Tax Implications for Americans Living In Canada with Terry Ritchie | E016
Understanding the complex tax requirements of American business owners in Canada
In this episode of Financial Planning for Canadian Business Owners, Jason Pereira, award-winning financial planner, university lecturer, writer, talks with Terry Richie, Partner and Vice President at Cardinal Point Wealth Management. Cardinal Point is a firm that specializes in dealing with U.S./Canadian cross-border issues. Terry Ritchie discusses tricks and traps that Canadian business owners are exposed to when they are also United States tax residents.
Episode Highlights:
● 01:02 – Terry Ritchie describes what he does in his career.
● 02:44 – What are U.S. residents for income tax purposes?
● 05:57 – COVID-19 is affecting ‘snowbirds’ from a tax prospective who can’t travel.
● 08:42 – You could have zero assets in the U.S. and a U.S. resident living in Canada. But you still have to file your taxes in the United States.
● 10:10 – Terry Ritchie addresses gift taxes
● 12:05 – What are the potential penalties for not filing income taxes?
● 17:38 – If you have interest in Canadian company, what IRS forms need to be filed?
● 19:22 – What were some of the tax changes when Trump became president?
● 21:05 – Terry shares the come advice for American clients setting up a business in Canada.
● 22:29 – What are the differences in homeowner taxes in the US and Canada?
● 26:26 – Which business industries does it make sense to get incorporated?
● 28:27 – What are your filing requirements for a corporation?
● 30:20 – What is one of the big detriments to being an American taxpayer when you are a Canadian business owner?
● 34:32 – Terry discusses the reasons why it is important to become compliant.
● 41:50 – How will passports be affected by tax debt?
● 42:52 – What is the difference between having a green card or when you are actually considered a citizen?
3 Key Points
1. There are 9 million Americans that live outside of the United States and just below 1 million Americans that live in Canada.
2. U.S. residents for income tax purposes are citizens of the U.S. that were born there, those that hold green cards, traditional ‘snowbirds’ who consistently spend generally at least 4 months in the United States for 3 years in a row.
3. Income that you leave in a foreign entity is taxed at the highest margin rate for U.S. tax purposes.
Tweetable Quotes:
● “‘We’re not just book smart, we live it.’ So, I live in Phoenix and Calgary. We have offices in California, Florida, Phoenix, Toronto, and Calgary. All my kids are dual citizens. I’m married to a U.S. citizen.” – Terry Ritchie
● “In the U.S., generally more than 90% of the companies in the U.S. are all flow-throughs, tax corporations, S-Corps, LLCs.” – Terry Ritchie
● “Sometimes, when you make them aware of the way that we tax in the US on the Canadian side, it sometimes it makes sense to just be a sole prop, and just file a good old C-2125 and a scheduled C.” – Terry Ritchie
Resources Mentioned:
● Facebook – Jason Pereira’s Facebook
● LinkedIn – Jason Pereira’s LinkedIn
● FintechImpact.co – Website for Fintech Impact
● jasonpereira.ca – Website
● Linkedin – Terry Ritchie’s Linkedin
● Terry@cardinalpointwealth.com – Email Terry Ritchie
● Linkedin – Terry Ritchie’s Linkedin
● cardinalpointwealth.com – Website for Cardinal Point Wealth Management
Full Transcript:
Speaker 1: Welcome to the Financial Planning For Canadian Business Owners Podcast. You will hear about industry insights with award-winning financial planner and entrepreneur Jason Pereira. Through the interviews with different experts, with their stories and advice you will learn how you can navigate the challenges of being an entrepreneur, plan for success, and make the most of your business and life. And now your host, Jason Pereira.
Jason Pereira: Hello, welcome to Financial Planning For Canadian Business Owners. I'm your host Jason Pereira. Today on the show I have Terry Richie, partner and vice president at Cardinal Point Wealth Management. Cardinal Point is a firm that specializes in dealing with US Canadian cross border issues. I brought Terry on the show today to talk about tricks and traps that Canadian business owners are exposed to when there are also US tax residents. With that here's my interview with Terry. So Terry, thanks for taking time.
Terry Ritchie: Thanks for having me, Jason.
Jason Pereira: Always a pleasure to talk to you. So Terry Ritchie of Cardinal Point Management, tell us about what it is you do?
Terry Ritchie: So well we've known each other for a bit of time. I've been practicing for about 34 years in the cross border financial planning space, had lots of experience, obviously given the years. Myself and many of my colleagues at Cardinal Point, I often use the term we're not just book smart we live it.
Terry Ritchie: So I live in Phoenix and in Calgary. We have offices in California, Florida, Phoenix, Toronto, and Calgary. All my kids are dual citizen, I'm married to a US citizen. So the issues that we often deal with on behalf of our clients are issues that we personally have to confront and deal with as well.
Jason Pereira: Yeah. So it's pretty much not bragging to say that your firm's probably the preeminent cross border financial planning firm in the country.
Terry Ritchie: Yeah. We can say that now. Certainly we made an acquisition the beginning of January. So we are certainly the largest firm in this space. We manage about a billion dollars of assets. There's 28 of us now. So we've had significant growth over the last seven years that I've been here partner at Cardinal Point. So yeah, it's been a good ride for a while.
Jason Pereira: Fantastic. And of course we know each other for many years and of course got directed to you for cross-border help a long time ago. And you've been super gracious with your time and you're gracious enough to agree to come on the show. So I appreciate that.
Terry Ritchie: Welcome.
Jason Pereira: So Terry, let's talk about Canadian business owner standpoint. Well, before we get there Americans living in Canada, what is it they need to know about their obligations to the IRS and the US and to American in general?
Terry Ritchie: So it's a really good question. And for many years, I think the majority of Americans in Canada probably are aware that irrespective of where they generate income, where they hold assets, where they die, that they are considered to be US residents, Frank's Tax purposes. So there's a requirement to comply with the US tax rules. We'll talk about some of the programs that the IRS has come out with that relate to helping people like that get compliant.
Terry Ritchie: So there used to be a lots of Canadians that just when I call, keep their head in the sand, hoping that it would never rear its ugly head. But the problem-
Jason Pereira: [inaudible 00:03:01].
Terry Ritchie: Yeah. And we'll talk about that. So a lot still do. We'll talk about it, in fact why many are getting compliant. And so we'll talk about just a few minutes here. But there are apparently 9 million Americans that live outside of the United States. So it may be just shy of a million Americans that live in Canada. But we often hear the term US resident for tax purposes. And a US resident for tax purposes would be a citizen. So if you were born in the US physically born there, or even if you were born in Canada, but you were born to a US parent or that parent after the age of 14 was living in the US for five years, you're automatically affect the US citizen as well.
