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American living in Canada


I own property on Lake Erie, Ontario would like to build home there but maintain my US citzenship. I am retired collect pension  and SS. Also have medicare. Would this be a problem? I have children that live in Buffalo, NY. I do not plan to work in Canada. what is the process I should follow?
david ingram replies:

You will not find it possible to retire to Canada as described unless you find a Canadian to marry and have him sponsor you to live in Canada. Once in Canada, our Provincial Medical plan would be pretty equal to your Medicare.

Without a sponsor, you 'can' maintain your home in the US and spend up to six months in Canada as a seasonal visitor and maybe even a little more.  However, your medicare will NOT cover you in Canada and if you are here more than 183 days a year, you will end up with 85% of your Social securioty taxable from the first dollar and 'will' be paying more tax in Ontario, than you are as a retiree in the US.

It is not a likely move for you. �
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Becoming a non-resident of Canada - Dennis Lee - Judge Teskey Case


Hi, I am a US permanent resident (moved from Canada this yr). I have some ties to Canada (student loans, driver's license which will expire this yr, a Canadian passport which has my US address, & my BC pharmacist license). I don't want to pay taxes to Canada on my income while I live in the US. What should I do? Should I submit the NR73 form? Is there any thing else? -----------------------------------------------------------
david ingram replies:

Having a green card implies thatyiou either won the Diversity lottery or you married an American.

In either case, if your intention is to live in the US for the rest of or most of the rest of your life, you are taxable on your world income in the US the year you move there and taxable in Canada on the income you earned in Canada before you left and any investment income you have after leaving.

If you are married, you should likely explore the likelihood of filing a joint US return with your husband by reporting the Canadian income as well and claiming foreign ta credits on form 1116.  If you do not have children, you should likely claim the exemption on form 2555.

For Canada you will file a departing Canada return and prorate your exemptions on schedules 1 and 428 based upon the number of sdays you were living in Canda divided by 365.  the departing return should also lookm at forms T1161 and 1243 and 1244 tio see if they apply to you.  From the description given, you will not, but if you happen to own a share of a ski cabin with your brother or some mutual funds, etc., the forms will be necessary.

If you have truly moved to the USA, there is no reason to file an NR73 form.  Ar4ticle IV of the US/Canda Income Tax Treaty takes over.

The following is an extract from my 1991 Income Tax Book  which you will also find in total (including Article IV at in the second box down on the right hand side under US/Canada Taxation.

So what are the rules?

Well, to leave Canada for tax purposes, you must give up clubs, bank accounts, memberships, driving licences, provincial health care plans, family allowance payments (if you are a returning resident, you can continue to get Family Allowance out of the country), your car, and furniture. You can keep a house here as an investment and rent it out, but it must be rented on lease terms of a year or more. And you MUST have an agent sign an NR6 for you (see example). This NR6 has the Canadian Resident AGENT ** guarantee the Canadian Government that if YOU do not pay your tax to Canada, the AGENT WILL. Even after fulfilling the foregoing, the Canadian government can still tax you or "try" to tax you on your income out of the country. If you are being paid by a Canadian Company, they can quite often succeed.

Even though you can collect family allowance out of the country, don't! One client's wife found out that she could get family allowance out of the country if she said they were coming back to Canada. She got some $3,000 of family allowance and cost the family some $80,000 in income tax when they came back to Canada from Brazil. I will never forget the husband's expression when he found out why he had been reassessed and I will never forget his wife's explanation. She said he was a skinflint and never gave her any money. The total episode cost them their house.

** The "agent" referred to above can be a friend, relative, or a business such as ours. We charge a minimum of $40.00 per month to be an "AGENT" for an NR-6 filing. This $480 per year is "in addition" to any other fees but "well worth it" of course. It stops your mother, father, brother, next door neighbour or ex-best-friend from being plagued by paperwork they do not understand.


It is possible to be physically "in Canada" and be treated as a Non-Resident and it is possible to be out of the country for seven years, or never have even lived in Canada, but wanted to, and be taxed as a Canadian resident as the following three cases show. In case you missed it, the reason for the different rulings is the "INTENT" of the parties involved.  Wolf Bergelt intended to leave Canada.  David MacLean was only working out of the country.  He still maintained a residence and could not ever become a resident of Saudi Arabia anyway. Dennis Lee "wanted" to live in Canada.

In 1986, Wolf Bergelt won non-resident status before Judge Collier of the Federal Court, even though he was only out of the country for four months and his family stayed behind to sell his house. He had given up his memberships, kept only one bank account and rented an apartment in California until his house in Canada was sold. Four months after his move, his company advised him that he was being transferred back to Canada. Judge Collier said his move was a permanent (although short) move and he was a non-resident for tax purposes for those four months.

In 1985, David MacLean lost his claim for non-residence status even though he was gone for seven years. He kept a house and investments in Canada and returned a couple of times a year to visit parents. He had even been to the Tax Office and received a letter on January 29, 1980 stating that his Canadian Employer could waive tax deductions because he was a non-resident. However, he did not advise his banks, etc. that he was a non-resident so that they would withhold tax, he did not rent his house out on a long term lease and he did not do any of the things that makes a person a "NON-RESIDENT". Judge Brule of the Tax court of Canada said that he thought Mr. MacLean had stumbled on the non-resident status by chance rather than by design. In other words, to become a non-resident of Canada, you must become a bone fide resident of another country.  As a rule, only a Muslim born in Saudi Arabia to Saudi Arabian parents can become a Saudi Arabian citizen.  The best that David MacLean can hope for is that he has a Saudi Arabian temporary work permit.

In other words, when a person leaves a place, they usually leave and establish a new identity where they are because the "new place" is where they live now. Trying to "look" like a non-resident is not the same as "BEING" a non-resident - think about it.

