Case Study: How Glen Avoided Exit Taxes as a Covered Expatriate

How Glen Avoided Exit Taxes as a Covered Expatriate

Glen and Tina are Canadian-born professionals who spent their careers in the US.

Tina was a high-level executive and Glen worked as a consultant. When they decided to return to Canada, their financial situation was complicated by Glen’s green card status.

The Problem: Covered Expatriate Risk

Glen was not a US citizen. If he gave up his green card without proper planning, he risked being classified as a covered expatriate.

Being a covered expatriate would have triggered a significant exit tax. This tax would be

imposed on unrealized gains, even if he hadn’t sold anything. The couple was understandably concerned.

They wanted to return to Canada, but they didn’t want a surprise multi-six-figure tax bill on the way out.

The Solution: Strategic Planning to Avoid the Exit Tax

We worked with their cross-border accountant and legal team to structure things, so that Glen would not be considered a covered expatriate. This included:

• Careful analysis of his income, assets, and filing history

• Strategic gifting of assets to his wife, who is a US citizen

• Timing and documentation around green card relinquishment

  
  

Only a handful of advisors in Canada have the technical knowledge to help with this kind of case. Most advisors (even those with cross-border licenses) would not have known how to manage this, as it requires deep knowledge and careful planning. So, if you’re a couple where one spouse is a green card holder, we recommend that you reach out.

Why This Worked

We went the extra mile to coordinate with the right professionals and implement a legally sound, tax-efficient strategy. We helped them plan before they triggered any tax events, which allowed us to avoid costly mistakes.

The Outcome: Tax Savings and a Smooth Return to Canada

Glen avoided the exit tax entirely. Tina continues to work internationally, and while a small portion of the couple’s wealth remains tied up in private investments, we are actively helping them transition those assets over time.

Their main concern—facing a massive tax bill—was resolved, and they were able to move back to Canada without stress or financial penalties.

*The case studies and client examples presented on this website are for informational purposes only. Names and identifying details have been changed to protect client confidentiality. These examples are based on real scenarios but do not constitute financial advice. Individual circumstances vary, and you should consult a qualified financial advisor before making any financial decisions.