Terry Ritchie: That happened in my case. Two of my four kids were born in the US and the other two were born in Canada of the virtue of their mother being a US citizen and living in the US but have to age of 14 for longer than five years. They automatically become US citizen. So that's all my kids travel on two passports and are dual citizens. So a US citizen is a resident of the US for income tax purposes. The other two sort of areas where folks could be treated as a US resident for tax purposes would be those that hold Green Cards. So if you apply for Green Card and then get a Green Card, then under US rules, generally, we would treat you as a US resident for income tax purposes as well. And there are a number of folks that we bumped into on occasion that are US Green Card holders that live in Canada, and that can pose some problems from an immigration perspective.
Terry Ritchie: And certainly from a tax perspective, if they're out of the US for longer than a year. That's a whole other discussions. We have to be aware of those issues. And in the other person that could be treated as a US resident for income tax purposes would be a traditional snowbird who attest in what's called a Substantial Presence Test. And that's a test where an individual spends generally at least four months of the year consistently in the US for three years in a row. It go through a calculation, if you take the number of days in the current year, you add one third of the days of the year before that, and one sixth days of the year before that.
Jason Pereira: That's one of the most important things to take away to start from this thing is that a lot of snowbirds think it's 180 days or something like that in general per year. But they don't realize it's a rolling calendar.
Terry Ritchie: Correct.
Jason Pereira: You go down there five, six months of the year at a time by year two you're off side.
Terry Ritchie: Yeah. Correct. And so there's a requirement. Now, I will say that the IRS and you've often heard me say this speaking at conferences and from our other discussions that I'm also an enrolled agent with the internal revenue service. It's a specific taxes nation conferred by treasury. We do a significant amount of US tax work.
Terry Ritchie: The IRS is nowhere near, they don't poke and prod as much as CRA does. So there's lots of things not to suggest that we encourage clients to be evasive or to be sloppy, but the IRS doesn't does not challenge taxpayers generally on the falling of the 8844, which is the form that most snowbirds are required to file. That means there's Substantial Presence Test. And it'll be interesting to see next year for this tax year what's going to happen for those snowbirds that are now in the US for longer than 183 days from an immigration perspective this year because of our lovely COVID-19 challenges.
Terry Ritchie: So there were some guidelines, there was a revenue procedure that the IRS brought out, I guess, two weeks ago now that recognizes that there are folks that happened to be trapped in the US because of their inability to get back to Canada. And so that's going to put them offside for the Substantial Presence Test, and it's going to put them off site for US residency purposes. So how do we file for next year? Before the rulings came, and I talked to a few clients, or people that just called and said, "What are we going to do here? We can't get back." And again, as we talked about before, when we look at cross border financial planning tax is a piece, and immigration is a piece. And sometimes they don't align together. They're two separate agencies.
Terry Ritchie: And so we have to be cognizant of the fact that the immigration rules might say one thing, but the tax rules might say another thing. So my suspicion is that again, we have snowbirds. Again, we had citizens residents, Green Card holders residence. Now, we've got these snowbirds drop down in the US and are they residents? And generally under these rules, they would be.
Terry Ritchie: So next year, it's a matter of whether we filed the Closer Connection Exception Statement, and you get the days, and everything's fine. Or generally what we used to do in the old days. If somebody, the steak was in the US for longer than 183 days in a calendar year, we couldn't file the 8840. So we'd have to file a nonresident return of 1040-NR, and then take a treaty election to tie break them as a resident back to Canada.
Terry Ritchie: Now, in that case, as long as they have no US source income, there no US tax result. It's just filing obligation to disclose that with the treaty disclosure and other front of the file. But also we have to then recognize that if they are a US resident, we typically, as a protective measure will also file their FinCEN, their foreign bank account reports and things like that as well. So it can be somewhat intrusive.
Jason Pereira: So to sum it up, bottom line is if you are any one of those categories, American born citizen, a child of American born citizen, you are holding a Green Card living out of the US which can be its own issue. The snowbird issue, you are considered potentially a US citizen for tax purposes or US tax resident. In which case, unlike every country with the exception of Eritrea.
Terry Ritchie: Yeah. You have to file taxes.
Jason Pereira: You have to file taxes no matter where you are in the world, right?
Terry Ritchie: That's correct, on a worldwide income.
Jason Pereira: On a worldwide income. So unlike Canada, where once you leave and you've done your last terminal filing, you're gone. And by the way, when I say Canada, I mean every other country in the world with the exception of Eritrea and the US. Unlike that typical residency based tax code, you essentially have to file no matter what you do. You could have zero assets in the US but you're still obligated to file in the US Correct?
Terry Ritchie: Correct. And again, when we talk about income tax, we have to go broader than that, because in many cases, our issues also have to look at, gift tax in a state tax as well. We have many clients that have left the US years ago and have no requirements to go back and we'll never go back.
Terry Ritchie: But yet, by virtue of the fact that they have citizenship, they have to be cognizant of the fact that when they die, if they exceed a certain threshold in the US which is $11.58 million, there's a state tax exposure that would have to be dealt with on the US side. Even if they have not a single penny of assets in the US or spent any time there. So unless they've gone through the process of renunciation, which is a whole another subject-
Jason Pereira: We'll get to that at the end.
Terry Ritchie: Okay.
Jason Pereira: So, yeah, I mean the gift of the state tax. Even something as simple as gifting large sum of money to their family members is subject to the US tax regime, right? So I want to give my kids $25,000, I'll pay for their wedding, right? If there's a possibility that if I'm a US tax resident, they are, there's potential gift tax implications there.
Terry Ritchie: We talk a lot about it, it is a big deal and today it's not that big of a deal. Again, in many cases for our listeners, I'm going to spew a lot of crap out here. And at the end of the day, a lot of this is just the fact that there's a greater administrative and compliance for me to be aware of. There may not be a net tax result, but there's going to be this additional burden here. So for example, on the gift tax side.
Terry Ritchie: So on the gift tax side many years ago, and some clients forget about these. These numbers do change. They don't change an awful lot, but many years ago, the annual gift tax exclusion amount to your anybody, other than your spouse, your non-citizen US spouse was $10,000. Over the years just went 11, 12, 13, it's now $15,000. It's been that way I think three years. In your example there, if you were to go ahead and pay for the wedding on behalf of your son or daughter, if you pay for it even though your son or daughter benefited from that, and you're a US person who paid for it, there's no gift tax implications there whatsoever. But if I go ahead and give 25,000 to my US citizen son, that's a gift.