In 1989, Denis Lee won part but lost most of his claim for non-resident status. He was a British Subject who worked on offshore oil rigs. He maintained a room at his parents house in England and held a mortgage on his ex-wife's house in England. For the years 1981, 82 and 83 he did not pay income tax anywhere. in 1981 he married a Canadian and she bought a house in Canada in June of 1981. On September 13, 1981, he guaranteed her mortgage at the bank and swore an affidavit that he was "not" a non-resident of Canada. [As I have said in the capital gains section of this book, bank documents will get you every time.] During this time he had a Royal Bank account in Canada and the Caribbean but no Canadian driver's licences or club memberships, etc.

Judge Teskey said:

"The question of residency is one of fact and depends on the specific facts of each case. The following is a list of some of the indicia relevant in determining whether an individual is resident in Canada for Canadian income tax purposes. It should be noted that no one of any group of two or three items will in themselves establish that the individual is resident in Canada. However, a number of the following factors considered together could establish that the individual is a resident of Canada for Canadian income tax purposes":

  • - past and present habits of life;

  • - regularity and length of visits in the jurisdiction asserting residence;

  • - ties within the jurisdiction;

  • - ties elsewhere;

  • - permanence or otherwise of purposes of stay;

  • - ownership of a dwelling in Canada or rental of a dwelling on a long-term basis (for example, a lease of one or more years);

  • - residence of spouse, children and other dependent family members in a dwelling maintained by the individual in Canada;

  • - memberships with Canadian churches, or synagogues, recreational and social clubs, unions and professional organizations (left out mosques);

  • - registration and maintenance of automobiles, boats and airplanes in Canada;

  • - holding credit cards issued by Canadian financial institutions and other commercial entities including stores, car rental agencies, etc.;

  • - local newspaper subscriptions sent to a Canadian address;

  • - rental of Canadian safety deposit box or post office box;

  • - subscriptions for life or general insurance including health insurance through a Canadian insurance company;

  • - mailing address in Canada;

  • - telephone listing in Canada;

  • - stationery including business cards showing a Canadian address;

  • - magazine and other periodical subscriptions sent to a Canadian address;

  • - Canadian bank accounts other than a non-resident account;

  • - active securities accounts with Canadian brokers;

  • - Canadian drivers licence;

  • - membership in a Canadian pension plan;

  • - holding directorships of Canadian corporations;

  • - membership in Canadian partnerships;

  • - frequent visits to Canada for social or business purposes;

  • - burial plot in Canada;

  • - legal documentation indicating Canadian residence;

  • - filing a Canadian income tax return as a Canadian resident;

  • - ownership of a Canadian vacation property;

  • - active involvement with business activities in Canada;

  • - employment in Canada;

  • - maintenance or storage in Canada of personal belongings including clothing, furniture, family pets, etc.;

  • - obtaining landed immigrant status or appropriate work permits in Canada;

  • - severing substantially all ties with former country of residence.

"The Appellant claims that he did not want to be a resident of Canada during the years in question. Intention or free choice is an essential element in domicile, but is  entirely absent in residence."

Even though Dennis Lee was denied residency by immigration until 1985 (his passport was stamped and limited the number of days he could stay in the country) and he did not purchase a car until 1984, or get a drivers licence until 1985, Judge Teskey ruled that he was a non-resident until September 13, 1981 (the day he guaranteed the mortgage and signed the bank guarantee) and a resident thereafter.

My point is made. Residency for "TAX PURPOSES" has nothing to do with legal presence in the country claiming the tax. It is a question of fact. My thanks to Judge Teskey for an excellent list. The italics are mine and refer to the items which I usually see people trying to "hold on to" after they leave and are trying to become non-residents. No single item will make you a resident, but there is a point where the preponderance of "numbers" leap out and say, "He / She is a resident of Canada, no matter what he / she says." 

The case above is not unusual in any way. It is a fairly typical situation in my office.

In 1990, John Hale was taxed as a resident on $25,000 of directors fees he had received from his Canadian Employer and on $125,000 he received for exercising a share stock option given to him when he had been a resident of Canada (the option, not the stock). Judge Rouleau of the Federal Court ruled that section 15(1) of the Great Britain / Canada Tax Convention did not protect the $125,000 as it was not "salaries, wages, and other remuneration". It was, however a benefit received by virtue of employment within the meaning of section 7(1)(b) of the act.

Even a car you do not own can make you a resident as the next sailor found out.

In 1988, FrederickReed was claimed by the Canadian Government as one of their own. He lived on board ship and shared an apartment with a friend in Bermuda but only occasionally. He also stayed with his parents in Canada when visiting his employer in Halifax. Judge Bonner of the Tax court ruled that he could not claim his place of employ or the ship as his residence and just because he did not have a fixed abode, did not make him a non-resident. He was also the beneficial owner of a car in Canada which even though of minor consequence, served to add to his Canadian Residency. He had in fact borrowed money from a credit union to buy the car, even though it was registered in his father's name. He had maintained his Canadian Driver's licence as well.

An interesting case in June, 1989 involved Deborah and James Provias who left Canada in October of 1984. They had sold a multiple unit building to James' father on September 21, 1984 but the statement of adjustments did not take place until December 1, 1984. They tried to write off rental losses and a terminal loss against other income as `departing Canadians'. Judge Christie of the Tax Court ruled that they had left before the sale and were not entitled to the terminal loss or another capital loss as these could only be applied against income earned in Canada from October 13, 1984 (the day they left) to November 30, 1984 (the day before the sale) and there was no income, only a rental loss.

But June, 1989 was a good month for Henry Hewitt. He had been a non-resident living in Libya for four years and received some back pay after returning to Canada. DNR tried to tax him on the money but Judge Mogan of the Tax Court came to the rescue. He ruled that although Canadians were usually taxable on money when received, that assumed that the money itself was taxable in Canada, which was not true in this case.

