importing a car to Canada for a short time - - david ingram expert US CANADA cross border non-resident income tax help and prepa


Dear Mr. Ingram
I am a Canadian citizen whom has been working in other side of boarder for 5 years on different engineering projects. Meantime, I bought a car and house in US so I could claim mortgage interest for tax purposes.
Recently, I got a 6 months contract in Toronto for a Canadian company which deals with same technology.
Upon returning to Canada, US took away my TN visa and gave me 1 Year visitor visa.
The Canadian custom asked me that I have to import my car since I have bought from US.
Now, I am totally confused because at end of my contract I would have to return to US to work on other contracts. Then do I have to import my car back to US again? Is there a way to not import the car in Canada for these six months?
 
Thank you,
With best regards


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david ingram replies:

I spent quite some time on this because I became intrigued with the fact that I could not just phone and get a simple answer. I finally got my answer directly from the Office of the Director of the Pacific crossing here in BC but it took five days for them to reply as well and they usually get back within a couple of hours.  I made three calls to them and was told they were working on it..

The consensus seems to be that because you have lost your status in the US, If you want 'that' car in Canada. you must import the car as a returning Canadian which is what you are, like it or not.  If the vehicle is worth less than $10,000m there will be no duty because you are returning with your possession.  If it is over $10,000, there will be some excise tax.  The answer would be different if you were maintaining your US status (maybe because your US company was only transferring you up for six months).

There should not be any problem taking the car back to the US because you will have copies of the original bill of sale showing that it is a US car and you will have registration numbers, etc.  Make sure that you keep either original copies of it all or US notary certified true copies.

You might try getting the Province of Ontario to issue you the licence in addition to your existing licence.  Although not common, there are several people in dual citizenship status who live and work on both sides of the border and carry Washington State and BC plates on their cars.

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This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,200 would be the same with one rental
 
$1,300 would be the same with one business no rental
 
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.

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IRS Circular 230 Disclosure:  To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--

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Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at www.centa.com or www.garygauvin.com.  If you forward this message, this disclaimer must be included." -


 



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