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The “Super” reason Australians are renouncing their US citizenship

US citizens living in Australia, and around the world, are finding themselves facing the very difficult decision to keep or renounce their US citizenship. A decade ago, the idea of renouncing one’s US citizenship was, for most, unthinkable. Fast-forward 10 years and wait times to book renunciation appointments at US consulates and embassies worldwide have exploded, with record numbers of quarterly and annual departures documented. So why is this article dialed in on our Aussie friends when US renunciation appears to be a global movement? The reason is Australia’s popular retirement vehicle known as a Superannuation fund (commonly referred to as a “Super”), something that can have negative cross-border US tax implications. The Super problem for US citizens in Australia is fueling a heighted desire to give up US citizenship.

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Meeting your US filing obligations in 6 steps:

Are you a US citizen living abroad? Did you know that the US taxes on both citizenship and residency? If you’re a US citizen, you are required to file yearly tax returns with the IRS – even if you don’t live on US soil.

Understanding and complying to US tax law requirements can be daunting. Here’s a useful infographic that will point you in the right direction.

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More proposed reforms to small business taxation announced

The federal government continues to implement its agenda in respect of tax changes for small and medium sized private businesses, announcing further measures to increase taxation of this vital sector of the Canadian economy. These proposals come on the heels of other measures, for example the limitations to the small business deduction, which have already increased tax complexity and compliance costs for many small business owners. These new proposals are clearly an attack on entrepreneurs. Not good.

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The impact of high personal and corporate tax rates

Recently, I had the honour and pleasure of speaking at one of Canada’s premier tax and estate planning conferences. While listening to some of the sessions, a number of speakers commented on Canada’s high tax rates as well as Alberta’s tax rate increases and compared such resulting top rate (48% on ordinary income) to Ontario’s rate (almost 54% on ordinary income). It was clear from the various updates that there was little sympathy for Albertans who gripe about the large rate increases in such a short period of time given the fact that there are other provinces with higher rates. This theme irritated me for reasons I will explain.

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Could the Canada Revenue Agency ruin your next trip to Vegas?

The Canada Revenue Agency (CRA) has implemented a new policy where “accused” tax evaders are subject to fingerprinting. Although the CRA has fingerprinted some accused tax evaders in the past, this new policy appears to make the practice mandatory. CRA agents will no longer be able to exercise discretion on when to fingerprint persons. The policy requires that fingerprints be submitted to the Canadian Police Information Centre (CPIC).

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New individual tax identification renewal rules

The following article co-authored by Roy A Berg and Alexey Manasuev of U.S. Tax IQ first appeared in Canadian Tax Highlights, Volume 25, Number 5, May 2017

The IRS started to accept 2016 individual tax returns on January 23, 2017. A nonresident alien individual must renew his or her Individual Taxpayer Identification Number (ITIN) in order to file a 2016 tax return. Failure to renew an ITIN at this time is almost certain to delay any refund claimed on the 2016 return. Moreover, a taxpayer who must apply for or renew his or her ITIN but who resides outside the United States (including many a Canadian), must now budget more time for that process and also part with his or her passport for several weeks.

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Australian Superannuation reforms may negatively impact US citizens

The following article authored by Marsha-laine Dungog JD, LLM (US Tax)[1] was first published in SMSF Advisor on May 12, 2017.

Last May 4, President Trump and Prime Minister Turnbull celebrated the 75th anniversary of the Battle of the Coral Sea in New York aboard the USS Intrepid, a World War II aircraft carrier. In his commemorative speech, President Trump renewed friendship and lasting partnership with Australia noting that the ties that bind the two countries had been “sealed with the blood of their fathers and grandfathers”.[2] This recent warming of relations between Trump and Turnbull since the purportedly “combative phone call” [3] between the two leaders last February 2017 is fortuitous indeed. Perhaps it will provide the political momentum for much needed amendments to update the Australia-US tax treaty, [4] particularly Article XVIII which does not definitively address whether the United States can impose tax on contributions, earnings and distributions from Australian superannuation funds that are owned by US citizens residing in Australia (US expat).

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International estate planning after US tax reform

During the 2016 U.S. presidential campaign then candidate Donald J. Trump and the Republican National Committee (“RNC”) outlined similar plans to repeal the U.S. estate and gift tax regimes. Since the inauguration earlier this year (and as of the date of this paper) no fewer than four bills have been introduced into Congress that eliminate or substantially modify the estate and gift tax. However, while Trump and RNC platforms were similar, the proffered bills differ widely on their treatment of the gift tax, the generation skipping tax, basis rules, valuation rules under § 2701 – § 2704, and the application of any of the rules to individuals who are non-domiciliaries of the U.S. for transfer tax purposes.

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Canada Revenue Agency expands relief for Canadian taxpayers with US LLLPs and LLPs

During the Canada Revenue Agency (CRA) roundtable at the International Fiscal Association (IFA) conference in Toronto earlier this week, the CRA announced “administrative grandfathering” for some Canadian taxpayers with investments in US Limited Liability Limited Partnerships (LLLPs) and US Limited Liability Partnerships (LLPs). Practically, this announcement will allow some Canadians who hold investments in US LLLPs and LLPs formed prior to April 26, 2017, to continue to treat these entities as partnerships on a go-forward basis. The CRA indicates that this additional relief resulted from the submissions which have been received by the CRA and the apparent complexities of transitioning from a partnership to a corporation.

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The effective repeal of the flow-through share regime for the oil and gas industry in Western Canada

“We will fulfill our G20 commitment and phase out subsidies for the fossil fuel industry over the medium-term.” – Liberal Party of Canada Platform

You can’t say Justin Trudeau didn’t warn us. He made it very clear during his campaign to become Prime Minister that he planned to introduce legislation that would be damaging to the Western Canadian oil and gas industry.

The flow-through share regime has been a crucial element in the capital markets of Western Canada for oil and gas exploration and production companies (E&P companies). By issuing flow-through shares, and transferring corporate tax benefits of drilling from the corporation to the subscribing shareholders, E&P companies have, firstly, been able to issue shares in this highly risky business to arm’s length investors and, secondly, been able to reduce their cost of capital.

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Triple Canadian taxation possible with subsection 55(2)

The recent Tax Court of Canada’s decision in 101139810 Saskatchewan Ltd. v Queen (2017 TCC 3) did not cover any new ground with respect to subsection 55(2), but it was a useful reminder of the pitfalls one could encounter for running afoul of that provision. This short blog highlights what went wrong, and the court’s indifference to the taxpayer’s predicament.

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