Briefing highlights
- Repeal of U.S. tax would affect many in Canada
- Canadian retail sales rise 2.2 per cent
See Canada and die
The phrase, of course, is “see Venice and die.” But depending on how U.S. tax reform plays out, it may well apply to Canada for snowbirds and the many Americans,dual citizens who live here.
As in, death could suddenly become a lot cheaper with the proposed repeal of a loathed U.S. estate tax.
Lawyers Darrell Wickstrom and Corina Weigl of Canada’s Fasken Martineau recently alerted clients of the firm to the introduction of a law that would repeal the U.S. estate tax, which is commonly known as the “death tax” and affects rich people after they’re dead.
The proposed repeal, said Mr. Wickstrom and Ms. Weigl, who practice estate law at Fasken Martineau, could impact many people now living in Canada, and who presumably still will be living after and if the tax is repealed.
(They’ll be losing on two counts if they don’t last that long.)
“Under the current rules, U.S. estate taxes are imposed on the worldwide estates of U.S. citizens, wherever they reside,” Mr. Wickstrom and Ms. Weigl said in their bulletin, noting that an estimated one million Americans live in Canada.
“In addition, Canadian citizens who own ‘U.S. situs property’at the time of their death are subject to the U.S. estate tax regime based on the proportion that their U.S. situs property represents of their worldwide estate,” they said.
“The most common forms of U.S. situs property are U.S. real property (including vacation homes owned by ‘snowbirds’) and stocks of U.S. corporations that are directly owned by an individual,” they added.
“Finally, there are a number of individuals who were born outside the U.S. but who reside in Canada who may qualify as U.S. citizens for purposes of the rules, if one or more of their parents are U.S. citizens by birth. These individuals are sometimes referred to as ‘Accidental Americans.’”
(One wonders how many Americans would like to be “Accidental Canadians” right about now.)
The U.S. tax amounts to 40 per cent on estates above an exemption of about $5.5-million (U.S.) or $11-million for a couple.
Here’s an example from Mr. Wickstrom: Let’s say you have taxable assets valued at $3-million above the exemption number, say a $2-million property and a $1-million investment portfolio. The estate tax would take $1.2-million of that.
Mr. Wickstrom and Ms. Weigl believe the proposed repeal will become law. Mr. Trump pledged to kill it, and the Republicans control both the Senate and the House. It’s also rare for a later government to bring back a tax law that has been undone, they noted.
“The upshot is that while there may be other actions taken by the Trump administration that prove to be troubling for Canadians, the proposed repeal of the U.S. estate tax would be a positive development for dual U.S.-Canada citizens, or residents of Canada who own U.S. situs property,” Mr. Wickstrom and Ms. Weigl said..
So if all goes according to plan, you’ll be able to go to your grave knowing your money is safe.
Retail sales up
Congratulations, you’ve done your bit for Canada’s economy.
Shoppers boosted retail sales by a better-than-expected 2.2 per cent in January, with volumes up 1.3 per cent.
Even when you strip out cars and parts, sales rose 1.7 per cent.
Health and personal care shops were particularly busy, with sales up 6 per cent, Statistics Canada said.
“Given the other data we’ve had, that positions January for at least a 0.4-per-cent or 0.5-per cent advance in real GDP, setting the stage for growth to be over 3 per cent, even if the economy is flat over the next two months,” CIBC World Markets chief economist Avery Shenfeld said of the overall retail sales report.
“That’s going to make it difficult for the Bank of Canada to stick to its dovish spin in the April [monetary policy report], but it will put a lot of emphasis on political uncertainties stateside as a way of avoiding a turn to outright hawkishness.”
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