CALGARY
LAW REVIEW
a directed-editorial publication on business law by the calgary herald
www.calgaryherald.com/business/lawreview
JUNE 20, 2014
Boosting energy
Regulatory lawyer Gordon Nettleton on how Canada can better share its oil and gas story
are important to the Canadian oil and
gas industry, they’re also important
to the parties that are doing business
with Canada’s oil and gas industry. And what we’re hearing, very
loud and clear, in Southeast Asia is
reputational risk is of paramount
concern. So, the touch points that
we’re hearing are, firstly, regulatory uncertainty, secondly, First
Nation risks and how to address
First Nations’ issues, and thirdly,
environmental assessment and how
to ensure projects move forward in
a sustainable way.
And I think industry, quite frankly,
is getting it right. I think industry has
had a marked change from the way it
has proceeded in the past.
INTERVIEW BY BRIAN BURTON
PHOTOS BY Adrian Shellard
D
espite a string of recent
setbacks, it’s still possible for
energy companies to launch
major projects and get them approved
within reasonable time frames, says
Calgary regulatory lawyer Gordon
Nettleton of McCarthy Tetrault. The
industry hasn’t lost its licence to operate, but maintaining that licence in the
face of increasing public scrutiny will
require new levels of strategic planning, community consultation and
corporate communications.
Beyond all that, many say Canada needs
a broadly supported national energy
strategy. Nettleton, a 20-year veteran
of regulatory law, discussed the current
state of play by phone from Jakarta,
Indonesia, where Asian energy buyers
are watching to see whether Canada will
overcome regulatory gridlock.
Q. The United States is stalling Canadian efforts to build an oilsands pipeline
to the Gulf Coast. But who can blame
them, in view of the level of public
opposition to a similar line to our own
West Coast? Europe has talked about
banning Canadian crude on the basis of
carbon content and it’s not at all clear
whether we can get approvals for LNG
(liquefied natural gas) projects in time
to be competitive in global markets.
Is our energy industry losing its licence
to operate?
A. I don’t think the industry is
losing its licence to operate. But I do
think that the public is taking a far
greater interest in the oil and gas
sector. Regrettably, the 30-second
sound bite that is common in the
media seems to be prevailing over the
logic and full understanding that the
industry is (trying) to deliver.
OK, but I don’t see the industry
moving the yardsticks of public
perception. Is there another level it
needs to go?
I think that public perception is
something that has to be planned
for, and planned carefully, when
new projects are advanced. For example, I fully support, and am a big
proponent of, LNG developments
being planned that address those
three key areas well before projects
are announced and moved forward
in a public way. I think that very
much tempers the potential adverse
impacts that can happen with public
perceptions.
I’ll give you an example. I acted as
counsel for the Kitimat LNG project
and at the time I thought Apache, EOG
and Encana did a fantastic job of being
able to sit down and work with First
Nations, particularly the Haisla First
Nation, in being able to address, on a
commercial basis, a means the project
could be advanced in a way that was
acceptable to the Haisla community.
The sound bite is never sufficient to
answer the accusation.
You know, it’s funny. I was in
Toronto and I was in a movie theatre
and one of the ads that came on
before the movie was an ad put out
by (Calgary-based energy company)
Cenovus. As you know, it was trying
to explain the importance of the oil
industry and I think they’ve done a
wonderful job. The problem is that
the reaction I listened to and observed
was, “Why is this on? Why do I have
to sit through an advertisement on the
oilsands? Oil is bad.”
I think industry has an, unfortunately, long and steep hill to climb.
But I don’t think that hill is insurmountable. I think it requires industry
to pay more attention, not only to
So, it’s possible to work with, and
negotiate with, specific groups. But
what’s to be done about the Toronto
theatre effect, that broad adverse
public perception?
I think it comes down to education. I
think you have to provide key stakeholders with the opportunity of independently understanding the projects
— and do so without the hype and
fanfare of the press and the misuse of
the 30-second sound bite. We’ve seen
projects as far away as Australia and
Saskatchewan, where the indigenous
peoples from Australia have come to
Saskatchewan to learn from aboriginal groups how operators in Northern
Saskatchewan have
carried out projects.
See ENERGY Page 2
“I think industry is getting it right. I think industry has had a marked change from the way it has proceeded in the past,”
McCarthy Tetrault regulatory lawyer Gordon Nettleton says of the energy industry’s efforts to address concerns.
engineering aspects, but also to the
government relations and public
relations roles of communication, so
that an informed public objective can
be attained.
