Canada-US Tax Treaty Explained - Creator's Corner Newsletter #24

Hey Reader!

You don’t need to renounce your passport to avoid double taxation. There’s a smarter path, and it’s called a tax treaty. A reader replied "TREATY" last week, so we're deep diving into its mechanics today.

The Canada–U.S. Tax Treaty protects residents and citizens from getting taxed twice on the same income. It’s how creators who live cross-border can legally sidestep (cha-cha real smooth) added tax pain.

Let's say you’re a Canadian citizen temporarily living in L.A. for a collab tour. You earn $100K from brand deals while there. Because you're still a Canadian resident (family and home still in Canada), you file taxes in both countries. However, under the treaty, you can claim a foreign tax credit in Canada for U.S. taxes paid. That way, you don’t pay tax twice on that $100K.

Let's flip the script and say we have a U.S citizen residing in Toronto for a streaming collab. With the treaty, they can use the Foreign Earned Income Exclusion or a foreign tax credit to offset U.S. tax after filing (and paying) Canadian tax. You’ll still file a U.S tax return, but the treaty prevents you from getting Batista Bombed twice (s/o to my favorite wrestler back when I though RAW was real).

Youtubers in particular benefit from this treaty by getting withholding tax relief. Say a U.S. brand (ie. Google) pays you royalties. Normally there’s a 30% withholding. The treaty drops this to 15% or lower, depending on your income type. 15% adds up when we do the math on 6-9 figure earnings.

But Rony, why do films always depict offshore accounts in Panama or creating corporations in Guernsey? I saw Franklin Saint do it so it must be useful somehow. If we get 5 "GUERNSEY" replies, I'll discuss it next week.

Tax planning isn't a science. It's common sense, and my goal is to simplify it one piece of content at a time.