This article emphasizes the need to review financial planning and investment matters with a team well-versed in cross-border issues prior to any move, as a lack of proper planning can often result in higher taxation, poor estate planning and enhanced risk. It can be hard to identify an advisor who is qualified to offer financial advice on both sides of the border. The best strategy is to employ an advisory team that has the ability, platform and knowledge to manage assets in Canada and the U.S. under one cohesive strategy. A successful strategy requires in-depth knowledge of Canadian and U.S. tax systems and collaboration between cross-border professionals (financial advisors, CPAs, attorneys, etc.).
In the third series installment, Cardinal Point’s John McCord looks at how the differing tax systems of the U.S. and Canada can lead to the risk of “double taxation” for expatriates when both countries tax the same income for the same tax year. The Canada U.S. tax treaty helps mitigate this risk as does the exchange of citizen and resident tax information between the two countries. Established in 1980, the treaty asserts that residency—not citizenship—is the most important factor. The article also discusses tax credits and tax-withholding guidelines set forth in the treaty.
This is the first in a three-part series for the Canadian Expat Network (CEN) examining important aspects of cross-border financial planning. In the first installment, Cardinal Point’s John McCord looks at the Canadian Departure Tax, a levy assessed by the Canadian Revenue Agency (CRA) when an individual or family becomes a non-resident of Canada. It discusses which assets are subject to the tax and which aren’t, as well as strategies that can be used to lower the tax.