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Search Results for: estate planning

Cross-Border Financial Advisors Are in Demand

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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 financial advisor professionals (financial advisors, CPAs, attorneys, etc.).

Preparing to Exit the United States for Canada?

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This article by Cardinal Point’s John McCord for the Canadian Expat Network discusses some of the common misconceptions about a move from the United States to Canada. Readers are advised to start planning with their advisor as far in advance as possible, particularly in the areas of retirement planning, deferred compensation arrangements, currency conversion, the Canadian U.S. Tax Treaty, and insurance and estate planning. The article goes on to provide actionable steps to consider when making a cross-border transition, specifically in the areas of qualified retirement plans, Roth IRAs and U.S. retirement plans.

Preparing to Exit Canada for the United States? (Part IV)

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In the fourth installment of the series, John McCord looks at the importance of consulting an attorney with cross-border expertise to analyze your estate plan before a move. Estate planning is a sophisticated, rapidly changing subject, and the laws governing it are not uniform between Canada and the U.S. A collaborative approach between cross-border financial advisors, CPAs and other practitioners is recommended when developing a cross-border estate plan. The article also looks at Canadian corporate pensions and how a U.S. move may impact pension taxation. Canadian pensions are taxed at IRS income tax rates when domiciled in the U.S., which can create additional after-tax pension income but also raises the risk of double taxation.

Canadian Snowbirds Present Opportunities—and Pitfalls—for Advisers

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As more Canadians are following the warmer climate and real estate bargains of the Sun Belt, buyers should beware of the numerous cross-border financial planning issues involved. This InvestmentNews article discusses how U.S.-based advisory firms that cater to these Canadians can have particular value in dealing with the nuances of taxes, trusts and estate planning, and retirement accounts.

Update: Section 899 and the U.S. “Revenge Tax” – What Canadian Investors in the U.S. Need to Know

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We previously wrote about the proposed impact of Section 899.  Now, as Canadian investors continue to look south of the border for diversification and potential returns, new legislative developments in Washington could have significant tax consequences — or relief — depending on how events unfold. Most recently, U.S. Treasury Secretary Scott Bessent called on Congress to eliminate proposed Section 899, dubbed the “revenge tax,” from the latest version of the “Big Beautiful Bill” (BBB). This provision had drawn sharp criticism from allies, businesses, and tax experts for its potential to disrupt cross-border investment, particularly for Canadians investing in the U.S.

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Here’s what you need to know about Section 899, how it would have worked, and what its possible repeal means for your U.S. investments.

What Was Section 899?

Section 899 was initially included in both the House and Senate versions of the BBB as a retaliatory tax measure aimed at foreign countries imposing “unfair foreign taxes” on U.S. multinationals, such as Digital Services Taxes (DSTs) or the OECD’s undertaxed profits rule (UTPR).

If enacted, Section 899 would have:

  • Increased U.S. withholding tax rates (e.g., on interest, dividends, royalties) by up to 15 percentage points for investors from “offending foreign countries,” including Canada, if caught in the scope.
  • Applied to both Canadian individuals and corporations, including portfolio investors, trusts, and Canadian pension funds investing in U.S. stocks or real estate.
  • Overridden treaty benefits under the Canada-U.S. Tax Treaty, denying reduced withholding rates for “applicable persons.”

For Canadian investors holding U.S. assets, Section 899 could have meant withholding tax rates jumping from 15% to as high as 30% or more, even where treaty relief normally applied.

The Senate’s More Restrained Version

In June 2025, the Senate Finance Committee somewhat softened Section 899 compared to the House version:

  • Only investors from countries with “extraterritorial taxes” (e.g., UTPR) would face the tax hikes — a narrower definition than the House’s inclusion of all “discriminatory taxes” like DSTs.
  • A 15-point cap was placed on the increase (down from 20 points in the House version).
  • A delayed effective date to tax years beginning after December 31, 2026, offered taxpayers more time to plan.
  • Exemptions were added for certain interest income (e.g., portfolio interest), but not for amounts exempt under treaties alone.

While these changes helped, the Senate version still risked stripping treaty protections from Canadian investors connected to a country deemed to have an “extraterritorial tax” regime, such as Canada under Pillar Two.

Secretary Bessent’s Call to Kill Section 899

On June 26, 2025, Treasury Secretary Bessent publicly urged Congress to strip Section 899 entirely from the legislation, citing concerns over:

  • Violating U.S. tax treaty obligations;
  • Potential retaliation from allies like Canada and the European Union;
  • Risks to global tax coordination efforts under the OECD framework; and
  • Harm to foreign direct investment in the U.S., especially in real estate and fixed income.

This rare public rebuke by the Treasury signals strong internal opposition and increases the chances that Section 899 will not survive in the final bill.

What Does This Mean for Canadian Investors?

For Canadians investing in U.S. real estate, equities, or fixed income:

  1. Immediate Impact Paused: Even if Section 899 is not repealed, it wouldn’t come into effect until 2027, offering a temporary reprieve.
  2. Treaty Protections Remain — for Now: As long as Section 899 is repealed or delayed, Canada-U.S. tax treaty benefits such as the 15% withholding rate on dividends for individual investors continue to apply.
  3. Potential Tax Uncertainty: The proposal itself reveals U.S. frustration with foreign tax regimes. Future attempts to override treaty benefits could resurface under different names.
  4. Need for Portfolio Review: Canadian investors with U.S. holdings — particularly in private partnerships or REITs — should consult tax advisors to ensure structures are robust, especially if Section 899 is revived in any future form.

Planning Considerations

If you’re a Canadian investing in the U.S., here are some steps to consider:

  • Review investment vehicles: Consider whether assets are held directly, through Canadian corporations, trusts, or retirement accounts like RRSPs or TFSAs — each has different U.S. tax exposures.
  • Consider U.S. estate tax exposure: Section 899’s focus was on income taxes, but U.S. estate tax remains a separate risk for Canadians with U.S. situs assets.
  • Stay informed: Changes like Section 899 illustrate the dynamic nature of cross-border tax policy. Ongoing monitoring is critical.

Final Thoughts

While the fate of Section 899 remains uncertain, its potential impact on Canadians with U.S. investments is real. Treasury’s push to remove it is a positive signal, but Canadian investors should remain vigilant.

At Cardinal Point Wealth Management, we help clients navigate the complexities of cross-border investing and taxation. Whether it’s U.S. real estate, public markets, or private equity, we ensure your structures are efficient, compliant, and resilient against legislative surprises like Section 899.

Contact us today to review your cross-border investment plan in light of these evolving developments.