U.S. tax reform to bring double taxation to some Canadians
New tax law changes in the United States will impact some Canadians who hold dual citizenship, a green card, or who own American property. Of primary concern is how some of the tax changes will affect how foreign income is calculated for American citizens. It affects the “participation exemption system” that allows income earned abroad to not be taxed again when it comes into the U.S. The issue is how tax-free repatriation provisions, known as “transition tax” is being applied and while U.S. corporations are offered relief in the Tax Cuts and Jobs Act, individuals may be subject to double taxation. The problem is further compounded by a statement by the IRS saying it will disregard any foreign tax credits, which reduce the transition tax.