In 1989, James Ferguson lost his claim for non-residency status but from the information, it didn't stand a chance anyway. He had been in Saudi Arabia on a series of one year contracts for four years. His wife remained employed in Canada, and he kept his house, car, driver's licence, union membership, and master plumber's licence. Judge Sarchuk ruled that he had always intended to return to Canada and was a resident.

A similar situation involved John and Johnnie M. Eubanks in the United States. He was working on an offshore oil rig in Nigeria with a Nigerian work permit and attempted to claim non-resident status for the purposes of exempting the foreign earned income exclusion. His wife was in the United States at all times and because he worked 28 days on and 28 days off, he returned to the U.S. for his rest periods using 4 days for travel and 24 days for rest with his family. He did not spend any 330 day period (out of a year) in Nigeria and only had a residency permit for the purposes of working in Nigeria. Judge Scott ruled he was a resident of the U.S. and taxed him some $20,000 with another $6,000 penalties and interest.

The Tax departments in Canada and the U.S. issue Interpretation Bulletins and Information Circulars and Guidance Pamphlets. These documents sometimes get people in trouble because the individual reads the good part and doesn't pay any attention to the exceptions. The following case ran contrary to a Guidance Pamphlet issued by the IRS.

On and Off-shore Oil rigs were involved with William and Margaret Mount and Jesse and Mary Wells. William and Jesse worked in the United Arab Emirates. However, they kept their homes and families in Louisiana and kept their driver's licences in Louisiana and voted in Louisiana. No evidence was shown that they had tried to settle in The United Arab Emirates. Judge Jacobs turned down claimed exclusions of approximately $75,000 each.

There isn't any question about what oil rig people talk about on oil rigs. It has to be "how to beat the tax man". Unfortunately, they all seem to think it is easy. Another such story follows.

In 1989, Clarence Ritchie found out that bona fide residence means just what it says. You cannot be a non-resident of the U.S. for tax purposes if you are not a bona fide resident of another country. He was working on the Mobil Oil Pipeline in Saudi Arabia and although when he left he was married with a couple of kids, by the time he returned permanently, he was a happily divorced man. Judge Scott ruled that though he did not have an abode in the United States, he had not established one in Saudi Arabia and therefore was not entitled to the foreign earned income exclusion which requires you to be away for 330 days out of 365. He had worked a 42 days on, 21 days off schedule and usually returned to the U.S. for his days off although he did spend time in Tunisia, England, Italy and Greece.

On a final note, as explained on page 143 of the "PINK" 17th edition of my ULTIMATE TAX BOOK, it is possible to have three countries after you for tax. If you are thinking of taking a job because a recruiter told you the money is tax free, think twice and check three times with competent individuals about what the rules "really are". No government likes giving up the right to tax its citizens.


Non-residents of Canada with investments in Canada are subject to a 25% non-resident withholding tax on any money paid to them while they are out of the Canada. Therefore, if they have $10,000 in the Bank of Montreal and they live in Argentina, The Bank of Montreal must withhold 25 cents out of every dollar of interest paid to the account. Most tax treaty countries such as Great Britain, Germany, the United States, and Australia have a reciprocal agreement with Canada that limits the withholding to 15%.
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Moving my US 401(k) to Sweden?


I am Swedish citizen who lived and worked in the US for a few years on a H1-B visa. Now I live in France and would like to move my 401k out of the US and wonder if I have to pay taxes and penalties on it?

I do not want to take the money out, but I want to put it into another retirement plan in my home country, Sweden and wonder if I can find some legal help to do so.

Also, before I moved to the US, I was told I can roll over my social security contribution from US to Sweden when I leave the country, I don't know if you can help me with that too.

Really appreciate your help,
Best regards,

david ingram replies:

Sorry, but I am not likely the person to ask.

You can NOT directly roll your 401(K) into a plan in Canda and Canada has the most liberal set of rules with the US of all the countries out there.

You can roll your 401 into an IRA and then Canada would allow the rollover of the IRA into a Canadian RRSP but to do that you still need to pay the tax to the US and the 10% penalty if you are under 59 1/2.

You end up getting the equivalent of the US tax back by claiming it as a foreign tax credit in Canada but i have no idea if Sweden or France has the same system. You will have to ask there.  However, the method mentioned in Canada is not well known either so you will have to find out if it can be copied. Maybe 1 out of 100 financial advisors in Canada would have a clue how to do it.  Fred Snyder at (604) 731-8900 and Dan Walkow at (604) 541-9952 or Darrel Thompson at (416) 874-8007 are three that do.

Provided you have six credits into the US Social Security, you will likely receive reduced benefits from both countries.  Your working in France will further complicate the process but the following is taken from the US / Sweden Social security Totalization Agreement

Retirement or old-age benefits
United States Sweden*
Worker-Full benefit at full retirement age, or reduced benefit as early as age 62.
Required work credits range from one and one-half to 10 years (10 years if 62 in 1991 or later).

Basic: Full pension at age 65, or reduced pension as early as age 60. Payable to Swedish residents with three years residence in Sweden or three years of ATP coverage.

Payable outside Sweden to Swedish nationals with at least three years of ATP coverage.

ATP: Full pension at age 65; reduced pension as early as age 60. At least three years of work required. Reduced payments with fewer than 30 years of work. No nationality or residence requirements.

Disability benefits
United States Sweden*
Worker-Under full retirement age can get benefit if unable to do any substantial gainful work for at least a year.  One and one-half to 10 years credit needed, depending on age at date of onset.  Some recent work credits also needed unless worker is blind. Worker-

Basic: Must be age 16 to age 65 and at least 25 percent disabled. Payable to Swedish residents with three years residence in Sweden or three years of ATP coverage.

