American citizens in Canada can’t even escape U.S. taxes in death

How does the Canada U.S. tax treaty assist with preventing double taxation on death?

Financial Post

One million American citizens in Canada face double tax troubles. Max Reed explores these challenges in a spring series.

Benjamin Franklin famously said that nothing in life is certain except death and taxes. One wonders then what Mr. Franklin would say about taxes due on death?

For U.S. citizens living in Canada, it would seem that Ben Franklin was doubly right.

Consider Rajit, an elderly single U.S. citizen who lives in Montreal. His estate is made up of his principal residence worth US$2 million, an RRIF worth US$2 million, and a Canadian stock portfolio worth US$2 million. When he dies his US$6 million estate will be subject to a Canadian deemed disposition and the U.S. estate tax.

The U.S. estate tax is imposed on U.S. citizens in Canada. The total value of Rajit’s estate will be used to calculate his estate tax liability. There is a lifetime US$5.43 million (the…

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