a full service law firm with over 100 lawyers located in Calgary, Edmonton and Yellowknife.
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