Jason Pereira: I think it's important to go back to what we said about a tax result, right? At the end of the day, there may not be any tax owing here, but there's a filing obligation that you have to comply with that if offside could result in tax implications or penalties, which can be more on this.
Terry Ritchie: A penalty. Yeah. I just couldn't in that case, because I think it's important for the listeners because we're talking about it. And I just want to make them aware of what the requirements for filing would be.
Terry Ritchie: So in that case, there would be a 10,000 or taxable gift that would be required to be filed. So we get 25,000 minus 15, is 10. So we'd follow what's called an IRS form 709 as the gift tax return. But the gift tax exemption that's eligible for any taxable gifts is the same number as the lifetime exemption or the state tax exemption. So $11.58 million. So that's the lifetime amount. So at the end of the day, for many people, you're not going to pay any money out of your pocket. There may be an income tax in Canada because in Canada we don't have a gift tax. If we sell something that's got up in value-
Jason Pereira: [inaudible 00:11:47].
Terry Ritchie: Yeah. So they have that issue. And those are not offsetting credits for US or Canadian purposes gift tax.
Jason Pereira: No. So overall we covered thus far, already that there's an obligation. It may not be taxation. Let's talk about the penalties look like. If I failed to comply with this, because this is really the stick here we're talking about. So let's talk about the penalties here. Because that's the stick we have to deal with here. And they can be, in Canada we kind of get a little bit lax for, "Oh, I didn't owe any tax, so I didn't bother filing." Or whatever it is. So some people go years without filing, which is not a good practice. In the US is a different story. Tell us how that differs?
Terry Ritchie: It is a different story. And it's actually a story the last couple of years where we've seen the IRS being a bit more yuckier in terms of imposing these penalties. Because in the old days, there are lots of things that we could get away with on the IRS side. And it's still in many cases, if you can prove to the IRS that you weren't aware of what you were doing in many cases, and that's still the case today the IRS does provide some level of grace. If you can sort of plead ignorance and indicate that you've taken steps, that you weren't aware of these issues, and you've taken steps to ensure that you're not going to make these mistakes again. In many cases, you can get a first time abatement. So for example, a number of years ago, I was working with a client who set up a partnership in the US and to run some of his US business operations aligned with his Canadian company.
Terry Ritchie: And he had his accountant up here do it, deal with it all. He didn't know what they were doing. And so they heard me speak someplace and I sort of got involved and did some consulting for them. And there's a requirement for them to file partnership return and schedule K1s and things like that. They were late in doing so. And they were late in doing so because the client didn't have a taxpayer identification number and things like that. So there's a bunch of things that made them become late. So we went ahead and when you file a partnership return, in most cases, most companies in the US LLCs, S Corporations, partnerships, there all flow through entities. So at the end of the day, anything that the partnership or the entity generates generally goes through to the individual's tax return and they pay income tax on that result.
Terry Ritchie: So the partnership returns going to have a zero result. Okay. But it was late. And so in the old days, we follow it late, no tax results, the income would be picked up or the loss picked up on tax return. In his case was a 1040-NR and life is good. Well, surprise, surprise. This is like a number of years ago. Not very long ago that we ended up getting a penalty. Penalties imposed on these returns, partnership returns being late, which I hadn't seen for forever. So I was able to successfully just call the IRS and get the first year abated. Again, pleading ignorance. I didn't have an ITIN. That's why I was late, blah, blah, blah. And the second one, because I think we filed like a 14 and the 15 year.
Terry Ritchie: So they went out at the same time. The 15 one, they were a little difficult on the penalty, but it took me a year and I got the 15 one done. So what I'm hearing and what we've seen in talking to other practitioners is that even though there are many requirements where you have to file a form because you have a trust, you have an entity, you did a gift, you made a gift, but there's not going to be any income tax result from that. But he didn't file the form on a timely basis. They're going to come back and impose a penalty.
Jason Pereira: So what are we looking at in terms of monetary penalties? Because some of these can be pretty substantial.
Terry Ritchie: Well, they can, but it depends on what they are. And again, my 34 years of practice is something that we don't see an awful lot. So let's talk about maybe some of the forms that generally would need to be followed by business owners or traditional Canadians that have US obligation to file. So generally if you're filing a traditional 1040 return and you've got no tax on it because of the application of the foreign tax credit-
Jason Pereira: 1040 is the basic personal one, correct?
Terry Ritchie: Yep, And you've got no tax owing and you didn't file an extension. You just fathered late. You're not going to get a bill from the IRS to file that return late. If there's no tax sewing, you're not going to pay any kind of follow up late filing penalty. However, if you've got some tax sewing, there'll be a late filing penalty and a interest proposal on that as well. And they're all like calculus sort of go through that. And those pennies are going to be based on how much tax is owing and the period of time since the tax was due.
Jason Pereira: That's the 1040, that's the personal side. What else are you looking out for?
Terry Ritchie: But for most people that would be worried about penalties, it would be related to the not timely filing, information returns. And the most common types of information returns that might be there that we would see for taxpayers might be the 3520 or 3528. And the 3520 and the 3528 relate to the falling of disclosures relating to foreign trusts. And so if you are somebody that is a trustee or settler of a trust in Canada, if you are a beneficiary of a trust out of Canada. If you inherited money from an individual Canadian or a company you have to disclose that stuff. And if you don't disclose that information on these forums, the penalty that can imposed can be as high as 35% of what wasn't disclosed.
Terry Ritchie: And we were talking earlier before we started here about the implication related to whether a TFSA is a trust for tax purposes. We saw some rules in March that came out from the IRS that recognized that RDST is forgiving and RESP are not considered trusts under US rules.
Terry Ritchie: And there are many practitioners would file these 3520s and penalties imposed and things like that. And there's a mechanism now to recover those taxes. So there's those, when I was at an accounting firm, I worked at many, many years ago, there was an individual who set up and RCA, retirement compensation arrangement. And under US rules that would be deemed a trust. And so therefore it wasn't filed. That was millions of dollars in there. And so well, I was at this other firm, it took us a year and a half to sort of try to get that abated and reduce and things like that. So that was significant.
