Part 15 – The Canadian Media Notices the @USTransitionTax: The @LizT1 series of post

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The first fourteen posts in my “transition tax” series were:

Part 1: Responding to The Section 965 “transition tax”: “Resistance is futile” but “Compliance is impossible”
Part 2: Responding to The Section 965 “transition tax”: Is “resistance futile”? The possible use of the Canada U.S. tax treaty to defeat the “transition tax”

Part 3: Responding to the Sec. 965 “transition tax”: They hate you for (and want) your pensions!

Part 4: Responding to the Sec. 965 “transition tax”: Comparing the treatment of “Homeland Americans” to the treatment of “nonresidents”

Part 5: Responding to the Sec. 965 “transition tax”: Shades of #OVDP! April 15/18 is your last, best chance to comply!

Part 6: Responding to the Sec. 965 “transition tax”: A “reprieve” until June 15, 2018

Part 7: Responding to the Sec. 965 “transition tax”: Why the transition tax creates a fictional tax event that allows the U.S. to collect tax where it never could have before

Part 8: Responding to the Sec. 965 “transition tax”: This small business thought it was saving to invest in business expansion – Wrong, they were saving to be robbed by America!

Part 9: Responding to the Sec. 965 “transition tax”: From the “Pax Americana” to the “Tax Americana”

Part 10: Responding to the Sec. 965 “transition tax”: Individuals subject to U.S. state tax jurisdiction, the response of New York State – It’s about “reasonable cause”!

Part 11: Responding to the Sec. 965 “transition tax”: Letter to the Senate Finance discussing the effects of the transition tax on Americans abroad

Part 12 – Bulletin – June 4, 2018: It appears that the first payment for the @USTransitionTax will be delayed for some

Part 13 – Calculating the Transition Tax: Just Like Dental Work – Painful in More Ways Than One

Part 14 – Calculating the Transition Tax: The 962 Election – getting credit for the tax the corporation has paid

The Canadian Media Takes Notice …


Veteran CBC Reporter Elizabeth Thompson has written an informative series of posts about the impact of the “transition tax” on Canadian residents. I am not going to reproduce the posts. I am going to include a series of tweets that link to both the original CBC site and the Isaac Brock Society. You should read her articles, the Brock posts, the comments on both sites and compare the comments to each.
Ms. Thompson’s articles were well written and explained the mechanics of the “transition tax” well. Nevertheless, the comments on the CBC site revealed that it was very difficult for readers to understand what is going on. For each of her articles I left a comments that I hoped would help readers better understand the problem. One example was:

This is a complex problem – in the spirit of helping people understand the context and unfairness of this, here is a summary of what is going on:

1. A Canadian resident individual creates a Canadian Controlled Private Corp.

2. That CDN corp may make some profits.

3. If those profits are paid out to the individual, the individual pays taxes on his personal tax return (wherever he is required to file a return).

4. If the profits earned by the Corp are not paid out to the individual they are (1) taxed to the corp in Canada. The “after tax money” remains in the corp for future investment, or to be distributed to the individual later. Note that in Canada the money is not taxed to the individual until the money is distributed to the individual.

5. Canadians with U.S. citizenship also have to file U.S. tax returns. Those returns disclose existence of the CCPC and the amount of earnings that have not been paid out by the corp.

6. Money left in the corp (to be distributed later) was fully disclosed to the USA, but was NOT subject to US tax when earned. I repeat it was NOT (under US law subject to taxation when it was earned).

7. USA is claiming the right to (1) impose tax on money earned by the corp by (2) pretending that the money was actually earned by the individual (who never received it) – creating fake income!

8. Therefore, this is about (1) the USA imposing retroactive tax on (2) money that was not subject to U.S. tax when earned (3) by pretending that the money was distributed to the CDN shareholder (4) when the money was not distributed.

9. It will expose the individual to double tax in the USA and Canada.

USA is (1) creating fake income (2) imposing real taxation on fake income (3) imposing taxes before Canada can tax it and (4) stealing from Canada.

I don’t think my attempts to explain this did any good.

Ms. Thompson’s articles included:

April 30, 2018

May 2, 2018

June 13, 2018

August 13, 2018

August 14, 2018

John Richardson – Follow me on Twitter @Expatriationlaw

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