Payable outside Sweden to nationals with at least three years of ATP coverage.

ATP: Same as basic pension except three years work required. Reduced payments with fewer than 30 years of work.

Family benefits to dependents of retired or disabled people
United States Sweden*
Spouse-Full benefit at full retirement age or at any age if caring for the worker's entitled child under age 16 (or disabled before age 22).  Reduced benefit as early as age 62 if not caring for a child. Spouse-No provision. However, a means-tested wife’s supplement to the basic pension may be payable for a wife who is at least age 60. Certain residence requirements may apply.
Divorced Spouse-Full benefit at full retirement age.  Reduced benefit as early as age 62.  Must be unmarried and have been married to worker for at least 10 years. Divorced Spouse-No provision.
Children-If unmarried, up to age 18 (age 19 if in an elementary or secondary school full time) or any age if disabled before age 22. Children-No provision.
Survivors benefits

United States Sweden*
Widow-Full benefit at full retirement age or at any age if caring for the deceased's entitled child under age 16 (or disabled before age 22).  Reduced benefit as early as age 60 (or age 50 if disabled) if not caring for child.  Benefits may be continued if remarriage occurs after age 60 (or age 50 if disabled). Widow-(worker died prior to 1/1/90 or widow born in 1944 or earlier)-

Basic: Pension at any age if child under age 16 in care or at least age 36 and married at least five years.

ATP: Pension at any age if worker was receiving ATP retirement or disability pension, or had at least three years of ATP coverage. Marriage must have lasted five years and taken place before worker reached age 60, unless there is a surviving child of the marriage.

Widower-Same as widow . Widower-No provision.
Divorced widow-Same as widow if marriage lasted at least 10 years. Divorced widow-Same as widow if worker died prior to 1/1/90.

No provision if worker died 1/1/90 or later.

Divorced widower-Same as divorced widow. Divorced widower-No provision.
Children-Same as for children of retired or disabled worker. Children-

Basic: Under age 18, or age 20 if student. Certain residence requirements may apply.

ATP: Under age 18, age 20 if student. Deceased must have had at least three years ATP coverage. No nationality or residence requirements.

Lump-Sum Death Benefit-A one-time payment not to exceed $255 payable on the death of an insured worker. Lump-Sum Death Payment-No provision.

*Sweden has a new pension system. People born in 1938 or later receive at least part of their benefits under this new system. People born in 1937 or earlier receive benefits only under the old system. This table shows the eligibility requirements for benefits only under the old system.

IV.A. How benefits can be paid If you have Social Security credits in both the United States and Sweden, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country’s system, you will get a regular benefit from that country. If you don’t meet the basic requirements, the agreement may help you qualify for a benefit as explained below.


IV.A.1. Benefits from the U.S If you do not have enough work credits under the U.S. system to qualify for regular benefits, you may be able to qualify for a partial benefit from the United States based on both U.S. and Swedish credits. However, to be eligible to have your Swedish credits counted, you must have earned at least six credits (generally one and one-half years of work) under the U.S. system. If you already have enough credits under the U.S. system to qualify for a benefit, the United States cannot count your Swedish credits.


IV.A.2. Benefits from Sweden Sweden provides survivors and disability benefits two separate programs.

  1. A “basic” pension program pays flat-rate benefits to Swedish residents with at least three years residence or three years ATP coverage. The pension normally is payable outside Sweden only to Swedish nationals with at least three years of ATP coverage. However, under the agreement, U.S. nationals residing outside Sweden can receive the basic pension on the same basis as Swedish nationals. In addition, U.S. credits can be counted to help meet the three-year ATP coverage requirement.

  2. A “supplementary” pension program for workers, known by the initials “ATP,” pays benefits based on how long you worked and the amount you earned. To be eligible for an ATP pension, you must generally have at least three years of ATP credits. If you don’t meet this requirement, but have at least one year of ATP credits, U.S. credits may be counted to help you qualify.
IV.B. How credits get counted You do not have to do anything to have your credits in one country counted by the other country. If we need to count your credits under the Swedish system to help you qualify for a U.S. benefit, we will get a copy of your Swedish record directly from Sweden when you apply for benefits. If Swedish authorities need to count your U.S. credits to help you qualify for a Swedish benefit, they will get a copy of your U.S. record directly from the Social Security Administration when you apply for the Swedish benefit.

Although each country may count your credits in the other country, your credits are not actually transferred from one country to the other. They remain on your record in the country where you earned them and also can be used to qualify for benefits there.


IV.C. Computation of U.S. benefit under the agreement When a U.S. benefit becomes payable as a result of counting both U.S. and Swedish Social Security credits, an initial benefit is determined based on your U.S. earnings as if your entire career had been completed under the U.S. system. This initial benefit is then reduced to reflect the fact that Swedish credits helped to make the benefit payable. The amount of the reduction will depend on the number of U.S. credits: the more U.S. credits, the smaller the reduction; and the fewer U.S. credits, the larger the reduction.


Part V -- A Swedish ATP pension may affect your U.S. benefit If you qualify for Social Security benefits from the United States based only on U.S. credits and an “ATP” pension from Sweden based only on Swedish ATP credits, the amount of your U.S. benefit may be reduced. This is a result of a provision in U.S. law that can affect the way your benefit is figured if you also receive a pension based on work that was not covered by U.S. Social Security. Receipt of a Swedish “basic” pension, which is based on residence in Sweden, won’t affect the way your U.S. benefit is figured. For more information, call our toll-free number, 1-800-772-1213, and get the publication, Windfall Elimination Provision (Publication #05-10045). If you are outside the United States, you may write to us at the address in Part VIII.

You can find the whole agreement at:
Hope this helps.
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Inquiry from fellow lawyer - talk to Richard Kurland

Hi David,

My name is XXXXXXXXXX and I am an immigration lawyer in Montreal.

