US estate tax

If you die owning certain US property, your estate could be subject to US estate tax. Estate tax applies to the fair market value, net of liabilities, of the US property at the time of your death. US citizens are subject to estate tax on their worldwide estates. However, Canadian residents who are not US citizens are only taxed on certain US properties, such as US real property, shares of US companies, tangible personal property located in the US and debts issued by US residents, including the US government.

For 2015, the US estate tax exemption amount for a US citizen is $5.43 million with a top estate tax rate of 40%. In general, if the estate of a non-US person resident in Canada is less than this exemption amount, there should be no US estate tax. It’s important to note that even if a Canadian estate has a value which is less than the exemption amount, there may well be a requirement to file a US Estate Tax Return. Consult with your tax adviser if you are unsure about your obligations.

Tax tip: Do you own or are you about to acquire property situated in the United States? If so, consult your tax adviser to review your exposure to US federal estate tax. Planning strategies are available to defer, reduce or eliminate this potential liability.