Terry Ritchie: For business owners though, where it can get really mucky is that if they are folks that haven't been compliant and have now chosen to get compliant, we'll talk maybe about that a little bit later here why it's important to do that is that if you will have an interest in a Canadian company, their obligations to disclose to the IRS what's going on there. And there's specific types of IRS forms, the most specific one is what we call the 5471 form. That's effectively a financial statement that relates to the activities that are going on in the company in Canada. And the failure to file those forms is $10,000 that can be imposed. And I've heard of-
Jason Pereira: Per year, correct?
Terry Ritchie: Per year. Yeah. So if you have to go back and you're going through the streamline program, you're going to go back and follow the last few years returns.
Terry Ritchie: It's likely that you're going to go ahead and get a penalty of $10,000 a year for each of those years. Plus there's likely going to be some tax there because the things that we can get away with in Canada from a different perspective, we can't get away from with that on the US side. And that's where there's a big, big mismatch between what we can do in Canada as a business owner, setting up a company versus what we can do on the US side. If you're a physician in Canada or dentist in Canada, your buddy who you work with, he set up a company in Ontario, Alberta, and he's going to make some money. He's going to pay himself a reasonable salary. He's going to maybe cut some dividends, pay staff, and he's going to have a profit.
Terry Ritchie: Okay. And that profit is going to be what? It's going to be taxes separate rate in Canada. And it's going to accumulate in that company. Right? And that's what we do in Canada. That just makes sense. Can't do that on the US side, because in the US, generally more than 90% of the companies in the US are all defaulters. Again, that's corporations, LLCs. Yeah.
Terry Ritchie: And so the IRS say if you're going to do that, Jason, what we're going to do here is we're going to tax you as if that income was distributed. And because it wasn't distributed, we're going to make you pay tax the highest marginal rates. So when Trump became president in late 2017, we had some significant US tax changes. And one of the changes that came into play and affected many, and the reason this tax came into play was what we call the transition tax or GILTI. GILTI stands for the global intangible low tax income.
Jason Pereira: Interesting acronym. That was a very wise, that was very telling pick of a name.
Terry Ritchie: Well, there's lots... The IRS for the US has acronyms for everything, right? So we've got the CARES Act, SECURE Act just passed.
Jason Pereira: The JOBS Act, yeah.
Terry Ritchie: So what happened is, Apple and GE and Alphabet or Google, they have these massive operations outside of the United States. They're paying taxes in these little jurisdictions. So Trump's like, "Hey, we need to encourage these folks to repay to that income and pay tax here." And so they gave us a year to sort of pay this one time transition tax or pay it... So we could pay at one time. We could pay it over, seven years?
Jason Pereira: It was deferred, yeah. Seven years deferral period.
Terry Ritchie: Yeah. Seven that's right. Seven years. And so you paid over seven years, but it affected a number of people in Canada. I know CBC did some stories on a person running a hair salon in Ontario and how it affected them after the US person, that kind of crap. So there is that-
Jason Pereira: And essentially it was they reached into every corporation out there and pull the chunk out of it. And that was regardless if you'd filed everything properly in the first place. Right? Even if you were on side with filings, which must be what's lot of some business owners, weren't, you still lost a chunk of money there for no good reason.
Terry Ritchie: That's right. And if you had all your money in your company for your retirement, things like that, you've got this tax and then it's an ongoing effort as well. Because you've got now, again, if you've not restructured your affairs, then you've got this guilty tax that this now is still applicable as well. So when we have the discussion with clients who are Americans in Canada that are looking to set up a practice or a company, sometimes when you make them aware of the way that we tax in the US the Canadian side it's sometimes makes sense just to be a sole prop and just follow a good old 2125 and a schedule C and off the tax form tax cuts there. Or again, pay everything out because that's what the IRS is going to have us do on the US side anyways.
Terry Ritchie: There's either that, well, there's a type of entity that we can utilize in Canada that's unique. So the hybrid entity from Canada US perspective and started many years ago out of Nova Scotia, it's called NSULC. So Nova Scotia Unlimited Liability Company. Alberta has legislation to do this as does DC. And so if you are a physician... Physicians have a different, because you've got PC issues and things like that. But if you have a company and you are happy to be an American, you want to get consistent tax treatment in the Canadian side and the US side. So a ULC would be, you'd file a Canadian T2. You basically fill everything out. And on the US side, it'll be a flow through just like it would be an S Corp or llC.
Jason Pereira: Yeah. I could get treated like an S Corp. Okay. So we got a little bit deep in the weeds there. I'm going to try to bring it back to some basic personal stuff. And I'm making some notes on some things I want to specifically address. So I'm going to ask you a couple of questions in different areas about how things differ for Canadians versus American tax residents. So one of the first big traps we typically find is home ownership in Canada. What's the difference in tax streams in Canada and in the US?
Terry Ritchie: A number of years ago, it used to be significant because if you owned a home and you had a mortgage and you had real estate taxes, you could go ahead and deduct the interest on the mortgage for tax purposes and the real estate taxes. A couple of years ago, the task laws were changed. And so most people now in the US may not have the benefit of itemizing deductions any longer, because when you follow US tax as a US taxpayer, I didn't like seduction or take what's called a standard deduction. The standard deduction for married couples now is $24,000. So if you don't have mortgage interest, real estate taxes and state taxes and donations and other things that exceed that number then you're better off to take [crosstalk 00:23:07] direction.
Terry Ritchie: And again, most people are, or there's limits on how much you can deduct on a mortgage. If I get a new mortgage right now, and it happens to be a million dollar mortgage, I can only write off interest up to the $750,000 limit. Somebody that's on home equity, credit lines as well too. So right now we talk to clients about like, is there an incentive to going ahead buying a home and financing or paying off your mortgage? Because there's no tax benefit any longer on the US side.
Jason Pereira: Of course, they used to be. But then came time to sale.
Terry Ritchie: Yeah, that's big one. So you're right ahead of me there. So the big, big, big one is, is that in Canada, obviously we have our principal residence. We sell it, it's gone up $18 million. You've got no tax burden in Canada, all related to that. Different story in the US side. And this is the problem for those folks. We've had clients like this who happened to be US citizens living in Vancouver. They bought a house for half a million dollars. They sell it for $2 million. What do they get in Canada? Nothing. On the US side? You've got some guidance to relate to exemptions that are available to them. If they meet certain rules. So there's certain requirements relate to how long do they live in a house for and so on and so forth.
