Cardinal Point Wealth Management
Your Cross-Border Financial Advisor
A Canadian inheriting a U.S. IRA faces different tax implications than an inheritance in Canada would generate, namely, income tax and income withholding in the U.S. and income tax in Canada. It may be possible though for such a beneficiary to defer taxes in both countries by establishing an Inherited IRA account. Cardinal Point’s cross-border specialists are well positioned to guide you through the rules, procedures, and reporting requirements governing this option.
The Lifetime Capital Gains Exemption (LCGE) is available to all Canadian residents and Americans living in Canada as a tax deduction on the sale of a Qualified Small Business Corporation (QSBC). It is indexed to inflation, and it can be used in part. Three tests must be met to claim an LCGE, and there are complicated regulations governing each of these. There are implications regarding succession planning, and its benefits can be multiplied through use of family trusts. An LCGE can be a significant deduction, and Canadian or dual Canada/US tax residents need professional help devising a tax-efficient strategy.
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If you have moved from Canada to the U.S., the normal intricacies of tax issues become particularly complicated in certain circumstances. In particular, this is so if you are considering taking a distribution as a non-resident of Canada for use in the U.S. Advice from Cardinal Point can ensure that you go about this on the most tax-effective basis.
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