Altro Quarterly Update Fall 2010

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Dollars & Sense Radio Show

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Join David A. Altro, Florida Attorney, Quebec Notary and Canadian Legal Counsel and host Matt Altro, COO of Altro & Associates, tonight Thursday September 16th at 7pm on their monthly radio show, “Dollars and Sense” on CJAD AM 800.

Tonight, David and Matt will host a good humored and spirited discussion on legal issues related to cross border and domestic tax, estate planning and real estate issues.

Be sure to check out our expanded Radio Shows page on our website where you can listen to past shows, highlighted clips and submit a question for an upcoming show.

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Upcoming Cross Border Seminars

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David A. Altro will be a guest speaker at several upcoming Montreal seminars. He will be presenting on cross border tax, estate planning and real estate issues.

September 28th 2010 from 8:30am-11:00am

Marriott Chateau Champlain
3500 Ch Du Souvenir
Chomedey, Quebec
H7V 1X2

September 28th 2010 from 7:00pm-9:30pm

Le Chateau Royal (Laval)
1 Du Canada Place
Montreal, Quebec
H3B 4C9

September 29th 2010 from 7:00pm-9:30pm

Hôtel ALT Quartier DIX30 (Brossard)
6500 boulevard de Rome
Brossard, Quebec
J4Y 0B6

Sign up and attend »

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David Altro featured in STEP Journal

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This article will look at the various tax and estate planning issues facing Canadians with special emphasis on the major impact of changes in the US estate tax rules under the US Internal Revenue Code (the Code) affecting Canadians. As of 1 January 2010, a Canadian owning US assets upon death in 2010 will not be subject to any US estate tax…

Read the article »

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Ontario Attorney Leanne Milech (B.A. LL.B.) joins our Toronto Office

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Prior to joining Altro & Associates, Ms. Milech was a Business Law associate at Heenan Blaikie LLP in Toronto.

Ms. Milech’s practice focuses on general corporate matters with a particular emphasis on mergers and acquisitions, share and asset purchase transactions, financing transactions and entertainment law matters.

As a law student, Ms. Milech gained labour law experience at the Screen Actors Guild in Los Angeles as well as entertainment law experience at Taylor Mitsopulos Klein Oballa in Toronto.
Ms. Milech earned her Bachelor of Laws from the University of Western Ontario in 2008. She received her B.A. in Film and Religious Studies from Queen’s University in 2004 with honours, graduating on the Dean’s List.

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Bumping up Your ACB

InlineBy Amanda Shear B.A., J.D.

Under the Foreign Investment in Real Property Tax Act (“FIRPTA”), a person or entity purchasing a U.S. real property interest from a foreign person is required to withhold ten percent (10%) of the amount realized upon sale (gross sale price) from a foreign owner. Read more to find out how to take advantage of the capital improvements initiates to increase your basis under FIRPTA!

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Moving to the U.S. the Canadian Way

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By David A. Altro B.A., LL.L., J.D., D.D.N., Fin.Pl., TEP

Why do Canadians move to the US?

If you find the weather in Canada difficult, the Sunbelt certainly offers a better weather alternative. If you have loved ones who you miss living in the States then what can be more important than to be near family? Our clients who move to the US generally enjoy lower income tax and a higher after tax net in their pocket on an annual basis. And of course, if an attractive business opportunity knocks south of the border then why not?

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Moving to the U.S. the Canadian Way

Download the article here (PDF) , or read it below.

Why do Canadians move to the US?
If you find the weather in Canada difficult, the Sunbelt certainly offers a better weather alternative. If you have loved ones who you miss living in the States then what can be more important than to be near family? Our clients who move to the US generally enjoy lower income tax and a higher after tax net in their pocket on an annual basis. And of course, if an attractive business opportunity knocks south of the border then why not?

The Threshold Issues
At our Firm we do not generally accept a client who can’t qualify for a US immigration visa or green card and US medical coverage.

Green Card
There are several programs available to obtain the right to live in the US including the EB-5 investor program which gets you a green card. A green card means permanent residency. Once obtained you are not bound by any job offer, investment, or temporary right to live in the US.