I would greatly appreciate your advice on the following:

My client, Mexican citizen, has been working (illegally) in the U.S. for the last eight years.

He now wants to apply for PR in Canada (skilled worker category).  He is very well qualified but I’m wondering if his work experience will be recognized given that he worked without obtaining a work permit in the U.S. (although he has paid his taxes and social security).

Would this be considered committing an “act” outside Canada and therefore render him inadmissible to Canada? Have you had similar cases before?

Thanking you in advance for your time.

Kindest regards,

xxxxxxxxx Attorney at law

david ingram replies:

I am not a lawyer and not a member of CSIC. Although I have graduated from the UBC / Seneca College Immigration Practitioners course and was grandfathered into CSIC, I chose to drop my enrollment.

To my knowledge, his illegal work in the USA will not stop his acceptance in Canada.  I can think of a dozen individuals i know (one from Sri Lanka and the rest from India) who came to Canada while working illegally in the USA.

No guarantees but I do not personally know of anyone who was stopped because of their illegal job in the USA.

However, note that I am talking the Canadian experience.  I have no experience whatsoever with the Quebec system so Quebec could take a conmpletely different attitude to the situation.

Someone who you should talk to is Richard Kurland.  If anyone knows what is going on in this area, it would be Richard- His Montreal Number is (514) 288-5252.  He really never answers the phone so you have to leave a message but his irreverance for the asystem makes him a joy to talk to and deal with if you can get him interested..  His Vancouver Phone number is (604) 688-6583 - His fax is (604) 689-1327 and his email is [email protected] - He is also the former National Chair of the Canadian Bar Association.
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Working on a TN and 1099

This is a second answer given to the same email.   I answered it two times because i looked at it in different ways from different directions.    Hello David,

I found your contact information on the Internet
(, in a posting
that closely reflects my situation.

I am currently working on a TN visa in the US and just in the process on
moving to another project. However, lawyers from the hiring agency insist
that I *have* to work as a W2 employee and I know that this is not true. My
intent is to work as 1099, which means that billing goes through my Canadian
company (incorporated in Ontario). From your post (link above), I know about
tax considerations I have to keep in mind.

Would it be possible to hire you for a consultation so that you can explain
to the lawyer at the hiring agency that 1099 can be done on a TN visa and
how? I do not anticipate any issues with issuing of the TN visa because I
have done it many times before. This issue I am writing you about is tax

Thank you in advance. Below is the email that hiring agency shared with me.
It contains lawyer's contact information. From his email and suggestion #2,
I see that he has not dealt with TN before, otherwise he would not suggest
obtaining a TN visa without a TN letter from the US company. It would be
great if you could provide clarity on the tax situation and what exactly has
to be specified in the contract between NueVista and my company to avoid any
hassles with the IRS. Thank you in advance.



Here is the lawyer's response:

From: xxxxxxxxxxxxxxx]
Sent: Monday, August 06, 2007 10:57 AM
To: xxxxxxxxxxxx Cc: xxxxxxxxxxxxx

8 CFR 214.6(b) prohibits him being on a 1099 if sponsored by xxxxxxxxx.
trying to get cos. to sponsor for TN under a 1099 is an old scheme designed
to avoid taxation in either country and remains quite popular but, the IRS
can some back on XXXXXXXX for the tax obligations if you participate in the
scheme.   2 options   1) sponsor as a TN and employee him not as a contractor on a 1099 but, as an employee W-2 or   2) contract with his company directly and let him deal with obtaining the TN via his own company but, provide no TN
support letter but, you can sign a contract with his co. (not with him) and
then pay his co. directly and issue a 1099 to his co. as you would any other
vendor.   If you decide option #2, I recommend that you let me review any
contract or other document he wishes you to sign. xxxxxxxx

david ingram replies:

I wish that every question I answer was perfect.  However, I have answered this so many times that I lose track of what has been said and what has not been said.

The legal advice that your potential employer was given about paying your corporation is / was correct. 

I have continuously said in numerous emails that you cannot work on a TN and have your Canadian Corporation paid unless:

1.   There are several owners of the Candian corporation so that 'you' are not the only or controlling shareholder. AND

2.   Your Canadian corporation obtains the TN. 

If these two factors are not met, you can be paid as an individual on a 1099 as an employee with no benefits and this is not uncommon. However, if you are the soul owner of the Canadian Corporation, you can NOT do what you suggest.  In rereading the answer you quote, it does appear that the person is the sole owner of his corporation but I obviously did not think that at the time.

This older Jan 2004 answer on my site gives you more

----- Original Message ----- From: [email protected] To: CENTAPEDE Sent: Tuesday, January 13, 2004 2:24 AM Subject: [CEN-TAPEDE] W2 or 1099 or Corporation for TN holder in the US.


Can A person on TN status be paid as 1099 contractor?
Can A person on TN status do Canadian corp. to US corp. billing instead of on
============================================================== david ingram replies:   A person on a TN can be paid on a 1099 as an independent contractor but can only do services for the company for which he was issued the TN.   A Canadian Company can get a TN to supply an employee to a US company.  In that case, he could be paid from Canada but would have to be an independent contractor again because his or her tax liability is to the United States for the work performed in the US.  You cannot get a TN, work in the US and be paid form Canada and not file a US return plus a return for the state or states you performed the services in.  -----------------------------------------------------------------------------------------------------
You can NOT work for your Canadian corporation in the US if you do not have the TN through your Canadian Company.  If the TN is issued throught the US employer, they can NOT pay your Canadian Corporation.  You hafve been working illegally as i understand your situation.

It sounds like you have been illegal with your last arrangement.

However, I disagree with the legal opinion that you can not be paid on a 1099 basis as an individual.

