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Cardinal Point Wealth Management

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Canadian Snowbirds

U.S. and Canadian border services to collect biographical data

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This Investment Executive article offers a reminder that a new set of U.S.-Canadian border rules will soon be enforced, which could lead to tax and immigration issues for Canadian snowbirds. It suggests that Canadian financial advisors caution their snowbird clients that overstaying the limit in the U.S. could result in U.S. tax residency status and potential problems when crossing the border. In the article, Cardinal Point’s Terry Ritchie warns, “If you’re not keeping track, or you’re fudging the number of days, you’re compromising all the good things you want to go down there for.”

When visitors enter and exit at all border crossings starting on June 30, U.S. and Canadian border services will collect biographical data. This will provide both sides of the border with definitive information regarding residency, instead of relying on visitors to self-report. The number of days an individual spends in the U.S. is an important part of the U.S. “substantial presence” test (SPT). Those who meet the SPT may be considered U.S. residents and may be subject to U.S. income and gift taxes. To learn more about the formula behind SPT, read the full article here.

A checklist for U.S.-bound snowbird clients

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In the second part of this two-part series on advising snowbird clients, Terry Ritchie of Cardinal Point looks at four important items that should be on a snowbird’s checklist as they prepare to head south for the winter. First, get familiar with the residency requirements for healthcare benefits in your jurisdiction; some require specific minimum periods to be eligible for publicly funded health care when in Canada. Second, snowbirds should travel with a “border kit” that serves as proof that you’re a Canadian tax resident (click on the article link for specific documents to include).

Third, Ritchie warns against attempting to time the currency market when converting cash. If you plan to make the cross-border lifestyle a long-term situation, make sure you have U.S. dollars hedged for that purpose. Finally, review your estate planning situation, as Canadians who die owning more than $60K in U.S. real estate and securities held personally require the executor to file a U.S. estate tax return.

Clients who winter in the U.S. may soon be able to stay longer

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This article from Investment Executive features Cardinal Point’s Terry Ritchie and focuses on proposed legislation in the U.S. that would increase how long Canadian “snowbirds” can spend in the U.S. Under the Jobs Originated Through Launching Travel Act, snowbirds could stay in the U.S. up to 240 days per year (the current limit is 180 days). This proposed “retiree visa” is under consideration, so the limit is still 180 days.

Snowbirds should be aware of other restrictions and regulations that may impact them, including tax obligations. Under the”substantial presence test,” they may need to file an income-tax return with the IRS. Snowbirds should also be aware that U.S. income, including renting or selling U.S. property, may change their taxable status. In addition, they will soon be held more accountable for their visits, as Canada and the U.S. will implement a plan in June 2014 giving both governments easier access to information on when travelers enter/exit both countries. Get all the details in the full article found here.

Got Snowbirds? Check These Tax Changes

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In this article, Cardinal Point’s Terry Ritchie looks at new tax changes that took effect on October 31. The IRS released inflation adjustments for more than 40 tax provisions, including the 2014 tax rate schedules and other rates, exemptions and changes. In particular, advisors with U.S. citizens as clients, or those who help Canadian clients who own U.S. property/shares, should look at the U.S. estate tax exemption for 2014.

What Snowbirds Need to Know about U.S. Estate Tax

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Cardinal Point’s Terry F. Ritchie talks to Rob Carrick about the latest changes in U.S. estate taxes and what they mean for Canadian snowbirds who own property in the U.S. For many years, snowbirds had to worry about U.S. estate taxes, but it’s not an issue for most anymore, as the threshold is much higher ($5.23 million USD each). A married couple with a worldwide estate valued at less than $10.5M would have no U.S. tax exposure. According to Ritchie, the estate tax exemption will continue to rise with inflation. For most Canadians, these changes are good news, as estate taxes are not the big concern they once were.The other issue to be aware of is the need to file a U.S. estate tax return upon death if the Canadian has property worth more than $60K.

To view the video, click here to visit the Globe and Mail website.