U.S. Tax Reform Punishes U.S. Citizens Abroad

Part I – The Transition Tax

From a taxation perspective, the period from July 2017 to February 2018 has been one of the most tumultuous in recent history for Canadian private company owners. For those who also have the privilege of being U.S. citizens or resident aliens, things have gotten downright ludicrous. In a rush to pass into law the most sweeping tax reform in a generation, U.S. lawmakers have stuck U.S. citizens resident in Canada with retroactive, double taxation, the elimination of much of the tax deferral previously available in their companies, a looming April 17^th payment deadline and virtually no rules or regulations to guide them through the chaos. 

Part 1 of this article will review the first of two contentious changes contained in U.S. tax reform – the Transition Tax – and provide some ideas on how to mitigate its impact.