At least half of the TN's that we do returns for are paid on a 1099 basis because of the temporary nature of the assignment.  Howrever, they are paid as an individual and are only allowed to work for that employer so are really employees without benefits.  For most people, this is a DISADVANTAGE because they are then required to pay both halves of Social Security which is a pretty heavy price to pay. 

If you wish to be paid as a corp to corp basis, you will have to get your TN through your Canadian company.  Although this is not really legal as they are not supposed to issue TN visas for one person corporations, it does happen.

However, since you are earning all the money in the US, you WILL owe tax on all the money to the US and suffer the expense of a whole bunch of expensive accounting.  It will save you nothing legally and cost you a couple of thousand extra per year for accounting and your tax return.

The fact that the last company did it differently, does not make it right and the last thing you want to do is fool around with US Homeland Security.  If HS decides that you are stretching the truth on a TN application, the Homeland Securty Officer is within their right to arrest you, detain you, throw you in immigration jail for 5 days, make you post $5,000 bail and ban you from the US for 5 or 10 years with what is called an EXPEDITED REMOVAL.

If you are ever challenged at the border, do not make a fuss no matter when your plane leaves, etc.  Ask the officer to explain what he or she feels is deficient and ask for permission to return to Canada and rectify or get the information that they need.  Whatever you do, don't argue.

Hope this helps. �
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working on a TN and 1099 -ask Joe Grasmick

Hello David,

I found your contact information on the Internet
(, in a posting
that closely reflects my situation.

I am currently working on a TN visa in the US and just in the process on
moving to another project. However, lawyers from the hiring agency insist
that I *have* to work as a W2 employee and I know that this is not true. My
intent is to work as 1099, which means that billing goes through my Canadian
company (incorporated in Ontario). From your post (link above), I know about
tax considerations I have to keep in mind.

Would it be possible to hire you for a consultation so that you can explain
to the lawyer at the hiring agency that 1099 can be done on a TN visa and
how? I do not anticipate any issues with issuing of the TN visa because I
have done it many times before. This issue I am writing you about is tax

Thank you in advance. Below is the email that hiring agency shared with me.
It contains lawyer's contact information. From his email and suggestion #2,
I see that he has not dealt with TN before, otherwise he would not suggest
obtaining a TN visa without a TN letter from the US company. It would be
great if you could provide clarity on the tax situation and what exactly has
to be specified in the contract between NueVista and my company to avoid any
hassles with the IRS. Thank you in advance.



Here is the lawyer's response:

From: Michael xxxxxx
Sent: Monday, August 06, 2007 10:57 AM
To: xxxxxxx
Cc: xxxxxxxxxxxx
Subject: RE: Monday

8 CFR 214.6(b) prohibits him being on a 1099 if sponsored by xxxxxxx.
trying to get cos. to sponsor for TN under a 1099 is an old scheme designed
to avoid taxation in either country and remains quite popular but, the IRS
can some back on xxxxxxxxx for the tax obligations if you participate in the
2 options
1) sponsor as a TN and employee him not as a contractor
1099 but, as an employee W-2 or
2) contract with his company directly and
let him deal with obtaining the TN via for his own company but, provide no TN
support letter but, you can sign a contract with his co. (not with him) and
then pay his co. directly and issue a 1099 to his co. as you would any other
If you decide option #2, I recommend that you let me review any
contract or other document he wishes you to sign. xxxxxx

david ingram replies:

I am answering this twice. There is another answer going directly to you.
The Hammond Law Firm is a very good US immigration firm and your problem is that they do know what they are doing.    Although I disagree in principal with the concept that you can not be paid on 1099 for a short term contract, he is completely correct in stating that xxxxxxxxxx can not issue you a letter, get a TN in your name and then pay your corporation.

He is also 100% correct is strating that xxxxxxxxxxxxx would not issue you a TN letter if you were going to get a corp to corp contract. 

In that case, you would need a contract with your corporation and xxxxxxxxx and 'your' corporation would write the letter.  XXXXXXXXXXXX DOES know what he is doing and the XXXXXXX law Firm runs multiple seminars and immigration meetings in the general XXXXXXX area.

If you have been working for your corporation in the past but the visa was issued to you by a US corporation, you have been working illegally in the US and are lucky you have not had a problem so far.

Remember that I am NOT a lawyer but deal with immigration issues on a regular basis because of my US Canada cross border tax business.

One of the deans dealing with the issuance of a TN Visa to a Canadian is Joe Grasmick at
He has a 'pay in advance' telephone consultation service and I suggest that if you want a second legal opinion, you contact him.  He wrote the TN handbook which just about everyone in the US/CANADA/MEXICO TN buisinesss uses as a manual at some point.

In the meantime, don't make too much of a fuss or you could end up with retroactive penalties.

So that you understand where I am coming from, In the past, you should be reporting every single cent of money paid to your Candian corporation as gross income on your US tax return.
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Property transfer Tax and renting

My question is: Canadian-specific


Quit simply, we're buying a rental property in B.C. and have to pay the dreaded Transfer tax. Is it an expense for rental pueposes as we'll be renting the Lake Front Condo for the next five years?

david ingram replies:

The property transfer tax is NOT a deduction from rental income.  It is added to the purchase price along with legal fees and is a deduction against any taxable capital gain when you sell the property.

The same thing applies to 'fixing up' expenses to get it ready to rent.  These are considered capital and are added to the ACB of the purchase.
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Canadian or American selling Mexican property - Usually taxable


I are selling a mexican property/house that was given to me  from my father.Do I pay taxes on the money I recieve from the sale? and if so how much? Money will be wired directly to my bank account.How do I go about this. There must be more people buying and selling in Mexico , because I see and hear of it all the time.
david ingram replies:

Who knows?  You have not given me any figures to work with. So I will answer a couple of general questions.

