NEW U.S. Forms For DOING Business In CANADA

Tax Question:

What are the new tax forms recently drafted that a resident of the United States of America (U.S.) may need to file in the U.S. if you are doing business in Canada and what are these forms for?

Facts:

Although there is a tax treaty between Canada and the U.S., there are information returns required on both sides of the border to inform the respective governments of your dealings in the neighboring country. The U.S. has recently drafted several forms that may apply to you if you are doing business in Canada. Please see below for a discussion of several of these new forms.

Discussion:

Form 1118 Foreign Tax Credit

If you are a resident of the U.S. and a shareholder of a U.S. corporation. Your corporation may need to file a Form 1118 to claim a Foreign Tax Credit for taxes paid or accrued to Canada.

Form 5471 Information Return of U.S. Persons With Respect to Certain Foreign Corporations or Form 5472 Information Return of a 25% Foreign-owned U.S. Corporation

If you are a resident of the U.S. and a shareholder of a Canadian corporation or a shareholder of a U.S. corporation which is 25% or greater Canadian owned, you may need to file a Form 5471 or a Form 5472 to report transactions with a Canadian related party. Form 8858 Information Return of U.S. Persons With Respect to Foreign

Disregarded Entities and Foreign Branches or Form 8865 Return of U.S. Persons With Respect to Certain Foreign Partnerships

If you are a resident of the U.S. and an owner of a Canadian corporation or branch that is disregarded as an entity separate from its owner for U.S. tax purposes or an owner of a Canadian partnership, you may need to file a Form 8858 or Form 8868 to report transactions with a Canadian related party. Form 8992 U.S. Shareholder Calculation of Global Intangible Lowtaxed Income (GILTI) If you are a resident of the U.S. and a shareholder of a Canadian Controlled corporation, you may need to file a Form 8992 to compute your GILTI

inclusion.