This blog post addresses a very technical question about the new US repatriation tax. It will only be of interest to US tax advisors. It is not meant as legal advice and cannot be relied upon as such. It involves complex US tax concepts so advice specific to the situation is required.
With the enactment of the Tax Cuts and Jobs Act, Code Section 965 imposes a “one-time tax” on US taxpayers that own controlled foreign corporations (“CFC”). The rules are very complex and the results can be quite punitive. What follows is our attempt to distill some of the key points of the application of Code section 965 to US citizens resident in Canada who own CFCs. The post is intended as a guide for tax advisors and so relies on some understanding of basic US tax terminology. It is not exhaustive and should not be relied on as a substitute for a detailed examination of Code section 965. Nevertheless, we provide our views on some of the key issues.