What can the legal sector do to defend
what, in Calgary, is its main client
base?
I think what the legal community
can do is more of the same, that is,
impress upon clients the need for
strategic advice and the need for
understanding what the regulatory
hurdles are and what the public interest hurdles are associated with oil and
gas development. And I think that’s
a message that has to be conveyed
in the context of good planning and
up-front planning and understanding
what those touch points are.
What are those touch points that
industry needs to be more sensitized to?
I am, right now, in Jakarta, and have
been in various centres in Southeast
Asia. As much as those touch points
Anti-spam laws and small business
Canada’s new
rules require
preparation
By Barb Livingstone
W
Thinkstock photo
hile Canada’s anti-spam
legislation may be aimed
at catching the “bad actors”
plaguing your email inbox, it also
seems destined to affect a lot of legitimate small businesses when it comes
into force July 1.
Canada is the last of the G8 nations
to introduce an anti-spam law, but has
made up for its tardiness by introducing harsh penalties — in the millions
of dollars — for offenders.
Martin Kratz, who leads the Intellectual Property practice group for Bennett Jones, says Canada’s anti-spam
legislation is meant to regulate all electronic communication for commercial
purposes. That includes emails, text
messages, newsletters, instant messaging and social media.
And the legislation is so complex
Bennett Jones has even set up a website (bennettjones.com/casl/) just to
inform businesses, step by step, what
they need to do to be compliant.
The website includes checklists on
how to get started and templates for
all outbound emails.
“We don’t want to see innocent
people” caught in the intricacies of
compliance,” Kratz says.
Canada’s act differs from its biggest trading partner, the United States,
which has opt-out spam legislation. In
the U.S., the onus is on the consumer
to unsubscribe to messages from the
sender.
The legislation requires “opt-in,”
meaning businesses have to have express consent from consumers to send
any commercial electronic message.
Kratz says many of the “bad actors”
in the spam game come from outside
Canada and it will be difficult to turn the
new legislation on them.
However, anyone in Canada who
sends commercial messages will
be subject to penalties for not being
compliant.
See SPAM, Page 2
INSIDE:
Calgary lawyers
discuss how they
got started
Pg. 3
Snowbirds
warned of
U.S. changes
Pg. 4
2 CALGARY LAW REVIEW
ENERGY
from page 1
Another example (is) the Gas Tech
Conference in Korea about a month
ago, where it was refreshing to see the
Niska Nation attend the conference,
with three proposals for LNG development to occur on their treaty lands,
and sending the message that, “We’re
open for business.”
When I talked to their leaders, on
the way back, about how they felt the
conference was viewed, I think it’s
fair to say that they were quite taken
by surprise as to how significant the
LNG industry is and how important
the LNG industry can be to regions in
Asia, particularly to help reduce what
is a clear issue of air quality. And yet,
those are the key messages that we’re
not linking between what Canada has
to offer … and societal objectives of
clean energy.
It was truly amazing, when we were
in Singapore (recently), looking out
to the Singapore harbour and seeing
no less than 200 crude tankers sitting
in port. Ports such as Singapore are
viewed no differently than airports.
I think that’s lost on the Canadian
public because shipping is not, per
se, seen as something that’s familiar,
particularly with crude oil cargos. But
educating the people who are directly
affected by those operations is
something that I think would be
very successful.
Take, for example, the TransMountain project (the proposed expansion
of a pipeline from Edmonton to
Burnaby, B.C.) that I believe is projected to move from one or two ship
movements a day to three or four
movements a day. When you compare
that to the level of crude movements
that you see elsewhere in the world,
I think one would reflect upon that
as being quite a different outcome
than some of the hype and fanfare
that you’re hearing and seeing on the
Lower Mainland.
I think that education of the people
who are directly affected is something
industry can and should move forward
with.
In a participatory democracy, is there
any effective way of sorting out the
regulatory crescendo that we get with
Gordon Nettleton, regulatory lawyer at McCarthy Tetrault, says a new national energy strategy would help Canada show the world it is a safe, reliable place to invest.
projects such as Northern Gateway?
Could we do it better somehow?
I think that has to happen. Lessons
that we are learning have to be understood and applied. What the public
is telling us, by their representations
before the National Energy Board, is
that they need a voice. They want a
forum in which their concerns can be
registered.
In my view, that’s not the proper
place for those types of issues to be
raised — before a technical regulator
like the National Energy Board, which
is looking at very specific issues associated with the technical safety and operational features of a crude oil pipeline.
