U.S. persons owning shares of a PFIC that receive material distributions (e.g., large dividends and capital gains) may be subject to U.S. tax at top marginal rates instead of regular marginal rates or lower rates for long-term capital gains, as well as an interest charge. It may be possible to claim some of the U.S. tax as a foreign tax credit on your Canadian tax return to minimize your overall tax burden.
The PFIC rules are complex. We can suggest possible strategies that will avoid these harsh tax implications.
Please contact us for more information.