U.S. citizens who own shares of Canadian corporations may have new U.S. tax liabilities for 2018.
If you are a U.S. citizen or resident individual who owns shares of a Controlled Foreign Corporation (CFC), including a Canadian corporation (i.e., a Canco), you may be personally subject to U.S. federal income tax on a portion of the income earned by the corporation starting in 2018. The new Global Intangible Low-Taxed Income (GILTI) tax regime was introduced as part of the recent U.S. tax reform changes and it applies for the first time in 2018. These rules require U.S. citizens or residents who own 10% or more of the votes or value of a CFC, such as a Canco, to include as income on their individual U.S. income tax return each year amounts earned by the CFC that exceed a certain rate of return threshold. These new obligations are in addition to the U.S. repatriation tax that applied for 2017.
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