Business & Cross-Border Investment

The LLC is a common trouble spot: the U.S. usually treats a single-member LLC as a pass-through, while Canada often treats it as a corporation, and that mismatch in characterization can leave the timing and credits on the same income out of sync, producing real double taxation. The issue is highly dependent on your residency and how you hold the interest, so it's worth assessing alternative structures before using an LLC to hold Canadian-related assets or income.

Usually not in full immediately. A non-resident disposing of taxable Canadian property has to apply to the CRA for a section 116 clearance certificate; until it's issued, the buyer or lawyer typically withholds a portion of the proceeds and remits it to the tax authority, with a true-up once clearance is done. The application has a time limit after the sale, and poor timing can delay access to funds, so it's best to start at the listing or closing stage.

FIRPTA is the U.S. withholding mechanism on a foreign person's sale of U.S. real estate, with a standard rate of 15% of the sale price, withheld and remitted by the buyer. Because it's withheld on the gross price rather than the gain, it often exceeds the actual tax due; a seller can apply to reduce the withholding where eligible, or reclaim the excess afterward by filing a return. Whether a reduction is available depends on the price, use and holding.

You might. U.S. sales tax runs on economic nexus — even without a physical presence in a state, once your sales or transaction count crosses that state's threshold you may need to register, collect and remit there. Thresholds and rules vary by state, and marketplace collection only covers some cases, so it's worth mapping the states where you trigger nexus before volume grows, to avoid paying it back later.

A Canadian resident generally files the T1134 information return for a foreign affiliate, disclosing the company's basics and financials; if you're also a U.S. taxpayer controlling a foreign corporation, Form 5471 may additionally be required, along with consideration of anti-deferral rules such as GILTI. These are mostly information returns, but the thresholds and forms differ, so it's worth confirming each one against your ownership structure.