I think regulators need to assure that
type of (technical) discussion has to be
the focus of issues that come before it. I
think that social issues, such as climate
change, for example, are matters of
public concern and interest that politicians and the Government of Canada
need to address. It’s ultimately up to the
government to determine whether there
needs to be some type of forum that is
used to inquire into that type of concern.
I don’t think there is need for a public inquiry, for example, into pipeline
operations. I think that what has not
been told is the excellent story of how
safely pipelines have operated across
this country and, indeed, around the
world. I think we have the regulators
to thank for how good that story is.
One regulatory expert told me the
best system is to establish land use
plans that are publicly developed and
publicly accepted and then let the
regulators determine whether specific
project proposals fit within the plans.
I think that’s one way that may very
well provide an effective solution. I
think the problem is a clear
understanding of the importance of energy development to this country. And
What you
need to
know
SPAM
from page 1
Thinkstock photo
By Barb Livingstone
N
eed help complying with
Canada’s anti-spam legislation (CASL)? Here are some
tips from the Bennett Jones website
(bennettjones.com/prepare_your_
business/complying_with_the_antispam_law/)
n Review all existing communication practices internally, as well as with
applicable external service providers.
n Assess whether your communications are commercial electronic
messages (CEMs).
n Assess whether your CEMs are
subject to the new anti-spam legislation.
n Determine which entity in your
organization should “own” the consents.
n Address the informational
requirements where consent is collected by your organization for itself
or for other entities.
n Assess each of your business or
non-business relationships to ascertain if implied consent is available for
CEMs to be sent.
n Assess and diarize the availability
of implied consent to whom you may
have an “existing business relationship”
or a “non-business relationship” during
the three-year transition period.
n Take steps to collect necessary
express consents. This cannot be done
after July 1 using CEMs.
n Identify such communications
where consents are not required but
the informational requirements and
formalities are still required.
n Develop a database of your contacts that enables all consents to be
tracked, retained and retrievable; and
allows any waiver or variation of such
consent to be tracked.
that, ultimately, has to be a decision
made by government. It’s ultimately
up to government to decide whether its
electorate needs that type of forum.
I think the concern that I have is
that pipelines in this country have
been planned so that they follow
existing linear disturbances, as much
as possible, to minimize possible
impacts. The concern that I would
have about a public inquiry into land
use is the potential delay that could be
caused and the regulatory uncertainty
that could arise if processes were not
effectively managed.
We’re seeing a need for new market
access to happen — now more than
ever. But what we’re hearing in
Southeast Asia is the view that Canada cannot get its regulatory house in
order, or a national strategy on energy
in order. So I would be concerned that
is going to give a leg up to Canada’s
energy-industry competition.
n Maintain policies to ensure CEMs
are not sent where there is no consent or
where implied consent has expired.
n Create and maintain an easy-touse and effective unsubscribe mechanism for the CEMs.
n Create templates for CEMs that
satisfy the informational requirements
and formalities, as applicable.
n Develop and implement a CASLcompliance policy to address applicable provisions in CASL.
n Educate all relevant employees
and service providers about CASL,
and the organization’s CASL-compliance strategies.
n Ensure that all records of your
compliance procedures and policies
are maintained (as such documentation may support a due diligence
defence at a later point in time).
n Regularly review your compliance activities and adapt as needed.
CALGARY LAW REVIEW
Calgary Law Review is a directed-editorial publication of the Calgary Herald
Special Projects Department as a result of interest in law issues. The Calgary
Herald did not afford the advertisers creative control beyond approving the
broad subject; advertisers were not given the opportunity to put restrictions
on the content or review it prior to publication.
“This applies to everyone from
journalists, to law companies to the
pizza stores — unless you are
exempted, you are caught by it,” says
Kratz.
Currently, implied-consent exemptions
include friends and family (though
family is restricted and does not
even include siblings), political parties, charities, employees within an
organization and existing business
arrangements.
So how do you make sure you comply with the legislation? That is where
small business, in particular, will be
challenged.
“They are the ones that don’t have a
compliance team that can go through
the complexities of this law. Part of the
obligation component is, if challenged,
you have to have evidence of consent.
Large companies will have the support
tools; small companies may just be
writing notes down and have to be able
to retrieve them,” Kratz says.
Tony Morris, partner in the Calgary
Norton Rose office in the Intellectual
Property and Technology Groups,
says the most critical part of this
legislation’s implementation is that
businesses understand their obligations because there are consequences
to being offside.