Terry Ritchie: But in any of it, if they are a US person and their house is appreciated and value, they generally will get a $250,000 capital gain exemption. So if we go ahead back to my example, American couple bought it it for $500,000, they sell for $2 million. They lived in it for at least two to five years. They're going to get a $500,000 exemption of the capital gain for US purposes. But the net result is going to be based on capital income.
Jason Pereira: So bottom line, they look at the net profit on that translate to American dollars, subtract 500,000 and everything else is a capital gains tax in the US.
Terry Ritchie: Correct. Yep.
Jason Pereira: Yeah. I've seen-
Terry Ritchie: Because of that too. And they be on the capital gains tax, they may be exposed to the net investment income tax, the 3% tax will be imposed on gains, interest on dividend.
Jason Pereira: We'll talk about that too. So, I mean, the reality is that, and I've had this happen too, where I had clients who were planning on downsizing, bought a house in Toronto in the 70s. So you can imagine how little they paid for it. And we're talking about downsides and we're like, well, you're both Americans let's do the math on this. And by the time they said, you know what? Forget it. There's no way during my lifetime, I'm going to willfully pay the US government that kind of money.
Terry Ritchie: So here's a solution. Here's the easiest solution. We can go back to the gift tax stuff. So if we have a US citizen married to a non-citizen, a US citizen has all that gain. We can go ahead and gift the US citizens interests to the non US citizen. There is a different gift tax exclusion amount for the non-citizen spouse. It's much higher. But again, in that case, there's going to be a gift. It's going to be a taxable gift, but the 11.58 million exemption is going to grind that down to be nothing. And then the non-citizen spouse is going to own this property. And they are going to sell it with no tax result from a US perspective or Canadian perspective only if you have a gift tax return. Then you're married, in Toronto they can just get divorce.
Jason Pereira: I literally deal with that. yeah, they can get divorce. Oh, that's right.
Terry Ritchie: A divorce, marry somebody else or whatever.
Jason Pereira: That's not going to happen. But nevertheless, I am literally dealing with that case right now where we're doing a gift over to the non US tax resident spouse. Okay. So that's on the US side. We touched upon TFSs a little bit. There's some debate on mutual funds and ETS. We're going to skip over that. We're going to focus more on the business owner side. So let's just go over this quickly. So I basically want to start a business from scratch. Depending on what I do, incorporation may not be a good idea if I'm a US tax resident. Where is that line? Where does it make sense and where does it not make sense?
Terry Ritchie: Well, I think it's a good question. It depends on the nature of the industry. Like if you're a physician and you have to do a PC or-
Jason Pereira: So professional services in general, I'm trying to incorporate a professional.
Terry Ritchie: Yeah. In that particular case typically, if there's large amounts of money involved and things like that, we'll probably go ahead and we need to formalize it because we've got staff investments and things like that. We'll probably typically go the ULC routes. So either a BC, ULC and Alberta ULC, Nova Scotia, the ULC. So we get the full through treatment on the US side. Outside of that, if you go ahead and... We have many situations where clients will have incorporated a traditional Canadian company, what we just don't have them do is keep stuff in the company. They got to pay everything out in the form of salary, or manager fees or whatever.
Terry Ritchie: Because what we want to do is they can't get away from the requirements to follow the 5471 and disclose the IRS what's going on within their company for their financial statements. And then everything that they earn, they're paying out to themselves in the form of [inaudible 00:27:23] some level of income that's intact in Canada on their personal return eventually.
Jason Pereira: Just clear it out.
Terry Ritchie: Just clear it all out. And you'll get the equalization on foreign tax credit side of things. We've got 71. You Shouldn't have any guilty issues because you've got nothing that we're leaving in there, that's going on a deferred basis. So that's generally what we often do. And I will say this, I don't do as much corporate related work for our clients than others in our firm do. But generally it's some clients here recently, where again, we just went the T2125 route. We looked at the NFL crowd. And again, you have to look at the cost benefit to, okay. The additional burden of having to set up a company. They have separate set of books that you have got to deal with. You've got the legal cost [crosstalk 00:28:08].
Jason Pereira: Which normally is a terrible thing because it means something is going on in the background, but this is actually legitimate. So that said, okay. But let's say fall doesn't purposes. It doesn't make sense for me to set up a corporation. Because I'm a large scale widget manufacturer basically really at this point, my final requirements are different. That's what it comes down to.
Terry Ritchie: Yeah. So you're going to have the personal return that you don't have to file the 1040 return. You're going to pick up obviously the income that you're paying yourself in the form of salary or dividends or management fees or whatever. And then you'll have the 50 for 71 form that's part of the 1040 filing. And then you're going to have the results from the 50 for 71. Now, when you look when the financial statements from your Canadian company and from your T2 are translated over into the 1040 returning on the 50 for 71, then you'll determine whether you've got any deferral of income that's going to be taxed on the guilty side or what we used to call what we call Subpart F income. Those kinds of things. And again, that income is deferred.
Terry Ritchie: And here's why you don't want to do that though, because income that you leave in a foreign entity is tasked the highest marginal rate for US tax purposes. Right? So if you're not going to get the lower rates, anything that you leave in these foreign entities, because here's what the IRS says, Canada from the US perspective is an offshore jurisdiction. It's like fricking in the Cayman islands or Turks and Caicos or whatever. Right. But we happen to be [crosstalk 00:29:26].
Jason Pereira: Oh yeah. Our tax rates make us a really big tax shelter.
Terry Ritchie: That's right. Well, here's some people that suggest that the US is a haven. If you make more than $200,000 on Terry you're at 53.5% tax rate.
Terry Ritchie: The highest tax rate in the US for a married couple filing jointly is $620,000 and you'll pay 37%. Right? So there's a [crosstalk 00:29:50].
Jason Pereira: Federal States can get higher, the ratios are much higher.
Terry Ritchie: It's again, that you are going to be in. Yeah.
Jason Pereira: Yeah. And the entire income splitting with the spouse being baked into the system is fantastic. Okay. But one of the big detriments to being an American taxpayer, when you're a Canadian business owner, there's one of the nice incentives that they give us in Canada is the ability to utilize something called the lifetime capital gains exemption, which will give us tax free portion of the sale up to about 860 CRF. And that's per shareholder. So spouses can also qualify for that as well, potentially. How does the US look upon that when we sell shares of a corporation based in Canada.
