Certain U.S. individual shareholders residing in Canada may elect to pay repatriation tax in instalments.
The new U.S. mandatory repatriation rules introduced as part of the recent U.S. tax reform requires U.S. shareholders of a U.S.-controlled foreign corporation with an income inclusion for the 2017 tax year to pay a one-time repatriation tax. Affected shareholders may be able to elect to defer some of this tax and pay in annual pre-set instalments over eight years rather than all at once. Although taxpayers can make this election on their 2017 tax return's due date, even if it has been extended until later in 2018, the first instalment payment, which represents 8% of the tax liability, must be paid by April 17, 2018. However, specified individual taxpayers residing out of the U.S. are eligible for an automatic extension of time to June 15 to pay the first instalment payment.
To make this election, a shareholder must attach a statement to their 2017 return. Individuals must also have sufficient information to estimate the net tax liability and make the required payment.
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