“SMEs (small and medium enterprises) have the same obligations, the
same risks, but not the same
resources.”
He says the administration details
of the legislation are so dense it
won’t be difficult for business to be
offside.
Norton Rose also has provided
resources on its website (norton
rosefulbright.com/files/canadas-antispam-legislation) that take businesses
through the steps of determining
Are we, then, doomed to a secondrate status as an energy producer, or is
there a way through this?
Absolutely, there’s a way through.
There’s an opportunity for Canada to
continue to show the world that it is
a very safe and very reliable place to
invest and also to play the important
card that it has played for decades,
and that is that Canada is very
comfortable with being an energy
exporter and providing energy security to buyers who want to do business
with Canada.
I think the way through it is one that
requires real thought by government,
industry and key parties and, in particular, leaders of First Nations — to
come together and have a dialogue
that will allow for a new national
energy strategy. An energy strategy
will allow countries abroad to look
at Canada and say it has its house in
order.
whether they should send an electronic message.
“I don’t think most businesses are
aware of the implementation (of the
anti-spam legislation) and what they
have to do.”
The first time Morris, as a lawyer,
read the new law, “my head was
swimming; there are so many twists
and turns. It is a tough read.”
It also has to be taken seriously,
says Kratz, because it will be vigorously enforced.
He says federal investigators have
been hired just for this work and will
be looking to identify particularly bad
cases of breaches of the law.
And they will be setting up “honey
pots” to see if they can attract spam
and then identify the sources of that
spam.
“It sounds reasonable to you and I
that you go after the bad actors. The
problem is you and I and small
business; we have exposure to
considerable liability.”
Individuals can sue you if you make
a technical mistake with damages
provided in the legislation of up to
$200 per email, up to a maximum of
$1 million per day.
“There will be people looking for
mistakes,” Kratz warns.
There has been a lot of critical feedback since the legislative details were
announced and implementation set. A
parliamentary review of the legislation is planned for 2015.
In the meantime, how effective will
the legislation be in getting rid of the
spam that reduces efficiency as you
waste productive time deleting it?
Morris says it will be a challenge to
get to the heart of big spam, much of
which originates outside of Canada and
is unaffected by the new legislation.
So those ads for impotency drugs
and African millionaire schemes
may continue to arrive in your email
inbox.
Co-ordinators: Darren Oleksyn and Rachel Naud
Design: Kathryn Molcak
Stories: Brian Burton, Barb Livingstone and Jacqueline Louie
Photography: Adrian Shellard and Wil Andruschak
Website: calgaryherald.com/business/lawreview
CALGARY LAW REVIEW
PROFILE: Janan Paskaran, Torys LLP
Janan Paskaran, a partner at Torys LLP,
describes law as a very challenging profession
that places a lot of demands on time.
“But I think it’s also a very rewarding one
— being a trusted adviser to your clients and
being involved in their businesses, watching
their businesses grow day to day. It’s a very
rewarding place to be.”
Paskaran’s practice is internationally focused,
and a large part of his enjoyment in his work,
is “doing deals internationally and interacting
with lots of different people and cultures.”
Born and raised in Edmonton, Paskaran
studied commerce for three years at the
University of Alberta. He obtained his law
degree from the University of Western Ontario.
He started articling at Blake, Cassels &
Graydon in Calgary, where he worked for nine
years in the firm’s Calgary and London offices.
“Being in London, it’s such a hub that
everything I did there was internationally
focused. Then, when I came back to Calgary,
I managed to maintain a lot of those
relationships,” says Paskaran, one of the
founding partners of the Torys Calgary office
in 2011.
How would you describe yourself?
Hard-working, but fairly easygoing.
What was your first job?
When I was 14, I worked in the kitchen at Pizza
Hut in Edmonton.
What attracted you to your area of
specialization?
I was always interested in business and did
undergraduate studies in business.
What’s the best part of your job?
Interacting with clients and seeing them through
a deal; getting them to the end result they want.
Most clients are now my friends. I really enjoy
that part — the personal interaction.
What’s the most challenging part of your job?
My practice focuses a lot on the global market, so
time zone differences are challenging to deal with.
What makes a good lawyer?
Understanding your client’s business and really
being able to provide practical solutions.
PROFILE: Megan Stoker, Parlee McLaws
Whom do you most admire?
My parents. They came here from Sri Lanka,
never having been to North America or seen
snow before. They came to Edmonton, where
they worked for 35 years. I’m always amazed
how they survived. We were pretty fortunate as
kids to reap the benefits of their hard work.