Terry Ritchie: So they don't. Sort of like back to our old principal residence exemption thing, right? So there's things that we can do in Canada that we're going to get as a benefit. And we just don't get them on the US side. Same thing applies if we do, we crystallize shares or things like that with family members and stuff like that. And we get the benefit of a capital gains exemption. We don't get that from a US perspective. We just get it from a Canadian perspective. So that can certainly be a problem.
Terry Ritchie: So that's why going back to an example, if we've got a married couple where one of the citizens, one of the spouses is not a citizen, so it's maybe having again the shares or those kinds of things in the non-citizen spouses hands as opposed to the... I had a situation years ago where, again, we have that situation. Non-citizen married to a citizen spouse. The US citizen spouse he got paid a salary, but the spouse, the wife, the non-citizen he owned everything in the company.
Terry Ritchie: She was the share owner and things like that. And then just getting involved in estate planning and other kinds of things as well.
Jason Pereira: Yeah. I mean, so the bottom line is, and I think there's been kind of the weeds quite a bit on this. The reality is, is that if you're going to deal with anyone as a business owner who has an exposure to the American tax code, make sure you get the right help. You and I have both seen it. People in our industry or elsewhere just don't need that enough credence to just how complicated this can get. And anytime we come with a financial planning strategy, it's like, okay, this works here. Does it work there? And then what is this piece of legislation? The middle called the cross border agreement? Does it even come close to addressing it? And there's plenty of stuff that I see get sold over here, like insurance policies or whatever else, then maybe don't qualify the same way as they do in the US and leads to all kinds of complications and issues.
Terry Ritchie: It's a really good point. I mean right now the prescribed rate for spousal loans is going down to 1%, July 1st still am told. So does it make sense to do that when you've got an American couple or a mixed marriage. An American married to a noncitizen spouse? And so I had a client in that situation, reach out to me with a significant portfolio that we manage saying, listen, how come we haven't done this? Why did we not do this? Because my friends are doing it. Well, it makes sense for your traditional friends to do it. And so his friends were saying, why set up a trust and blah, blah, blah. But here's the problem. The problem is that if you loan money to your spouse, who's with a US citizen, the loan that you've now given to your spouse, that's considered to be US Situs for state tax purposes.
Terry Ritchie: So now his state tax Situs assets, along with the US shares he owns is now going to be greater. So we have to look at that. Plus there's some filing requirements that the spouse, the US spouse has to file with the IRS, the [inaudible 00:32:53] on behalf of the citizens the Canadian spouse. And then we have to make sure that there's enough investment income that's coming out to offset the interest. There's that, but then it's like getting a trust involved. That's a whole nother.
Jason Pereira: No, God, no trust law in Canada, the US are just, they don't line up.
Terry Ritchie: It doesn't work as well for you as it does for other folks. So the kind of traditional planning that we often hear people think about doing or wanting to do in a crossword or context it doesn't work as well. And it may not work at all. And some people like to play in the gray zone. We've had this discussion before. What can we get away with? And clients need to be aware of the pros and cons. I say the good, the bad and the ugly of some of the things that they might be exposed to.
Jason Pereira: But it works on both sides of the border, same concern. Because I mean, the number of times I have clients who vacation in Florida come back and say, I went to this seminar and they talk into moving the property and that is trust. So it can avoid probate. And it's like, okay, that's nice because you can move into that trust in the US without any tax implications. But the second you do that from a Canadian tax planning standpoint, you have now triggered the capital gain and yes, congratulation, you did a nontaxable than US, but a taxable event in Canada. It can be a real big mess if you don't get advice for someone who understands both sides of the border, not just one. So lets-
Terry Ritchie: They've got a free lunch or breakfast when they went to the seminar in Florida though for the [crosstalk 00:34:18] trust. There you go.
Jason Pereira: Yeah. I think the best excuse I ever heard was, well, oh, I don't give tax planning advice for candidates. That's fantastic. That's just fantastic. What a great cop out. So let's talk about why it's important to get compliant in general. Besides the fact that maybe people, I like a lot of people take this for granted, because realistically, this was kind of, it's something that started to really be starting to crack down on sort of around 2008. Part of that, you have people who most of their lives have just kind of ignored this issue, but it's becoming more and more of an issue. So tell me, why people need to become compliant and what their concerns should be if they don't.
Terry Ritchie: Okay. So, when you mentioned the 2008, so way back when UBS and the number of the Swiss banks and other banks were getting caught, helping clients, Americans hide money and be evasive that's when the crap hits the fan. Right? So out of that came a number of programs that the IRS initially established to try to encourage clients to get compliant, US to get compliant. Offshore Voluntary Disclosure programs. And initially there were some yucky penalties and it was kind of was this scarier program. And over the years, they've really kind of softened up a little bit so that the person who happens to be American and hasn't filed returns, they've made his or her ability to get back into the program a lot easier. And so what we now is we have the last number years is a streamlined disclosure program.
Terry Ritchie: That's the easiest, most painless program to get involved in, to get compliant. And then we'll talk about why it's important to get compliant. So in that particular program, the requirement for an individual who qualifies for the Streamlined Disclosure Program, is it hard to go back and file the last three years of the US return. And then they've got to file six years of foreign bank account report. So many people know them as FBARs, which are an acronym, but really the form is the FinCEN 114. FinCEN stands for financial crimes and enforcement network. It's a part of the US treasury that basically just no checks. It's almost like [inaudible 00:36:14] that we have in Canada, per se, to a certain extent.
Terry Ritchie: They have to go back and file the last six years of their FBARs, their FinCEN 114, and then three years of tax return.
Terry Ritchie: In most cases, Jason, most Canadian, most Americans in Canada, they will pay no tax because they'll have the form earned income exclusion that they can use to offset that. So as long as they don't have, if I look at currency rates from last year, if they did make more than $142,800 in Canadians and employment income, other forms of income, but just employment income. They will qualify generally most cases that they live a year longer in Canada for that. And if they did, they had money to exceeding that the level of tax in Canada generally is higher than we pay in the US side. We're going to get a foreign tax credit. We can utilize on the US side.
Jason Pereira: Exactly. That's an important piece to note, is that a dollar paid in Canada when you file in the US and you're, non-resident the US is the equivalent from their standpoint is a dollar after conversion paid in the US. So therefore you don't pay both except for a couple of weird little places where [crosstalk 00:37:08].
Terry Ritchie: The Obamacare surtax that's an income tax. So there's this other tax we can get caught, which is because that's significant amounts of investment in capacity income. There's a 3.8% surtax. It's imposed on you if you're single. When you're just a go single over 125. Or if you're married and your income comes over 250, you get nailed with that tax and that's not credible in Canada.
