Cross-border Tax Issues Seminar
International Tax Concepts
for Cross-border
Employees
AGENDA
Basic Tax Concepts for Cross-border Employees
Tax Residency – U.S. vs. Canada
U.S. - Canada Tax Treaty considerations
Income Tax – reporting/withholding for employers
Social Security Tax
Retirement Plans
Common Cross-border Issues
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Mo Ahmad
mo.ahmad@trowbridge.ca
Vancouver Office, Trowbridge
604.288.7700
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Who We Are
Trowbridge Professional Corporation is a specialty tax firm,
providing tax services for Canadians that live and work
around the world
Offices in Toronto, Montreal, Vancouver and London,
Through our affiliation with the Global Tax Network we are
able to provide global solutions to our clients.
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Tax considerations relating
to relocating from / to Canada
Canadian taxation based on “tax residency”
Factual Determination
U.S. taxation based on U.S. citizenship/Greencard
Status or Substantial Presence Test
Days of physical presence
Consider State residency
Short-term move – file in both Canada and the U.S.
Permanent move – Sever Canadian Residency For
Tax Purposes – file final Departure tax return in
Canada
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Canada Tax Residency - Common Primary
and Secondary Ties
Primary: Vacant Home, leaving dependent spouse in
Canada.
Secondary: personal property left behind in Canada,
maintaining Canadian bank accounts, Canadian credit
cards, professional and/or club memberships in
Canadian organizations, maintaining provincial health
coverage, Canadian drivers license.
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U.S. Tax Residency
“Substantial Presence” test:
Were you present in the U.S. 31 days during the current year, and
183 days during the 3-year period that includes the current year and
the 2 years immediately before that, counting:
 All the days you were present in the current year, and
 1/3 of the days you were present in the first year before the
current year, and
 1/6 of the days you were present in the second year before
the current year.
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U.S. – Canada Tax Treaty Issues
Purpose to avoid double taxation
Employment Income – exemption under Treaty
– Less than $10,000
– Spend less than 184 days in any 12 month period and your
remuneration is not paid by, or on behalf of, a person who is
resident in the United States and is not borne by a permanent
establishment in the United States
Residency “Tie-breaker” rules
– permanent home
– center of vital interests – personal and economic ties
– habitual abode
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Employer Reporting / Withholding
Employer Reporting / Withholding requirement even if
exemption under Tax Treaty
Income Tax Withholding Waiver
Frequent Business Travelers
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Social Security Taxes
US FICA and Medicare taxes vs. Canadian social
security taxes (Canada Pension Plan and Employment
Insurance)
U.S. Canada Totalization Agreement
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RRSP’s/401(k)/IRA
RRSP’s Tax protected while in the US – you can also
contribute in year of departure and any other year
(may not be beneficial to do so) – file Form 8891
IRA’s/401(k) tax protected in Canada until disposition
May be best to leave IRA/401(K) as is until you need
income in the future – not taxed in Canada or U.S.
until disposed
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Common Cross-border Issues
Sale of home – U.S. treatment vs. Canadian treatment
– Clearance Certificate / Withholding Taxes
Executive compensation / stock option plans
Foreign Disclosure Requirements
– Form T1135 / FBAR
Impact on Investments
 Tax treatment for dividends / capital gains
Foreign Disclosure Requirements
Estate planning / update will
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Questions?
Mo Ahmad
mo.ahmad@trowbridge.ca
Vancouver Office, Trowbridge
604.288.7700
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Legal
This presentation is for information purposes only and does not provide tax or
legal advice. Due to the complex tax rules for U.S. and Canada, it is imperative
that you obtain professional advice from a qualified tax or legal advisor
specializing in cross-border tax planning before you act on any of the
information provided.
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