What are you most passionate about?
Travel. I would travel pretty much any
time I can. I’ve travelled to six out of seven
continents (Antarctica is on my list) and more
than 50 countries. I’m always happy to get
on a plane any time and go anywhere. I love
seeing different places, different cultures, and
interacting with different people. I’m a big
history buff, as well, so I really love getting to
see famous historical sites. Over the last five
years, I finished seeing the New Seven Wonders
of the World: Machu Picchu, Peru; Chichen Itza,
Mexico; Christ the Redeemer statue in Rio; the
Colosseum in Rome; the Taj Mahal in India; the
Great Wall of China and Petra in Jordan.
What does a great day off look like for you?
A great day off means being out of the country
and seeing new sights or being in a new city,
or a new culture, with no BlackBerry or laptop
anywhere in sight.
Text: Jacqueline Louie;
Photo: Wil Andruschak
What Calgary lawyer Megan Stoker loves
about her job is that she’s always learning.
“You’re learning not only about the law
itself, but you’re also learning how to deal with
people and manage disputes,” says Stoker,
30, a litigation associate at Parlee McLaws in
Calgary. “It’s a challenge every day because
each day brings something new — so it’s
always interesting and engaging.”
Born in Edmonton, Stoker grew up in
St. Albert. She holds a Bachelor of Commerce
degree from the University of Alberta and a
law degree from the University of Calgary,
graduating at the top of her class and winning
the William A. McGillivray Gold Medal in Law
for 2012. She was called to the bar last July.
How would you describe yourself?
Dedicated and optimistic.
What was your first job?
When I was 16, I worked at the University of
Alberta through a summer program called the
WISEST Summer Research Program, which
paired Grade 11 students with researchers in
science, engineering and technology. My next
job was more adventurous — working at a gift
shop in Jasper for the summer after Grade 12.
What attracted you to your area of
specialization?
What attracted me to litigation is the same
thing that engaged me throughout law school,
and that’s the ever-evolving nature of the law.
As a litigator, you’re always interpreting and
reinterpreting the law to advocate for your client
and, at the same time, you are fine-tuning the
law to address novel issues and novel facts — so
your arguments become part of that evolution.
What’s the best part of your job?
The advocacy. As a litigator, I get to
help individuals and companies through
challenging and often stressful disputes. I love
the intellectual challenge that comes from
convincing the reader or the listener that you
have considered all the angles and that your
argument is correct. I’m learning how to do this
better every day.
What’s the most challenging part of your job?
Life balance. Lawyers are notorious for
allowing their files to envelop their lives, and
it’s a real challenge to keep the balance that
keeps us healthy and effective in our jobs.
Whom do you most admire?
My grandmothers. Both are paradigms of
female independence and strength, who lived
through and overcame great adversity. I aspire
to their passion for life and enduring kindness.
What does a great day off look like for you?
Playing tennis or skiing with my husband (John
Christensen) or spending relaxing time at home.
I love working in the garden or sitting around the
firepit with good friends and a glass of red wine.
“Tax is simple.”
Said no one.
Ever.
From corporate to personal, and planning to litigation, our team
of Canadian and US lawyers and Chartered Accountants have
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3
Text: Jacqueline Louie;
Photo: Wil Andruschak
4 CALGARY LAW REVIEW
Free as a Snowbird? Maybe not.
How extended
U.S. stays can
hit your tax bill
By Brian Burton
T
he days of carefree and careless
commuting are over for Canadian snowbirds with second
homes in the United States’ sunbelt,
says lawyer and tax specialist Roy
Berg.
The rules haven’t changed. They’re
as bewildering, contradictory and
potentially punitive as ever — on
both sides of the border, says Berg, of
Moodys Gartner in Calgary.
What has changed, however, is the
ability of Canadian and U.S. customs
agents to routinely swap computerized
information obtained from bar codes
on the passports of each other’s citizens,
he explains.
“None of the rules or substantive tax or
immigration regulations have changed,”
he says. “What’s changed is that they can
be enforced. Until this year, they (U.S.
Customs) haven’t really known how
long you’ve been there.”
In the past, it didn’t take a genius to
figure out that, with each country tracking only those entering its jurisdiction,
neither had a truly reliable count on the
number of days foreigners were spending in country — or the number of days
citizens were away. Accordingly, Berg
says, Canadians have habitually taken a
fairly relaxed attitude to accounting for
their time in the U.S.