Terry Ritchie: So it's important to get compliant. The reason why you also want to get compliant is that we just had this whole COVID-19 challenge, the passing of the CARES Act in the US as of a few months ago. There's a stimulus check of 12,000 US that's being sent out there. And guess what if you're an American living in Canada and your income's not over a certain threshold, which is effectively if you're married, filing separately, or if you are single and your taxable gross income doesn't exceed $75,000, without taking the foreign income exclusion. You're supposed to get at $12 check. My son's waiting for his. So when he gets his, I'll let you know.
Jason Pereira: USD.
Terry Ritchie: So there's that. Plus interesting enough, I saw this from another practitioner of the day. And I thought it was kind of interesting. He was sort of suggesting that the IRS has given these folks the ability to come back in from the cold for such a long period of time. They try to make it as painless as possible. At what point are they going to say enough? We're now going to say, listen, if you get in after this date, even if you have no tax swing, we're going to impose a penalty for late filing, and we're going to make things difficult. And he made an interesting argument and the argument was okay, so number just go. We also had the passing of FATCA, the Foreign Account Tax Compliance Act.
Terry Ritchie: And this was under the Obama administration. And I wrote a lot about this when it came out. So the purpose of that was to say, hey, if you happen to have an account that's outside the United States, we want to be aware of it. And we're not going to have you tell us about it. We're going to make your bank or your insurance company or an investment dealer tell us about it. And we have a bit of a breaking in Canada because in Canada, unlike other countries of the UK and Australia and other countries, jurisdictions. The banks, we have a number of accounts that would be exempt from that disclosure by the banks. So registered accounts basically are not disclosed, [inaudible 00:39:06] are not disclosed traditional accounts are. So now that FATCA has been around for a while and that data is being sent by CRA directly.
Terry Ritchie: So the banks provide them to CRA, CRA sends it directly to the IRS. Then that information is out there now. But for the last few years, there's a requirement now for all of the banks to make sure that they have a social security number on file with, for any of us persons within a W-9, right? IRS W-9 form. So this article I read, it was interesting saying, listen, the US government just went ahead and they have these massive programs to help them people through this pandemic. And so we've got trillions of dollars of debt that we've created, and we need to pay that back. Two Americans that live outside of Canada and are compliance, we're going to get it from you. Okay. So we've been easy on you for a while, but we're not going to let you get away with it. So the suggestion was you know what? Enforcement might be a bit more important.
Terry Ritchie: And if you are late a penalty might be imposed because you're late. Because he gave you all this rope, and yet-
Jason Pereira: I think it was two years ago. I can't remember which conference that was at, and they brought in someone from the IRS to basically talk about cross border filing issues and all that sort of stuff. And he very politely slid in. And by the way, this program, I don't count on it being around forever.
Terry Ritchie: Yeah. I think it was the step in Toronto maybe that [crosstalk 00:40:22]
Jason Pereira: We all simultaneously took a deep breath. Oh yes stay on that.
Terry Ritchie: Yeah. It's true. But the other issue too, is that the likelihood of being audited by the IRS is really, really small. The budget's been reduced significantly. And then it's harder to be chasing Jason in Ontario who owes money than it is to get somebody in your backyard in Louisiana kind of things. But that being said, if you've got accounts in the US that could get liens put on them or things like that. Or they can force theory to go ahead and grab the money from you. Those are the kinds of things that we often hear about or-
Jason Pereira: See, I've got an interesting view on this with my eye on the tech sector, because I know that a lot of these disclosures, these foreign disclosures, that they've been overwhelmed by like factor forms and everything else. And I've heard stories from sitting in warehouses and that'll get them eventually. And people are like, oh, I'll speak a lot of time to get to those forums. Yeah. There's this thing called machine learning that is eventually just going to suck those all up and spit out the result very quickly. And I have to think that, yeah you know what? You have to disclose all this stuff. And for the record, there's so much information sharing going on between financial institutions around the world now. And just even when you cross the border, it's all catalog.
Jason Pereira: It's a matter of time before they feed all this into a giant system and spit out the offenders. And I would think that you want to do whatever you can to not be one of those offenders. Because frankly, right now it's like looking for a bit of a needle in a haystack in the future it's going to be pushing a button.
Terry Ritchie: Yeah. I agree. Actually, we talked a while ago about immigration and tax and how they're not sort of, they don't sleep together. But that being said a number of years ago, I think two years ago, the IRS has a program now that if you are renewing your passport, you've got to sort of indicative whether you're compliant for US purposes or not. That's one of the questions that's being asked there. If the answer is no, where does that information go? And secondly, if you do decide to apply for passport and get a passport, if you have a tax, I believe that see $50,000, then they won't get granted your passport too, sort of thing. So, yeah. I mean big brothers truly upon us and they need revenue and where can they get that?
Jason Pereira: Oh yeah.
Terry Ritchie: And the other thing too is-
Jason Pereira: 10 million people outside the country aren't as many voters as number of people in the country. That's for sure.
Terry Ritchie: Well, my dad used to always say, at least at the state tax level, the dad make a very poor lobby, so let's get money from them. So if you are Canadian or if you're an American in Canada and you haven't been compliant and you happen to own some US shares, let's say Disney or whatever. And is the transfer agent going to go ahead and liquidate those shares and give them to your beneficiary upon your passing? No. They're going to wait and wait for a [inaudible 00:42:43] from the IRS to ensure that there's no estate tax at all. So there's those kinds of things you have to be cognizant of as well.
Jason Pereira: Yup. So before we close out, I want to discuss one of the things and that's renunciation. So let's talk about what happens. What's the difference between when I have a Green Card or when I'm actually considered a citizen. What happens to if I just say you know what, I'm fed up with this. I just want to stop with the ties and that's the end of it.
Terry Ritchie: Okay. So my personal experience story because I had a Green Car. So many people think, jeez, I thought you were a citizen. I should have been a citizen, I just got lazy, I never did. So I moved down to the US in 1979, my last year of high school. My mom was a US citizen. My dad hated the tax environment, late seventies and the weather. And so we all moved down, so on Green Card. And so in our case after three years, I could have applied for citizenship. Again, got lazy, never did. I had my Green Card for 15 years. I married a US citizen who was born in the US. My first wife that was raised in Calgary and knew my late twin sister. So we met that way and I just continued to have my Green Card.
