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w w w . C A N A D I A N L a w y e r m a g . c o m A P R I L 2 0 1 8 45 a number on the page" without tax associat- ed with it. "Now, it's important." Second, was the correct exchange rate taken into account in the past? Tax filers in the past may have taken Canadian dollars and assumed an exchange rate of one to one against the U.S. dollar. "Then, it didn't matter, but now it does," says Berg. "That kind of stuff happened all the time." And third, says Berg, "Can we amend prior returns for prior years to accumulate more Canadian tax credit to wipe out [at least some of] what might be owed to the U.S.?" If Canadian tax filers can find even $5 in excess Canadian taxes that they paid, "that reduces by $5 what you will owe in U.S. taxes." Estate taxes Trump had vowed to kill the federal estate tax, but in the end, he had to settle for doubling the base exemption. If you're a Canadian who owns U.S. situs property (real estate, stocks and bonds), this is great news, says Berg, as the exemption amount for estate, gift and generation-skipping taxes doubled under the new act to US$10 mil- lion from US$5 million for tax years 2018 through 2025. The catch is that if you die holding U.S. situs property, your estate must file a U.S. estate tax return or be subject to pay a large portion of the sale of proceeds to the U.S. government. (Berg gives the example of an elderly woman who owns a condo in Phoenix valued at US$200,000; when her son sells the condo following her death, Berg says, he would need to fork over US$40,000 of the proceeds from the US$200,000 sale to Uncle Sam if he failed to file an estate tax return in the U.S.). And not only are U.S. green card hold- ers taxed in the same way as citizens, Berg says, but many who have held green cards in the past — such as children, for example — may not be aware that their immigration status in the U.S. has changed indefinitely. "It's only the card that expires," he says. "The underlying status doesn't expire." The new legislation also affects the estates of Canadian parents who die in Canada but leave assets to children in the U.S., says Michael Kandev of Davies Ward Phillips & Vineberg LLP's Montreal office. In the past, the so-called 30-day rule in the United States said that a U.S. person could own shares in a foreign corporation for a maximum of 30 days before it became a controlled foreign corporation. So, an individual settling an estate had a window of 30 days to unwind a structure relating to a corporation without being hit by taxes. "The 30-day rule has now been repealed," Kandev says. Unless pre-mortem steps are taken, the U.S. heirs may be faced with a "double tax," payable in Canada and in the U.S. as well. The new act also includes certain anti-hybrid rules that adversely affect cer- tain financing arrangements that Canadian multinationals put in place in respect of U.S. operations, says Kandev. Corporate tax changes Paul Seraganian, New York managing part- ner for Osler Hoskin & Harcourt LLP, says that the act "resets the playing field for domestic competition in [the] U.S. and removed the structural disadvantages that foreign companies had. That's far reaching, across industries, asset classes and life stages of companies." Two decades ago, a leading Canadian lawyers' magazine called Millar Kreklewetz LLP a Super Boutique, describing us a Not much has changed. We are proud to be recognized by World Tax as a leading CanadianTax Law Firm – on the strength of our GST/HST and Customs client base, which they noted as "stellar"! 24 Duncan Street, 3rd Floor, Toronto, Canada M5V 2B8 Tel: (416) 864 - 6200 Fax: (416) 864 - 6201 www.taxandtradelaw.com Robert G. Kreklewetz rgk@taxandtradelaw.com W. Jack Millar wjm@taxandtradelaw.com John G. Bassindale jgb@taxandtradelaw.com Helping You. Help Your Clients. ® "brand name for commodity tax and related international trade work". MillarKreklewetz_CL_Apr_18.indd 1 2018-03-13 11:04 AM

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