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Canada-U.S. Estate and Gift Tax Planning: Utilizing Canada-U.S. Income Tax Treaty Provisions to Mitigate Tax

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, April 18, 2023

Recorded event now available

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This webinar will explain the transfer taxes paid in Canada and the U.S. by residents of the U.S. and/or Canada. Our panel of foreign tax experts will discuss specific articles in the Canada-U.S. Income Tax Treaty and provide examples of how these can be applied to mitigate estate and gift taxes paid in both countries.

Description

Although there is no inheritance tax in Canada, taxes on income and capital gains are generally required to be paid at death, on gifting, and transfers to trusts. There are exemptions to mitigate these taxes, including an exemption for a principal residence and a lifetime capital gains exemption, $971,190 (2023), for qualifying property. Unlike many other countries, there is no Canada-U.S. Estate and Gift Tax Treaty. Instead, there are provisions in the Canada-U.S. Income Tax Treaty to mitigate double taxation on death for Canadian citizens residing in the U.S.

A Canadian resident is subject to U.S. estate tax on U.S. situs property, including U.S. real estate and stock owned in U.S. corporations. Under the income tax treaty, a Canadian resident is entitled to a pro-rata share of the U.S. unified credit calculated as a ratio of the deceased's U.S. assets over worldwide assets. In addition to the unified credit, a marital estate tax credit and the foreign tax credit are available to offset taxes payable or paid.

Tax practitioners working with taxpayers residing in both the U.S. and Canada need to take steps to circumvent and reduce transfer taxes paid by these taxpayers.

Listen as our astute panel of international tax planning experts explains estate and gift tax considerations in the U.S. and Canada for Canadians residing in the United States.

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Outline

  1. Canada-U.S. Taxes on Transfers on Death and During Lifetime: introduction
  2. Residency
  3. Unified credit
  4. Marital credit
  5. Foreign tax credit
  6. State estate tax
  7. Canada-U.S. Income Tax Treaty
  8. Strategies to mitigate transfer taxes

Benefits

The panel will cover these and other critical issues:

  • When and how U.S. gift and estate taxes are applied to Canadian residents
  • Using the Treaty marital credit to reduce estate taxes
  • Specific strategies to reduce overall transfer taxes paid to the U.S. and Canada
  • How Canadian residents can utilize the U.S. unified credit

Faculty

McCormick, Patrick
Patrick J. McCormick, J.D., LL.M.
Founder/Managing Partner
McCormick Tax

Mr. McCormick specializes in the areas of international taxation, tax compliance, and offshore reporting...  |  Read More

Reese, Cheyenne
Cheyenne Reese
Principal
Legacy Tax + Trust Lawyers

Ms. Reese assists clients with tax, estate and trust planning. She received her J.D. from the University of Victoria in...  |  Read More

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