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Canadians may eventually owe tax on their US stocks

Canadians may eventually owe tax on their US stocks

The little-known IRS rule that may have some wealthy Canadians eventually owing taxes on their U.S. stocks

Source: The Globe and Mail

One of the great things about writing an investment letter is the opportunity to learn from subscribers. Such was the case the other day when we received a letter from a self-described elderly gentleman from Quebec who noted that his results for 2018 were modest because he only holds Canadian stocks. He explained that he doesn’t buy American stocks because he doesn’t want his estate to have to pay U.S. tax upon his death.

Our initial reaction was that this fellow was misinformed. Although we were aware that there could be some tricky points with a scenario such as owning a retirement condo in Florida, we thought there was no potential liability with owning U.S. stocks in a Canadian brokerage account.

Wrong! It turns out that one’s estate can incur a U.S. tax liability even though you’ve never visited Disney World, taken in the wonders of the Grand Canyon or even set foot in the land of the Star Spangled Banner.

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