Canadian and Mexican purchasers of Mexican homes are always being told not to worry about the sale becasue they can claim it as their personal residence.  In addition, because of notary and property transfer fees, it is not unusaul for a purchaser to sign documents stating a lowere purchase price than actually paid to 'save' money on the purchase.

What happens with this is that the seller saved capital gains tax becasue of the lower stated sales price, but the purchaser pays more tax when they sell.

Although a Canadian or an American 'can' claim their personal residence in Mexico tax free, the rules are

1.    that it has to be the only house they own AND they have to have occupied it full time for at least two years

2.    they have to have an FM3 visa and

3.    they have to be filing their tax returns as a year round Mexican resident.

4.   They have to apply to Mexico’s Secretary of Hacienda and Public Credit (the Mexican CRA / IRS) and obtain its approval. Each one of these requests is determined on a case-by-case basis.  This is similar in concept to the T2062 filed in Canada.

So - back to your question. 

*   Your father likely owes tax on the disoposal of the home to you unless he was a full time resident of Mexico with an FM3 visa, filed full Mexican tax returns as a resident, lived full time in the house for two years AND did not own a house in Canada or the US or Costa Rica or Spain or Italy, etc.

*   Depending upon what stated price he transferred it to you, you will likely have a Mexican Capital Gains tax to pay.

The tax on sale is (subject to change) 25% of the gross sale price OR 34% of the actaul profit.  The cost price for this purpose is the purchase (or gift) price plus legal and any improvements made over the period of ownership.  Becasue this is a 'documented' ruling, you have to produce the receipts for the work done when presented to the Secretary of Hacienda and Public Credit. 

In a similar case involving a house in West Vancouver, I had to produce over $140,000 of actual receipts to the CRA for improvements to a new purchase made by a US citizen.  The CRA only accepted 50% of the receipts because the receipts clearly pointed out that much of the work was actually repairs due to previous water and insect damage. The CRA's ruling was that much o fthe work had to be done anyway (I replaced the roof on my house this year and have discovered carpenter ants in a house I have lived in for 38 years) and the CRA only allowed the Improvement part of the bill and not the cost for the remedial work.  i.e the rotten deck was doubled in size, dormers were put in the roof, the downstairs bathroom was doubled in size.

Hope it helps. �
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Good morning My wife and I are considering purchasing a rental income condo in xxxxxx,Florida (strong Canadian dollar/weak Florida real estate market) We live in xxxxxxxx,Ontario and in approx. 8 years we plan to retire and winter in Florida. I am a Canadian citizen and my wife is a Canadian landed immigrant/U.S. citizen. We have made arrangements to purchase by borrowing against our home which is now paid for. Both of us work,my gross income approx. $75,000.00 my wife's approx. $50,000.00 . We have no debts although we do not have a company retirement plan and as such are heavilly investing in RRSP's (approx. $2,800.00 My questions are   - is their an advantage to put the purchase in my Wife's name as she is a U.S. citizen? - should we arrange for the morgage in the U.S. vs Canada - deal with currencey fluctuation vs deduct morgage interest from my wife's income? - do you have representation in our area - xxxxxxxxxxx,Ontario?   Any comments/advise you could provide would be very much appreciated.   Thank You  
david ingram replies:

First, your wife should take out her Canadian Citizenship.  There are NO disadvantages other than the paperwork and cost.

If you had done this three years ago, you would have wished that you had borrowed the money in the US.  The decline in the dollar means that you would be paying back 65 or less percent of what you had borrowed.

I am one of the people who thinks that we could see a 1.10 Canadian dollar which means that you should still borrow in the US and pay it back in smaller dollars as the Canadian dollar rises to $1.10 to $1.20 US.  Remember, there used to be $5.00 Caandian dollars to one British Pound Sterling and now it is about $2.25.

The problem is that if you have the mortgage in Canada and are trying to pay it with a lower US dollar, you will be subsidizing more than you think. The only way to guard agains the currency fluctuation is to borrow half in the US and the rest in Canada.  If you borrow enough in the US that the rent covers the mortgage paymnet, then you will have enough US dollars to pay the money that goes across the border.  Whatever is left you can pay in Canda with Canadian dollars. 

Think back to 1991 when you needed $1.14 to buy one American dollar.  It went straight up to where you needed $1.64 for one US dollar and today it is back to $1.05  or so. 
I hope that your wife has been filing her US tax returns with TDF-90 and 8891 forms to report her Canadian RRSP and any other financial accounts to avoind mimum penalties of $10,000 plus 35% of the money in the RRSP plus 5% for every year not reported.  You can find more information at

If she has not been filing her US returns, get them done NOW.  Your buying property has brought her back into the US IRS firing range radar.  We, of course would be happy to look after them for her.  She needs to do the current year (2006) plus the six preceeding years.

As far as who should own the property, it does not matter much as far as I am concerned.  If you are living in Florida at the time of sale, the tax will be identical. If you are living in Canada, there may be a small difference, but the rules can change a dozen times in the interim.  Tell me what day you both intend to die and the order and I could only 'maybe' give a beter ansdwer because of changing laws.

For estate and other purposes, having it in joint tenancy with right of survivorship is likely as good as you will get. If you put it all in your wife's name and she goes first, it will be even more complicated.  And I am feeling very mortal right now with 3 good friends (two younger) gone in the last three weeks.

Howver, it is anyone's guess what will happen in the future.  As I said before, the logical method of protecting yourself against too wild a fluctuation is to borrow half in the US and half in Canada.

The following older question answers the US rental question if you were both Canadians.  B ecause your wife is an American, you can file an1040NR and she can just include her half of the rental on her 1040 but you also have the right to file a joint 1040 return with her.

