Self-Counsel Press is the premier source for self-help law books and books for small business. All of our legal titles are written by lawyers who practise in the field they are writing about. Our business books are written by experts on the topic. People who have "been there, done that" in the businesses they write about, and know how to clearly and simply describe what they have learned. We are proud to have been the pioneer publisher of self-help law titles in North America when we launched our first Divorce Guide in 1971.

1 Before You Go to Canada 1 1. Planning Your Move 1 2. Expatriation 3 2.1 Relinquishing US citizenship 3 2.2 Relinquishing Lawful Permanent Resident status 4 3. Your Rights after US Citizenship Is Terminated 8 3.1 The Reed Amendment 8 4. Tax Planning before You Go 9 4.1 US bank and nonqualified brokerage accounts 9 4.2 Nonqualified US brokerage accounts 10 4.3 Qualified accounts 11 4.4 Cashing out your IRA, 401(k), or RRSP 11 2 Your First Year in Canada 13 1. Overview of Filing Requirements When You Are in Canada 13 2. Determining Canadian Residency 14 3. First Things First 15 4. Deemed Acquisitions 15 5. First-Year Tax Filing 16 6. Contributions to Retirement Plans 18 6.1 RRSP deduction limit formula 19 7. Social Security 20 Contents iv Taxation of Americans in Canada 8. Differences in How Certain Income Is Taxed 20 8.1 Dividends 20 8.2 Capital gains 21 8.3 Gambling winnings 21 8.4 Registered accounts 21 8.5 Alimony 21 9. Deductions and Credits 22 10. US Filing Requirements 23 11. The Totalization Agreement 24 12. Canadian Health Insurance 25 3 An Overview of Canadian Taxation 26 1. Two Important Points to Set the Stage 26 2. History of Canada Revenue Agency (CRA) 28 3. Filing Requirements in Canada 29 3.1 Unwinding a previous deemed disposition 30 4. Summary of Major Differences between Canadian and US Taxes 31 5. Filing Requirements in the US 32 5.1 When to file your individual income tax return 34 5.2 Electronic filing 34 6. Penalties and Interest for Underpayments, Late Filings, and Late Payments 35 6.1 United States 35 6.2 Canada 35 7. Filing Status 36 8. Address Changes 36 8.1 Notifying the IRS when you have a change of address 36 8.2 Notifying CRA when you have a change of address 37 9. Overview of Entity Taxation and Rates 37 9.1 Partnerships 37 9.2 Limited Liability Companies 38 9.3 Trusts 38 9.4 Corporations 38 10. Carrying Charges 40 11. Alternative Minimum Tax 41 11.1 Canadian Alternative Minimum Tax 41 11.2 US Alternative Minimum Tax 42 Contents v 12. Residency 43 12.1 Step 1: Determine if you have residential ties with Canada 47 12.2 Step 2: Determine your residency status and its tax implications 48 13. Tax Audits and Dealing with the CRA 49 13.1 The CRA examination (audit) process 49 14. Dealing with the CRA 50 4 The Treaty 52 1. History of the Canada-US Tax Treaty 52 1.1 The relationship of the "laws of the land" to the Treaty 53 2. Treaty Overview 53 3. Inside the Treaty 54 3.1 Saving clause 55 3.2 Disclosing treaty benefits claimed 55 4. Residency 55 5. Real Property 57 6. Dividends, Interest, and Royalties 58 7. Gains on Personal Property 59 8. Personal Services 59 9. Artists and Athletes 59 10. Pensions and Annuities 60 11. Social Security 62 12. Government Service 62 13. Students 62 14. Taxes Imposed by Reason of Death 63 5 Foreign Tax Credits 64 1. What Are Foreign Tax Credits? 