How we help
- US-situs asset classification (real estate, US-corp shares, tangible personalty)
- Treaty Article XXIX-B prorated unified credit modelling
- Pre-mortem restructuring (Canadian corp, partnership, irrevocable trust)
- Life-insurance funding of projected US estate-tax exposure
- Form 706-NA preparation and protective-claim filings
- Coordination with Canadian deemed-disposition planning at death
The rule in one paragraph
The US imposes federal estate tax on the worldwide assets of US citizens and residents and on the US-situs assets of non-resident aliens. The non-resident-alien exemption under domestic US law is US$60,000 — which is largely irrelevant to most Canadians because the Canada-US Income Tax Convention (Article XXIX-B) replaces it with a prorated unified credit, calculated as the regular US unified credit multiplied by the ratio of US-situs assets to worldwide assets at death.
If your worldwide estate is comfortably under the US unified-credit threshold (currently roughly US$13.6 million, set to drop substantially in 2026), the treaty's prorated credit will usually eliminate the exposure. If your worldwide estate exceeds that threshold — or if you're trying to plan around the 2026 sunset — the math gets more interesting.
What counts as US-situs
The main categories of US-situs assets are:
- Real property located in the United States (including the Florida or Arizona condo).
- Shares of US corporations, regardless of where the certificates are held or the share registry is located.
- Tangible personal property physically located in the US (cars at the snowbird residence, art at a US gallery, jewellery in a US safe-deposit box).
- Debts of US obligors in some circumstances.
The main categories that are NOT US-situs for non-residents are deposits in US banks held in the ordinary course of business by non-residents, portfolio-interest-eligible debt, and life-insurance proceeds on the life of a non-US-citizen non-resident.
Planning levers
The standard playbook for reducing US estate-tax exposure includes:
- Hold US real estate through a Canadian corporation. The Canadian corporation owns the property, and the deceased's gross estate contains shares of a Canadian (not US) corporation — which are not US-situs. The trade-off is the loss of the US principal-residence exemption (which Canadians never get anyway) and the imputed-rent benefit issue under Section 15.
- Hold US real estate through a partnership. The situs of a partnership interest is contested. Done carefully, a partnership structure can take the property out of the US estate without the Section 15 imputed-rent issue, but the structure has to be respected for what it is.
- Use a cross-border irrevocable trust. Property contributed during life to an irrevocable trust over which the contributor has not retained estate-tax-relevant powers escapes the gross estate.
- Fund the exposure with life insurance. If pre-mortem restructuring is impractical, life insurance on the property owner's life — owned by a third party or by an irrevocable trust to keep it out of the gross estate — funds the projected estate-tax bill.
Form 706-NA and protective filings
Where US estate tax applies, the executor must file Form 706-NA within nine months of death (with a six-month extension available on Form 4768). Even where the treaty's prorated unified credit eliminates the cash tax, a protective-claim filing is often advisable to preserve the credit, because the IRS's position is that the treaty benefit is conditional on the filing.
How we work the file
For living clients, we model the projected exposure under the current rules and the 2026-sunset rules and propose a restructuring that targets the lowest combined Canadian-and-US tax outcome. For estates that already have an exposure on death, we prepare Form 706-NA, claim the treaty credit, coordinate with the Canadian terminal T1, and respond to any IRS examination.
What to expect when you call us
Your first call is a free, no-obligation consultation with a tax lawyer. We will review the details of your situation, explain your options under the Income Tax Act and CRA administrative practice, and give you a clear, fixed-fee quote if you choose to retain us. Your consultation is confidential, and once we are retained, communications are protected by solicitor–client privilege.
If you retain us, we begin work within 24 hours of being retained.
Frequently asked questions
Is the consultation really free?
Yes. Most cases qualify for a free, no-obligation consultation with one of our tax lawyers. During the call we'll review your situation, explain your options, and give you a clear quote if you decide to retain us.
Do you serve all of Canada?
Yes. Barrett Tax Law represents clients across Canada. We have offices and local phone lines in Toronto, Calgary, Edmonton, Fort McMurray, Ottawa, Vancouver, and Winnipeg, plus a national toll-free line at 1-877-882-9829.
What does a tax lawyer do that an accountant cannot?
Accountants prepare returns and financial statements. Tax lawyers represent you when those returns are challenged, audited, or prosecuted — and our communications are protected by solicitor–client privilege, which accountant communications generally are not.
Will the CRA criminally prosecute me?
Most CRA disputes are civil. Criminal prosecution is reserved for serious tax evasion or fraud, usually involving deliberate misrepresentation. If you have unreported income, a voluntary disclosure is one of the standard ways to reduce criminal-prosecution risk.
How fast can you start on my case?
We typically begin work within 24 hours of being retained. For audit deadlines, Notices of Objection, and other time-sensitive matters, we move immediately.
What if I have unfiled tax returns from many years ago?
We routinely handle 5+ years of unfiled returns. Through the Voluntary Disclosures Program — applied for before the CRA contacts you — we can usually eliminate gross-negligence penalties and limit interest exposure.