TAX PLANNING FROM THE KNOWLEDGE BUREAU
By Evelyn Jacks
Canadians spend anywhere from $4.7 billion to $8 billion on cross-border
shopping, and if you spent either the July or August long weekend looking
for bargains in the U.S., you may have had an unpleasant surprise: Despite
the loonie holding some ground against U.S. currency, a new 10% surtax on
certain consumer goods came into effect on July 1, applied if you exceeded
your exemption limit.
A few weeks ago, Canada was hit with steel and aluminum tariffs by the
U.S., which led to a $2 billion counter-measure from the Canadian
government. This month, the Canada Border Services Agency has confirmed
that a surtax will apply on certain goods to Canadian citizens who have
exceeded their exemption limits; this charge is above and beyond the
standard duties already in place.
Each year, Canadian residents take an
average of 20 million overnight trips
across the border, and it’s these quick visits that will hit your wallet
the hardest. After all, there are no duty exemptions if you’ve stayed in
the U.S. for less than 24 hours, so this new surtax will apply to all
purchases made on such short trips. Make sure you’re familiar with the
exemption limits for U.S. stays between 24 and 48 hours, and over 48 hours,
so you know when standard duties and this new surtax apply.
The 10% surtax is being levied by the U.S. government on the value of the
applicable duty on any items classified as steel or aluminum products, as
well as on a classification referred to as “Other Goods.” This category
covers a wide range of things, including coffee, yogurt, candy, household
and cleaning products, some types of alcohol, appliances, and electronics.
Outdoor enthusiasts will be hit, too: The new surtax applies to various
types of pleasure boats, sailboats, sleeping bags, mattresses, and more.
Even your playing cards used around the campfire will cost more if they are
made in the U.S.! A complete list of applicable items is available on the
Department of Finance
Meanwhile, there is more bad news for consumers. Even if you’re planning to
buying homegrown Canadian products, Canadian interest rates are still on the rise, with the most recent hike
announced by the Bank of Canada on July 11. That won’t help the millions of
Canadians who hold a share of the $2 trillion in consumer debt.
Of special interest to advisors dealing with cross-border tax issues, we
are pleased to cover U.S.-Canada tax and trade matters in detail at this
Distinguished Advisor Conference, to be held November 10-14 in Quebec City. This new knowledge is critical
for advisors from across the financial services spectrum. At this year’s
DAC, economist Dr. Jack Mintz and other U.S.
tax experts, including Dean Smith of Cadesky Tax, will be addressing the implications
of U.S. policy on Canada’s competitiveness, and the tax consequences
affecting Canadians. Check the Knowledge Bureau website for a
and to register. We recommend you act soon. This is a very popular annual
conference, and early registration ends September 15.
© 2018 The Knowledge Bureau, Inc. All rights reserved. Reprinted with
is the founder and President of Knowledge Bureau, which
brings continuing financial education in the multiple areas of
specialization to advisors and their clients. She is the author of 52
books on tax and wealth planning. This article
originally appeared in the
Knowledge Bureau Report. Follow Evelyn Jacks on Twitter
@EvelynJacks. Visit her blog at www.evelynjacks.com.
Notes and Disclaimer
The foregoing is for general information purposes only and is the opinion
of the writer. No guarantee of investment performance is made or implied.
It is not intended to provide specific personalized advice including,
without limitation, investment, financial, legal, accounting or tax advice.