We like the EB-5 program because it is permanent. But it is not for everyone! It requires an investment of $500,000 US plus closing costs. It is not a purchase price to obtain a green card. It is an investment in a real estate project as a limited partner approved by the US Citizenship and Immigration Service (USCIS). For example, we successfully placed one of our clients in a hotel development project in Seattle where the Marriott is the hotel operator. The project was built without mortgage financing and the client was able to sell his limited partnership interest a brief delay after completion of the project.

Medical coverage issue
Generally high net worth Canadians are able to afford private medical insurance in the US. But are you insurable? The cost thereof is much less than the annual tax saving to live in the US. However, we always try to tie private medical coverage to US government Medicare programs.

Canadian versus US Income Tax Rates (2009)

CANADA (Ontario) UNITED STATES (Florida)
Married Filing Jointly
Taxable Income Tax Rate Taxable Income Tax Rate
$38,832 or less 22% $16,700 or less 10%
$38,833 -$77,664 31% $16,701-$67,900 15%
$77,665-$126,264 40% $67,901-$137,050 25%
$126,265 and over 46.4% $137,051-$208,850 28%
$208,851-$372,950 33%
$372,951 and over 35%

The tax savings above can increase by owning a home in Florida as mortgage interest, real estate taxes, condo fees, homeowners association fees, and home insurance are all deductions against your income. And if you keep a cottage back home in Canada you can also deduct all of the same expenses against your US income tax. There are numerous other opportunities including investing in US government tax free bonds whereby the interest earned is tax free in the US.

Your RRSP
There are advantages in collapsing the RRSP after leaving Canada. Instead of almost half of the value lost in taxes to Revenue Canada if you collapse it while a Canadian resident, the proceeds can be brought to the US after departure with a reduced tax rate of 25% or maybe 15% and possibly all or a portion of the 15% may actually be recovered by way of foreign credits if structured properly. In addition to the tax advantages, this takes away the risk of currency fluctuations, obligatory annual filing requirements with the IRS and the problem of the investments not US tax advantaged.

Canadian tax issues upon departure
A Canadian moving to the US may be subject to Canadian departure tax. When you leave Canada you are deemed to have sold all your assets immediately prior to departure at fair market value. Depending on your assets, that may trigger a capital gain tax.
Therefore, it would be prudent before you move to the US, to have a complete cross border financial planning analysis that addresses every issue with the goal of getting the best of both Canadian and US systems. Questions arise as to whether you own a business, are selling a business, have already sold your business or what are your other assets? If there is tax payable to Canada we look to see how to defer, reduce or legally avoid some or all. Where there is tax payable, we apply the advantages in the Canada/US Tax Treaty to obtain “foreign credits” in the US to deduct some or all of the taxes paid in Canada against future income tax in the US.

US pre immigration estate planning
Many Canadians hear stories that Uncle Sam taxes a US resident’s estate on death of up to 55% of the value. In 2010 there is no US estate tax. However, the tax is reintroduced in 2011. There may be US tax on death for the value of the estate in excess of $1,000,000. Some or all of such tax may be avoided with proper planning before you move to the US. Planning ahead well before the move provides appropriate time to create cross border trusts and other planning tools which can effectively shield some or all of your estate from US tax on death. Such planning may also provide protection against future creditors and protection for your children’s inheritance against creditors and or divorcing spouses of your kids!

Financial planning
Protecting and growing your portfolio once you become a US resident is of the utmost importance. Investments are different and many advantages exist on the US side regarding income, tax, fees to stock brokers and risk/reward. So plan ahead!

Upcoming Montreal Seminars

David A. Altro will be a guest speaker at the following seminars that will cover legal, tax and cross border issues.

September 28th 2010 from 8:30am-11:00am:

Marriott, Chateau Champlain
1 Du Canada Place
Salon Viger
Montreal, Quebec
H3B 4C9

September 28th 2010 from 7:00pm-9:30pm:

Chateau Royal
3500 Chemin du Souvenir
Hall New York
Chomedey, Laval, Quebec
H7V 1X2

September 29th 2010 from 7:00pm-9:30pm:

Hôtel ALT Quartier DIX30
6500 boulevard de Rome
Altitude Room
Brossard, Quebec
J4Y 0B6

See all seminars.