If you are a US citizen or resident or have US family members involved in your Canadian business, consider how the recent US tax reform may impact you.
On December 22, 2017, President Donald Trump signed into law the Tax Cuts and Jobs Act (the Act). The changes:
- introduce a transitional tax or one-time toll charge on accumulated earnings and profits
- expand the definition of a controlled foreign corporation
- introduce a new income inclusion that may expose your Canadian business profits to US personal taxation
These changes may have a significant impact on US individuals and require that you review the profit distribution strategy of your Canadian business. Although these rules apply to both US corporate and individual shareholders, this Tax Insights focuses on US individual shareholders of a private Canadian company.