65 2. The Foreign Tax Credit in Canada 65 2.1 Foreign non-business income tax credit 66 2.2 Foreign business-income tax credit 69 3. The Foreign Tax Credit in the US 69 6 Retirement Plans, Pensions, and Social Security 71 1. US Taxation of Canadian Retirement Plans 71 1.1 Canadian pension contributions 71 1.2 Spousal RRSP 72 vi Taxation of Americans in Canada 1.3 Pension withdrawals 72 1.4 Old Age Security and Canadian Pension Plan contributions and benefits 73 2. Canadian Taxation of US Retirement Plans 74 2.1 Contributions to US retirement accounts 74 2.2 Pension withdrawals 75 2.3 Social security 76 2.4 Planning for US retirement accounts 77 2.5 Rolling your US account into an RRSP 79 3. The Totalization Agreement and the Windfall Elimination Provision (WEP) 80 7 Investing in Canada 82 1. Comparing the US and Canadian Securities Markets 82 2. Taxation of Dividends in Canada 86 2.1 Eligible dividend rules 86 2.2 Dividends and corporations 87 2.3 Designating an eligible dividend 87 3. Basics of the US Net Investment Income Tax (NIIT) 88 3.1 Planning opportunities 89 3.2 Net investment income defined 89 3.3 Reporting net investment income 90 3.4 Foreign tax credits 90 3.5 Calculation examples 90 4. Savings Accounts for Retirement and Education 91 4.1 General information 91 4.2 Canadian Education Savings Grant (CESG) 91 5. Real Estate 92 5.1 Depreciating real estate 94 8 Common Deductions on Canadian Income Taxes 95 1. Employment or Office Deductions 97 2. Business Deductions 98 2.1 Advertising expenses 100 2.2 Meals and entertainment 101 2.3 Bad debts 101 2.4 Insurance 101 2.5 Interest 101 2.6 Other loan costs 101 Contents vii 2.7 Salaries, wages, and bonuses 102 2.8 Private health services premiums 102 2.9 Motor vehicle expenses 102 2.10 Other expenses 104 2.11 Capital cost allowance 104 2.12 Lifetime capital gains deduction 105 2.13 Qualified farm property and qualified fishing property 107 3. Other Personal Deductions 107 3.1 RRSP contributions 107 3.2 Split pension amount 107 3.3 Child care expenses 108 3.4 Disability support 108 3.5 Moving expenses 108 3.6 Spousal and child support payments 109 3.7 Deduction for foreign non-business income tax 109 3.8 Other deductions 110 4. Nonrefundable Tax Credits 110 4.1 Basic personal credit 111 4.2 Spouse or common-law partner credit 111 4.3 Eligible dependent credit 112 4.4 Infirm dependent credit 112 4.5 Caregiver credit 112 4.6 Universal child care benefit 112 4.7 Age credit 113 4.8 CPP and QPP credits 113 4.9 Employment Insurance (EI) credit 113 4.10 Pension income credit 113 4.11 Canada employment credit 113 4.12 Volunteer firefighters' and volunteer search and rescue credit 113 4.13 Adoption expenses credit 114 4.14 Public transit passes credit 114 4.15 Children's fitness credit 114 4.16 Children's arts credit 114 4.17 Disability credit 114 4.18 Medical expenses credit 114 4.19 Home buyer's credit 114 4.20 Donations and gifts credit 115 viii Taxation of Americans in Canada 4.21 Interest paid on student loans credit 115 4.22 Federal dividend credit 115 4.23 Overseas employment tax credit 116 4.24 Federal foreign tax credit 116 5. Refundable Tax Credits 117 5.1 Refundable medical expenses 117 5.2 Refundable GST/HST credit 117 5.3 Working income credit 118 9 Tax Planning 121 1. The Direction Your Planning Should Take 121 2. US Foreign Account Filing Requirements 122 2.1 If you own a Canadian corporation 123 2.2 If you own a Canadian trust 127 2.3 Registered Education Savings Plans 128 2.4 Tax-Free Savings Accounts 128 2.5 US entities 129 2.6 Principal residence 129 2.7 Other issues 130 3. Tax Planning Ideas 130 4. An Overview of the Tax Benefits of Moving to the US 131 10 Canadian and US Death Taxes 132 1. Canada's Death Tax: Deemed Disposition of Property 132 2. Gift Tax in Canada 134 2.1 Attrib…