All that changes June 30, with the
adoption of the Entry/Exit Initiative
agreed between the two nations. After
that date a continuous computerized
information exchange will make day
counts on each traveller automatic.
If you have any doubts about how
real this is, you can apply to check your
own day count with the U.S. Department of Homeland Security at https://
i94.cbp.dhs.gov/I94/request.html.
Thinkstock photo
Canadians who spend substantial time in the United States should be aware of changes to how their stays are monitored.
The automatic count means Canadians must be vigilant to avoid facing
additional tax penalties or even arrests.
Berg says there are two U.S. day
counts that matter — a three-year rolling total of 180 days and an annual
182-day count. The three-year rolling
tally is called the “substantial presence
test” and it flags anyone who stays
in the U.S. for more than 120 days in
any given year. Days in the current
year are counted at full value. Days
from the previous year are counted at
one-third and days from two years ago
are counted at one-sixth. So a tally for
2014 might look something like this:
Days in 2014 are 120 x 1 = 120;
Days in 2013 are 120/3 = 40;
Days in 2012 are 120/6 = 20; so,
Days for 2014 total 180.
For casual Canadian vacationers, the
substantial presence test is unlikely to
become an issue. But for Canadians
with second homes in the sunbelt, it’s
a different matter. Retirees hiding out
from Canada’s brutal winter can regularly exceed the 120 days — meaning
they will now be methodically flagged
by the substantial presence test in
a way they never were before. For
them, there’s a form called the Closer
Connection Exemption Statement for
Aliens (form 8840). By filling out the
form, you document that you have a
closer connection to Canada and are
not simply dodging U.S. taxes. Filling
out this form every year enables you to
stay in the U.S. a full 182 days without
offending the U.S. Internal Revenue
Service or Homeland Security.
take into account, he adds. The IRS
counts days within the calendar year,
while Immigration/Homeland Security
counts days in any 12-month period.
“You could be just fine for tax purposes but totally off-side for immigration
purposes,” Berg observes. And immigration law makes reference to “substantial
departure” from the U.S., meaning a
quick flight home and back may not be
counted as time out of the U.S.
“None of the rules ... have changed.
What’s changed is that they can be enforced.”
— Roy Berg, Moodys Gartner
The form isn’t new, but it has suddenly become very important to actually fill it out, Berg says. Canadians
who haven’t bothered or haven’t
known about 8840 until now will be
well advised to fill it out every year.
And it’s one filing per person, not one
per household, he adds. (Forms can be
obtained at http://www.irs.gov/pub/
irs-pdf/f8840.pdf)
There’s another wrinkle you should
Consequences of offending U.S.
immigration laws “can be quite dire,”
he adds.
“U.S. border guards have power
to arrest,” so uninformed Canadians
on their way to their second home in
Arizona or Florida could suddenly find
themselves turned back at the border
or even arrested if the border inspection point is on U.S. soil.
It all depends upon whether you’re
viewed as a resident under U.S. and/or
Canadian law, Berg says.
People who violate the U.S. substantial presence test can be banned from
entering the U.S. for three years on a
first offence and for life on a second
count, he says. The exception is if they
file the 8840 form. And anyone unlawfully exceeding 365 days in the U.S.
can be banned for 10 years on a first
offence.
Those who stay more than 120 days
in a calendar year and fail to file the
Closer Connection form, or who exceed 182 days in a calendar year, risk
becoming subject to U.S. tax on their
worldwide income, though taxes paid
in the U.S. are deductible from Canadian taxes owing.
If you inadvertently become a U.S.
resident, you become taxable at death on
your worldwide assets, meaning your
heirs will be subject to U.S. estate tax.
If you exceed 182 days in a calendar
year outside Canada, Canadian tax
law says you are no longer a resident,
you are deemed to have disposed of
all your assets worldwide and become
subject to capital gains tax on everything you own.
“Whether an individual is no longer
a resident is a facts-and-circumstances
test — but a big factor in that analysis
is day count,” Berg says.
And, of course, losing your residency also means you lose eligibility
for provincial health-care coverage.
Finally, Berg notes, not all U.S.
states align their tax laws with the
federal government, so staying square
with Uncle Sam doesn’t mean you’re
off the hook for state taxes.
Buying and licensing a car in Hawaii, for instance, may get you the
residents’ rate for golf, but it could also
very likely make you subject to Hawaiian state taxes. While Florida and
Arizona use U.S. federal rules, California, Hawaii, Montana and North
Dakota — all popular with Canadians
— don’t follow the U.S. federal tax
code.
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