Cardinal Point Wealth Management
Your Cross-Border Financial Advisor
Those who have worked in both Canada and the U.S. may be eligible for Social Security (SS), Canada Pension Plan (CPP) and Canadian Old Age Security (OAS), but it can be complicated. While SS depends on years worked, OAS is based on years of Canadian residency, and CPP is based on contributions. You may be able to take early reduced benefits or delay them to receive increased payouts. There may be clawbacks based on income levels…
A good savings or investment account allows you to avoid tax on contributions, income, and distribution. Not all available options meet these goals. For Americans living in the U.S., the Health Savings Account (HSA) does, in certain circumstances. For Americans living in Canada, though, the HSA’s benefits disappear as contributions cannot continue and tax liability opens up in Canada for income in the plan. Similarly for Canadians living in the U.S., benefits cease for Tax-Free Savings Accounts (TFSAs) and Registered Education Savings Plans (RESPs). Take a look at this e-book for more detail on the savings and investment plans available and see how they compare.
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…
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.
It’s a good idea for Americans living in Canada to understand which kinds of registered investment accounts they can have without having to confront onerous taxes and paperwork. Two kinds of plans are friendliest for Americans: The Registered Retirement Savings Plan (RRSP) and the Registered Retirement Income Fund (RRIF). Effectively, U.S. citizens are simply taxed […]
Cardinal Point’s Terry Ritchie discusses the impact of U.S. PFIC (Passive Foreign Investment Company) tax rules on U.S. citizens living in Canada who hold Canadian mutual funds or ETFs. The challenge is that under U.S. tax law, the earnings and dividends from these PFICs are not taxed the same way in the U.S. as they […]
Before you launch a business, be aware that there are various ways to legally incorporate in Canada. You can choose the simplest, which lets you operate as a sole proprietor; you can establish a partnership or limited liability company; or you can create a full-fledged corporation with shareholders. Each structure has its own unique pros and cons, depending on your goals and the nature of your business operations. Choosing the appropriate structure for your particular situation can also be a useful strategy for managing your taxes, and it may potentially reduce your tax liability.
In eight Canadian provinces, people in the top tax bracket are subject to tax rates of over 50%, while those in the other two provinces pay 47.5% (or more). However, high income earners can save substantial amounts of retirement income by utilizing a lesser known strategy involving Retirement Compensation Arrangements (RCA). Those who can potentially benefit the most from this strategy include highly paid executives and business owners (or others such as professional athletes) whose compensation is tied to special incentives. Setting up an RCA is a rather complicated process, but the benefits are well worth it for those who are eligible – and can result in many thousands of dollars extra per year in retirement. Read the ABCs of RCAs blog for a detailed explanation of how to take advantage of this unique tax-saving approach to wealth management.
If you are an incorporated Canadian entrepreneur or business owner, there are two general ways to pay yourself from your corporation. You can use a salary or bonus, and that’s a deductible business expense but is fully taxable as your personal employment income. Or the company can pay a dividend that isn’t a deductible business expense but is taxed at a lower rate to you as personal income. Each option has different personal and corporate tax implications. There may also be some different tax rate advantages or disadvantages, depending on the province. Our article covers the details to provide understanding and strategic tax planning insights.
There are a number of rules changes proposed by Congress that will impact retirement accounts. The changes will benefit US residents and also Canadians with IRAs and other retirement accounts. There are many ways this could be advantageous for you, possibly deferring tax or extending benefits. Cardinal Point, as the leading cross-border specialist, can show you how.
In this article, we will focus on Incentive Stock Options (ISOs) granted to key employees. In an era of remote employment, a firm understanding of the tax implications is critical where cross-border circumstances exist.
Good news on the tax front as the IRS lengthens life expectancies for its RMDs. The result of this may be an effective tax cut for you. If you are a US citizen or expat living in Canada, Cardinal Point Wealth Management can assist with complicated cross-border financial and tax planning.