Category Archives: Non-U.S.. investments

Free Internet Tax Summit: #FATCA, #FBAR, etc. – Sept. 21/15


Billionaire Eugene Melnyk: I’m a ‘whistleblower’ on tax allegations against Valeant


This is just one more example of how U.S. tax law makes it difficult for U.S. corporations to compete in a global world. There is no other country in the world that penalizes its own citizens and corporations simply because they are U.S.
Imagine if the Canadian government gave preferential treatment to non-Canadian citizens and corporations.
The U.S. believes it can both have the highest corporate tax rates in the world and expect corporations/people to want to remain Americans. This is delusional.


Brilliant @DollarVigilante article on confiscation of foreign wealth

Interesting Dollar Vigilante article on the use of U.S. laws to impose capital controls and confiscate wealth.

It includes:

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@TheOliverStone and Peter Kuznick Untold History of America

On the back cover of Stone’s “The Untold History of America” you will find an interesting comment from Mikhail Gorbachev.

“At stake is whether the United States will choose to be the Policeman of a “Pax Americana”, which is a recipe for disaster, or partner with other nations on the way to a safer, more just and more sustainable future”.

From time to time I have written posts call into question the “Official version” of America’s History. An example is the post on the book Liberty’s Exiles by Maya Jasonoff.

About a year ago I became aware of a book by Oliver Stone and Peter Kuznick called “A True History of the United States“. The book will be featured in a mini-series commencing next week. In any case here are two interviews with the authors. They are very interesting. Pay particular attention to the last three minutes of the second interview where Mr. Kuznick talks about the effects of ON THE UNITED STATES of the Obama drone attacks.

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U.S. corporate mergers end “US personhood” and #IRS discount – increase value

Updated April 28, 2014 – with comment from the Isaac Brock Society:


Not quite on topic but I thought it would be interesting to note nonetheless.

Pfizer announced this morning that they had made an indicative proposal to AstraZeneca in January to combine the two businesses. The proposal was rejected by AstraZeneca but Pfizer is seeking to reengage. As part of the proposal, Pfizer was going to become a UK domiciled company.

The US has amongst the highest corporate tax rates in the world and taxes the difference between the local tax rate and the US tax rate if profits are repatriated from overseas. Pfizer’s annual report says they hold 10-30% of their cash and cash equivalents and short-term investments in US tax jurisdictions. This means that 70-90% of the $32 billion in cash and cash equivalents and short-term investments as at 31 December 2013 are held outside the US. If the business combination with AstraZenaca is successful (or a different combination with another overseas business), that’s $21-27 billion that will never be repatriated to the US.

The process of redomiciling overseas is referred to as a corporate inversion and used to be very rare. However, increasingly, US companies are doing so to get access to profits that are otherwise “trapped” overseas. Predictably, the US government enacted legislation to “punish” the executives of companies that pursued a corporate inversion. Their stock options would be subject to an additional tax upon vesting. Equally predictably, this legislation was buried in a jobs creation act.

It seems, however, that the additional tax on vested options hasn’t proven to be a disincentive. In fact, it might be an incentive. In the case of Actavis, the board allowed certain executives’ options to vest early and then reloaded them with new options. As the Bloomberg article points out, the executives of Actavis got the best of both worlds (

While corporate and individual taxation are not entwined, perhaps the news that one of the US’ largest pharma companies is seeking to redomicile will prompt much needed action on both fronts.




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Tax compliant #americansbroad with a principal residence or mutual funds should renounce before becoming a covered #expats

For those who do not want to read this post. Here is the bottom line:

If you are a tax compliant U.S. citizen abroad, with a net worth of less than two million U.S. dollars, with investments (including mutual funds, pensions, and a principal residence in your country of residence), you should renounce your U.S. citizenship at the earliest possible moment. To the extent that your investments are in non-U.S. mutual funds, other kinds of PFICs or your principal residence, the U.S will confiscate large amounts of the proceeds of sale. (And you thought you were solving your problems be being tax compliant.)

