Cross-Border Planning Scenarios

Cross-Border Planning Scenarios

Scenario 1: A Canadian Resident Working for a US Company

A Toronto resident accepts a remote executive role with a US technology company and receives salary plus stock-based compensation.

Questions to review: Where are the services performed? Is US or state withholding required? What type of equity award was granted? Where were services performed during the grant-to-vest period? How will Canada and the United States recognize and source the income?

Our approach: Review residency, employment location, payroll reporting, award terms, income timing, sourcing, treaty provisions, and available foreign tax credits. We then map filing and payment obligations in both countries.

Scenario 2: A Canadian Amazon Seller Using US Fulfillment Centres

A Canadian e-commerce company stores inventory through Amazon FBA and sells to customers across several states.

Questions to review: Where is inventory stored? Which sales thresholds are exceeded? Does marketplace-facilitator collection cover every obligation? Are income, franchise, gross-receipts, registration, or federal filing requirements triggered?

Our approach: Identify relevant states, review historical exposure, assess registration and filing requirements, coordinate sales-tax systems, and compare direct operation with a US subsidiary or another structure.

Scenario 3: Canadians Investing in US Real Estate

Canadian investors plan to acquire US rental property and are considering an LLC.

Questions to review: How will each country classify the entity and income? Who will own the investment? What are the withholding, state-tax, financing, liability, estate-tax, repatriation, and exit considerations?

Our approach: Compare direct ownership, partnerships, corporations, LLC classification elections, and other available structures. We model the Canadian and US consequences before an entity is formed or an election is filed.

These examples are general illustrations. Results depend on the complete facts, applicable law, and the engagement scope.

Scenario 4: A US Citizen Moving to Canada

A US citizen relocates to Canada for employment or family reasons while retaining US citizenship.

What we look at: The tricky part is that Canadian residency doesn’t erase US filing obligations, so we need to work out how Canada will view their residency, what ongoing filings the IRS still expects, and how foreign tax credits are coordinated between the two systems. We also check whether FBAR and FATCA reporting applies, and take a close look at how retirement accounts and other investments are treated, since the two countries don’t see them the same way.

Our approach: We walk through residency rules, the treaty’s tie-breaker tests, worldwide income reporting, foreign tax credits, and information-reporting requirements, then build a compliance strategy that works for both countries at once.

Scenario 5: A Canadian Moving to the United States

A Canadian resident moves to the United States for work and becomes a US tax resident.

What we look at: Timing matters here. We need to pin down the exact departure date from Canada, since that determines whether departure tax applies. RRSPs, TFSAs, FHSAs, and other investment accounts are each treated differently once someone is living in the US, and we also need to sort out which country has the right to tax the employment income.

Our approach: We work through Canada’s departure rules, US residency tests, the relevant treaty provisions, and how investment and retirement accounts should be reported, then coordinate the filings on both sides of the border.

Scenario 6: A Canadian Business Expanding into the United States

A growing Canadian business is ready to establish operations, hire employees, or take on customers in the United States.

What we look at: The first big decision is whether to operate through a branch or a subsidiary. From there, we need to figure out whether the business has created a permanent establishment, which states require registration, and what payroll and indirect tax obligations come with the expansion.

Our approach: We compare the available operating structures, assess exposure at both the federal and state level, coordinate payroll and sales-tax registrations, and put together an expansion plan that’s tax-efficient from day one.

Scenario 7: Canadians Owning a US LLC

A Canadian resident owns, or is planning to set up, a US LLC for investment or business activities.

What we look at: LLCs are a classic cross-border headache, because Canada and the US don’t classify them the same way. We look at how the entity is treated in each country, which Canadian and US information returns need to be filed, and whether electing corporate treatment would actually help.

Our approach: We work through entity classification, the cross-border reporting obligations that come with it, and any treaty implications, then recommend the ownership structure that makes the most sense before anything is put in place.

Scenario 8: Physicians Working in Canada and the United States

A physician earns professional income in both Canada and the United States during the year.

What we look at: The main question is which country gets the first right to tax the income, and whether a professional corporation is worth using. CPP and Social Security also need to be coordinated, so the physician isn’t caught contributing to both systems without getting the benefit of either.

Our approach: We review residency and the split between employment and self-employment income, look at the social security agreement between the two countries, consider whether a professional corporation makes sense, and structure things to keep compliance as smooth as possible on both sides.

Scenario 9: An E-commerce Business Selling in Canada and the United States

An online business sells products through Amazon, Shopify, or its own website to customers in both countries.

What we look at: Selling across the border means keeping track of several rules at once: which indirect tax registrations are needed, where inventory is actually stored, which marketplace rules apply, and whether state sales tax or GST/HST thresholds have been crossed.

Our approach: We assess the business’s indirect tax exposure, map out its inventory footprint, work through marketplace-facilitator rules, and help build an operating structure that keeps compliance manageable in both countries.

Scenario 10: Cross-Border Estate and Succession Planning

A family owns assets in both Canada and the United States and wants to transfer wealth efficiently.

What we look at: Cross-border estates raise their own set of questions: whether US estate or gift tax will apply, how Canada will tax any deemed dispositions, whether trusts or holding companies should be part of the plan, and how beneficiaries should be structured to avoid unnecessary tax.

Our approach: We review the family’s ownership structures and succession objectives, look at the relevant treaty provisions, and develop a coordinated plan designed to reduce future tax exposure.

These scenarios are meant as general illustrations, not specific advice. What actually applies to your situation depends on the full facts, the law in effect at the time, and the scope of the engagement.