STEP LATAM and North America News Digest wrap-up – July’s top stories

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Catching up on the latest trust and estate sector news on the go? Welcome to the wrap-up of the top ten most popular stories in the STEP North America and LATAM News Digests throughout July. In case you missed them, here are the top STEP LATAM and North America News Digest stories most clicked by our readers.

CRA announces it has 80 new leads on taxpayers who may be hiding money offshore: The Canada Revenue Agency (CRA) said it has 80 new leads on taxpayers who may be hiding money offshore after getting hundreds of calls on its new hotline, established on January 15, 2014. This announcement comes after it was revealed that British Columbia’s securities regulator is funnelling more resources into a crackdown on suspicious trading activity coming from offshore bank accounts in “secrecy” jurisdictions, saying the accounts often belong to locals who are hiding their identities.

A brush with death taxes: Dhana Sabanathan TEP and Shu-Ping Shen offer estate-planning advice to international couples from the US and the UK.

FATCA – Most US expats considering giving up their citizenship: Four out of five American expatriates are considering giving up their United States citizenship due to the ongoing implementation of the Foreign Account Tax Compliance Act (FATCA), according to a new survey by the deVere Group. It found that 79 percent said they had “actively considered, are thinking about or have explored the options of” renouncing their US passport due to the implications of FATCA, which came into force on July 1, 2014.

IRS suffers multiple blows in its attempt to regulate tax professionals: The IRS has recently suffered multiple defeats in federal court which many experts believe could undermine its authority to regulate tax preparers and other tax practitioners. A few months ago it lost the case of Loving v IRS in the United States Court of Appeals for the District of Columbia, which hampered its efforts to regulate the tax preparer industry. The IRS has now suffered another setback – again in the United States Court of Appeals for the District of Columbia – in Ridgely v Lew.

CRA releases FATCA guidance on reporting obligations under IGA: The Canada Revenue Agency (CRA) has released some guidance for entities that could be subject to the US Foreign Account Tax Compliance Act (FATCA) regime – which went into effect on July 1, 2014. The guidance is intended to provide clarity to help financial institutions and their advisors understand and comply with their due diligence and reporting obligations under Canada’s intergovernmental agreement (IGA) with the United States.

New tax rules and exemptions will affect the financial market: Several changes are to be introduced to Brazil’s tax system after Provisional Measure 651/2014 was published in the Official Gazette on July 10, 2014. Changes include new tax rules and exemptions related to the financial market, effective as of January 1, 2015. For example the administrator of an investment fund will now be responsible for the calculation and collection of income tax levied on capital gains realized by investors who use their own securities to capitalize the investment fund.

IRS’ Individual Taxpayer Identification Numbers to expire: Individual Taxpayer Identification Numbers (ITINs) will expire in 2016 if not used on a federal income tax return for five consecutive years, the Internal Revenue Service has announced. A new policy applies to any ITIN, regardless of when it was issued, that “will ensure that anyone who legitimately uses an ITIN for tax purposes can continue to do so, while at the same time resulting in the likely eventual expiration of millions of unused ITINs”, said the IRS.

Tax Authority provides clarification on non-residents’ capital gains tax: The Mexican Tax Administration Service has issued proposed regulations on non-residents’ capital gains tax. The regulations provide clarification on certain aspects of the 2014 Mexican tax reform, which repealed the capital gains exemption for holdings of less than 10 percent applicable to foreign residents with respect to the sale of publicly traded shares. The proposed regulations affect the 2014 Temporary Tax Regulations, which includes rules for non-residents’ capital gains, including the determination of the tax basis, the withholding of tax responsibility and the taxation of American Depositary Receipts.

Tax Court holds that trustees’ activities as employees count for purposes of material participation: In the recent case of Frank Aragona Trust, et al. v Commissioner, 142 TC No. 9, (3/27/14), the United States Tax Court determined that a trust engaged in rental real estate activities qualified for the Code Section 469(c)(7) “real estate professional” exception to the passive loss rules for rental real estate activities. The court held that a trust is capable of performing personal services by and through its individual trustees, and that the trustees’ activities as employees of a limited liability company wholly owned by the trust enabled the trust to

Tax authority releases ruling on deductibility of payments made to ‘tax havens’: In Ruling No. 31855 of May 26, 2014, Colombia’s National Tax Authority pronounced on the interpretation of articles 124-2 and 260-7 of the Colombian Tax Code concerning the deductibility of payments made to ‘tax havens’. According to article 124-2, payments made to such jurisdictions are not considered deductible costs or expenses for the Colombian taxpayer, unless the corresponding withholding income tax has been applied.

The STEP Industry News Digests provide a round-up of relevant industry news for trust and estate practitioners and other professionals in the wealth management sector. They provide brief summaries of topical news stories gathered from news providers internationally, providing a quick reference for busy practitioners to all the relevant news and issues. The News Digests also feature job listings from our recruitment site and list local STEP branch events and conferences. STEP’s digest services include twice weekly UK and Wealth Structuring (international) editions as well as a bi-weekly North America Digest focusing on the US, Canada and Mexico, and a Latin America Digest.

To subscribe to STEP’s digest services you will need to first register here: http://www.step.org/register

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