Tax Issues for US Business Interests/Corporations

Owning US business interests as a Canadian resident can lead to tax complications, particularly if Americans living in Canada own interests in a Limited Liability Company (“LLC”) and/or an S corporation.

The IRS views LLCs and S corporations as flow-through entities, so they tend to be tax-advantageous business structures for Americans. In the US, profits from these structures are taxed only at the personal level, rather than both the corporate and personal levels.

However, the CRA does not recognize the flow-through nature of LLCs and S corporations, so retaining your interest in such structures as a Canadian tax resident could lead to double taxation.