Subject:        US Condo and Rental Expenses
Expert: [email protected]
Date: Saturday March 03, 2007
Time: 02:22 PM -0500


We have a rental property in the US. Can I claim the property taxes paid on my
condominium as a rental expense deduction on my Canadian taxes? Form T776 mentions
only Canadian property taxes however, the general guide states that all expenses can be deducted.

david ingram replies:

Anything that can be claimed on schedule E of the US return can be claimed on form T776

You need to do your Schedule E 1040NR first and then convert the US figures to the T776 on  your Canadian return.  If the condo is in Arizona, you would do a 140NR or if in Califormnia, a 540NR.

There is no state tax in Florida, Texas or Nevada, the other three popular places for a Canadian to have a rental US condo.

The difference between the two counties is the method of claiming depreciation.  In the US, you MUST calculate thedepreciation and include it even if it creates a loss.  The good news is that the operating loss caries forward as a future deduction agaisnt rent OR Capital Gains as opposed to non-resident losses in Canada which unfairly disappear into the ether.

In Canada, you do NOT have to claim it and if you do, can only claim enough to create a zero rental. Depreciation or CCA (capital cost allowance) as we call it can NOT be used to create or increase a loss.

Make sure that you do theUS returns, particularly if you are losing money.  The penalty can be a minimum of $1,000 to $10,000 PLUS 30% of the gross rent for failure to file a US rental return by a non-resident.

We, of course, are ideally suited to look after these for you by fax, snail mail, email or courier. �
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Sponsoring Australian (or any other spouse) to Canada

QUESTION: My husband is a canadian citizen and I'm australian non resident of Canada. I've been going in and out of Canada twice a year for the past 2 years. We just bought a house  and has mortgaged in the bank. I sold all my properties in Aust and now my husband's dillydallying on lodging our papers, I want to know what rights a non resident have or claims with the purchase of any property in Canada.

david ingram replies:

The purchase of the property does not give you any rights in Canada in terms of immigration if that is the question.

Indeed, its existence and the sale of your Australian properties AND a husdband in Canada can b e enough to keep you OUT of Canda becasue the nice person at the border might assume you are trying to live here and deny you entry if you are not here under the right auspices.

It sounds like you are waiting for your husband to file (lodge) his paperwork for you to become a PR (permanent resident) of Canada.

If he does not do it sooner rather than later, you could have a problem. 

The following will give you the paperwork that must be filled in and submitted. It is aimed at Americans but the Austraklian booklet can be found at 1(f) below:

There are some different rules for sponsorship from within Canada. If this is the case, also explore


I am a Canadian citizen working in Hong Kong for 4 years.  I have declared
myself as "non-resident" of Canada for tax purposes.

I will be getting marry in Jan 2007.  My fiancee is a HK citizen.  We would
like to move back to Canada after marriage and I have the following
questions regarding sponsorship of my finacee's immigration application:
- can I sponsor the application with my non-residence status?  then move
back after the application is approved??
- In order to sponsor the application, I need to fulfill some income
requirements.  Can I use my income from HK as a proof or if I need to move
back alone first, then get a job and pay tax before I can apply??

To complete the question, what are the steps to take in order for us to move
to Canada?
david ingram replies:

You can sponsor him from afar and move back together.

You need to fill out most, if not all of the following forms.

Unless there is a problem with criminality in your fiancée's background, you
should be able to fill them in yourself but we are here if you need some
help with them.

Our specialty is the tax portion of the question and we would be glad to
look after your arriving back in  Canada returns.

The following older question and answer will give you what you need

david ingram replies:

The following deals with sponsoring a spouse into Canada:

I can not guarantee that you will not have any problems but if you have no
problems in any of your backgrounds and your lady in is good health, you
should be able to sponsor her by filling in the following forms by yourself.

If there are any "really" questionable situations, you should consult with
an Immigration lawyer.  If there is nothing questionable that requires
privileged communication, you can and should consult with a member of the
Canadian Society of Immigration Consultants.

In general, you can likely fill them in yourself.  If you do need help, you
can contact me.

You can start the process by going to:

This is a guide for sponsoring a US citizen spouse into Canada.
            Publication 3910E

This is the Guide for sponsoring a spouse from MAINLAND CHINA, Macao, Tibet
and Hong Kong although the guide only refers to Mainland China on the cover.
You can also look at
894f62c to order the specific forms and at to see a list of the
countries and areas.

        This is the Guide for sponsoring a spouse form India, Nepal; or

        This is the Guide for sponsoring a spouse from the Philippines

        This is the Guide for sponsoring a spouse from Australia, Thailand,

        This is the Guide for sponsoring a spouse from Bangladesh, South
Korea, Pakistan,

        This is the Guide for sponsoring a spouse from Peru in South America
through Guatemala to México

This is the application form to sponsor - form IMM-1344A

This is the sponsorship agreement - Form IMM-1344B

This is the Sponsorship Evaluation Form IMM-5481

This is a statutory declaration of a common-law marriage - FORM IMM-5409

This is the Sponsor Questionnaire - Form IMM-5540

This is an authority to release information - FORM IMM-5540

This is a document Checklist - Form IMM-5491

This is where you order your official receipt

This is your actual Application for Permanent Residence - FORM IMM-0008GEN

This is your Background Declaration - FORM IMM-008_1

This is your additional family information - FORM IMM-5406

This is your spouse or conjugal partner questionnaire -= FORM IMM-5490

14.    The Above PLUS a police report from your local police station (See
the guide for details) applies to those being sponsored from the UNITED
STATES. There is a separate brochure for every country.  If you are reading
this and are from any other country (Australia, Brunei, Austria, Venezuela,
etc) goto

14a for other country

This is the self-assessment test for an individual to determine his or her
eligibility to immigrate to Canada without being sponsored by a spouse.

I know this will help you make your decision.  If we can help you, remember,
that is what we do for a living.  In particular you should goto and click on and read US/Canada taxation BEFORE you come.