Terry Ritchie: And then there's some family challenges that we had. My dad got sick and we decided when she was quite young we decided to move back to Canada. And so we moved back in 1995 and I continued to maintain my Green Card. After 9/11 that was much more difficult to do. So on the 23rd of September, 2001, I was asked to do a television program for Edward Jones in St. Louis. And I knew that that was the day that they are going to pull my Green Card. And so I went to immigration, really. I went to the airport like three hours before my flight. And I went in there and that was a day. And they were really jerks about it too, to be honest with you. So I had to fill I-407, a different form.
Jason Pereira: The DOH was difficult, give me a break.
Terry Ritchie: Because they're like, yeah, they were difficult that day for me, "Terry you had 15 years to do this. Why didn't you do it? Blah, blah, blah kind of thing." So I got pulled. And so, because I gave up from their perspective, the greatest gift in the world, there have been times when I've traveled, where I've been thrown into secondary and ask questions and all that kind of stuff.
Terry Ritchie: Now, I have a need to visa. I'm married to a US citizen. I could get a Green Card back, but right now for what works for me, that's what we've done. So all my kids are dual citizens, but if you have the Green Card and you've been out of the US for longer than a year, you can't demonstrate that you've been in the US in a consistent basis, they will pull your Green Card.
Terry Ritchie: And in fact, if you have a Green Card living in Canada, there's an obligation to be treated as a US person for tax purposes. Because effect of the your status doesn't end. So I'm told until you've abandoned your Green Card until you get that I-407 okay.
Terry Ritchie: So it's important that people be aware of that, there's a risk of obviously, physical losing your Green Card. And of course the ongoing tax requirement you have to fulfill because you still have a Green Card to look like a US tax resident. So there's some pros and cons to that. On the renunciation side. So renunciation is something that I've talked to hundreds and hundreds of clients about over the years, but very few have actually taking the steps to do that. Because they worry about the prospects of being able to either I spend time in the US as a snowbird, maybe move there in the future, or spend time with family there.
Jason Pereira: So you weren't giving something up. That does give you rights. Like it's not just something you do that on a whim.
Terry Ritchie: Correct. And there are some taxable cases that could be imposed upon your giving up. Again, the greatest gift in the world from their perspective. And so on their renunciation side, there's a couple things. So if your net worth is greater than $2 million, then you are going to face next titration tax. It's going to be imposed on you. And that's similar do a [inaudible 00:46:04] tax that we'd have in Canada. There's two levels of tax that would be imposed on you. So if your net worth is more than $2 million, or if you haven't filed tax returns from the previous five-year.
Terry Ritchie: So let's say that's totally exclude the net worth calculation. So if you've been somebody who hasn't filed returns in five years, and you have net worth of, let's say $500,000, you would be called a covered expatriate. You're going to face these same expatriation tax obligations. As a person, to me in our network, the two levels of tasks would be imposed, would be what we call a market to market tax of. Let's just call it this impacts for our listeners. What happens is the IRS system is going to say, we're going to have you sell all of your worldwide assets, except your tax for assets.
Jason Pereira: You're not actually selling it, but it's on paper. It's as a piece of it.
Terry Ritchie: But, every year it goes up for inflation, but there's also a very generous exemption that the IRS gives us on capital gains. I think it's just north of 700, $25,000. So there's a capital gains exemption that you're going to get first related to that. So for many people, unless you've got some large unrealized capital gains, it may not be an issue, but what could be an issue is there is an ordinary income tax would be imposed on your registered assets and you're tax deferred compensation assets. So if you've got an RSP or a RRIF in Canada, and you go ahead and renounce, that would be separate to this ordinary income tax on the US side. So that's something to be aware of.
Jason Pereira: I would say even more careful when it's defined benefit pension, because I've seen that happen as well. And we know with a defined benefit pension, it's not like you could cash out some of it to pay off the tax bill. You're still going to get this tax bill.
Terry Ritchie: Yeah. And the same thing on the state side. So you've got to sort of commute. But in any event. So the first thing is we got to quantify whether there's going to be tax exposure because the year that you do file, you got file with [inaudible 00:47:45] 8854 form, which is a financial statement, making them aware of what your financial assets look like as the point that you expatriate.
Terry Ritchie: And then when you cross the border, typically sometimes immigration officers might ask questions as why you're doing it, blah, blah, blah, blah, blah. So more people are doing this because they want to get out of the compliance requirements and the headaches that we talked about earlier, because of that, I mean, the people that do expatriate every quarter, your name goes into a federal register. So you can see who expatriates every quarter. You can get those people's names.
Jason Pereira: Wow. Hope really. It's crazy.
Terry Ritchie: Who is Mark Zuckerberg, buddy?
Jason Pereira: Oh, [inaudible 00:48:19].
Terry Ritchie: Yeah. What's it? [inaudible 00:48:22] Yeah. So he was one of sort of became more public a number of years ago. And that's why they changed these rules now, because-
Jason Pereira: You got a way before you pay capital gains, didn't they?
Terry Ritchie: He got Facebook just before he went public. He went to Singapore where there's no capital gains tax. So he can't come back to the US because of visa.
Jason Pereira: I'm sure he's living a very comfortable lifestyle, regardless.
Terry Ritchie: I'm sure he is. And he's using Zoom like we are to talk, communicate with people in the US, whatever. Right?
Jason Pereira: That's right. Well, Terry, we got pretty heavy and deep, but quite honestly, it's a pretty heavy and deep subject. And quite honestly, like I said, I think if you get nothing else from this podcast, if you're an American living in Canada, A, you need the proper advice from a tax and financial planning standpoint. And B, if you're a American living in Canada who owns a business, you really need it. And you've compliant because in my opinion, it's only a matter of time, but that's just me, anyway. So Terry, thank you very much. Where can people find them?
Terry Ritchie: So a couple of places so they can email me at terry@Cardinalpointwealth.com. So T-E-R-R-Y@cardinalpointwealth.com. Or they can check out our website is www.cardinalpointwealth.com. That's where they can find us.
Jason Pereira: Fantastic. Thank you yet again. Good, sir.
Terry Ritchie: Okay. Thanks Jason. Take care.
Jason Pereira: And that was an interview with Terry Richie of Cardinal Point. As you can see, we got pretty technical and pretty deep, but then again, this is a incredibly deep and technical subject matter altogether. As always this has been Financial Planning For Canadian Business Owners. If you enjoyed this podcast, please review on iTunes, Stitcher, or as you get podcasts. Until next time take care.
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