Many Canadians are using their principal residence as their retirement plan. Their plan is to sell, downsize and live of the balance of the proceeds. This is NOT possible if you are a tax compliant U.S. citizen! You must NOT be a U.S. citizen at the time the investments are sold.

If you want to preserve your investments  you must relinquish your U.S. citizenship to protect your access to your investments!

For those who want to understand why, read on …

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Sun Life prepares to turn clients over to IRS for processing – bitter end to a company with a proud history




Once upon a time there was a Canadian life insurance company. It’s name was Sun Life. Sun Life was founded  in 1865 in Montreal (predating Confederation by two years). It was a proud Canadian institution. It was in the business of protecting families. The story of Sun Life parallels the history of the world since 1865. It is an international company with a presence in most of the developed world. It saw itself as a “good corporate citizen”. During World War II the wealth of Great Britain was stored in the Sun Life building in Montreal. During World War II the company provided entertainment for Canadian troops abroad. After World War II it helped “protect” the middle class of North America. The name “Sun Life” meant “trust”. If you want to learn about Sun Life, review a bit of history and understand Sun Life’s important role in Canadian history, I urge you to watch the video history of Sun Life financial.

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How fluctuating FX rates generate capital gains taxes on the discharge of debt and the sale of property – US citizens abroad!

FX rates and capital gains

Financial planning is difficult for US citizens abroad. I have been writing a series of posts that describe the tax treatment of US citizens abroad in very specific circumstances. Few would imagine many of these circumstances. I have recently written about when US citizens abroad sell a principal residence and why US citizens abroad  should not invest in TFSAs. I have written about why PFICs  must be avoided.

My topic today is how the fluctuating exchange rates can create “phantom gains”.  AARO  has noted and proposed the following as part of legislative tax reform for US citizens abroad:

Situation Today:
Based on current tax law, for Americans living abroad, currency fluctuations create U.S. dollar capital gains or losses even on daily transactions as well as on movements of short and long term investments done in local currencies.  The exchange rate on the purchase date and the exchange rate on the sale date determine the capital gain for the U.S. Treasury.

Allow Bona fide foreign residents the option to choose a foreign currency as their functional currency and calculate all capital gains/ loss transactions in that currency before converting to U.S. dollars.  The current average annual exchange rate with the U.S. dollar is then used to convert any gains/ losses into dollar amounts from the foreign currency.  Since the use of a functional currency is allowed for foreign subsidiaries of U.S. corporations, it is only reasonable that a similar logic be applied to U.S. citizens abroad.

Obviously fluctuating FX rates are a problem for US citizens abroad. My inspiration for this post comes from the following comment by Lisa on the Isaac Brock Society site. Anybody who has taken out a mortgage loan will have to deal with this problem.

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New Filing Compliance Procedures for Non-Resident U.S. Taxpayers – Effective September 1, 2012

Note: There is an updated version of this crossposted to the Isaac Brock Society.

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Letter of a Canadian businessman to his dual U.S./Canada citizen son on the occasion of his high school graduation

“Good citizenship” and “Your citizenship”

The Isaac Brock Society recently featured a discussion  about how and when to advise young people about the potential problems of U.S. citizenship and whether they should consider renouncing U.S. citizenship. As parents, teachers, mentors and friends we should pass on to our young people the benefits of our (in varying degrees) knowledge, wisdom and experience. We do this because we want to equip them with the skills they need to make the best life decisions that they can.

The books:  “Letters of  A Businessman to His Son” and “Letters of A Businessman to His Daughter“, by G. Kingsley Ward, are wonderful examples of  this principle.  They are chock full of practical advice and thoughts on –  the only business that really matters – “The Business of Life”.

I have been inspired by Mr. Ward. Here is the letter (with many factual modifications to protect the young person in question) that I wrote  on  the occasion of  that young person’s  High School graduation. Continue reading