Foreign Earned Income Exclusion Review Case Studies
6 worked Foreign Earned Income Exclusion Review case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to foreign earned income exclusion review work, not a specific client's file.
Case Study 1 · Structure rebuilt
Corporate Structure Rebuilt For $22,000 Of Annual Savings — US-Facing Canadian Corporation, Edmonton
Client: A Canadian corporation with US customers · Where: Edmonton, Alberta · Engagement: 11 weeks, fixed fee
Saving per year$22,000
DocumentationComplete
Transfer basisRollover
The situation — A Canadian corporation with US customers, Edmonton, Alberta
The structure at a Canadian corporation with US customers in Edmonton, Alberta had been set up years earlier for a business that no longer existed, and 25% withholding on gross Canadian rent where a section 216 election would have taxed only the net had become expensive.
What we did for A Canadian corporation with US customers, Edmonton, Alberta
We filed the section 216 election with the supporting rental statements and recovered the excess withholding as a refund. The reorganisation used the rollover provisions rather than a taxable transfer, so no tax fell due on the restructuring itself.
The result — A Canadian corporation with US customers, Edmonton, Alberta
$22,000 of annual saving, achieved on a tax-deferred basis. The minute book, elections and valuations are all in the file.
Case Study 2 · Sale and succession
Share Sale Restructured, $380,000 Less Tax On Closing — Inbound Assignee, Hamilton
Client: An inbound transferee on assignment · Where: Hamilton, Ontario · Engagement: 7 weeks, fixed fee
Tax saved on closing$380,000
PriceAs agreed
Post-closing adjustmentsNone
The situation — An inbound transferee on assignment, Hamilton, Ontario
An inbound transferee on assignment in Hamilton, Ontario was preparing to sell. Due diligence surfaced a single shareholder holding every share, with no room to multiply the exemption, which would have reduced the price or killed the deal outright.
What we did for An inbound transferee on assignment, Hamilton, Ontario
We cleaned up the historical file, applied the treaty rate to the dividend withholding, filed the NR4 return, and remitted the shortfall before the CRA assessed the payer for it, and prepared the due-diligence package the buyer's advisers actually asked for.
The result — An inbound transferee on assignment, Hamilton, Ontario
The deal closed at the agreed price. $380,000 of tax was saved against the structure originally proposed, with no post-closing adjustment.
Case Study 3 · Backlog brought current
Collections Halted And $52,000 Cut From A 4-Year Backlog — US Rental Owner, Saskatoon
Client: A Canadian resident with a US rental property · Where: Saskatoon, Saskatchewan · Engagement: 4 weeks, fixed fee
Balance reduced by$52,000
Backlog cleared4 years
CollectionsHalted
The situation — A Canadian resident with a US rental property, Saskatoon, Saskatchewan
By the time a Canadian resident with a US rental property in Saskatoon, Saskatchewan called, 4 years were outstanding and the CRA had assessed on estimates. Underneath it sat US tax paid but no foreign tax credit claimed on the Canadian return.
What we did for A Canadian resident with a US rental property, Saskatoon, Saskatchewan
We reconstructed the records year by year and filed the outstanding T1135 disclosures through the Voluntary Disclosures Program, which eliminated the penalty exposure entirely. Each filing replaced an arbitrary assessment with a real one.
The result — A Canadian resident with a US rental property, Saskatoon, Saskatchewan
The account is current. Filing on real numbers rather than CRA estimates reduced the balance by $52,000, and a relief application addressed part of the accumulated interest.
Case Study 4 · Records and systems rebuilt
Month-End Close Cut From 10 Weeks To 10 Days — Mid-Year Emigrant, Brampton
Client: An emigrant who left Canada mid-year · Where: Brampton, Ontario · Engagement: 6 weeks, fixed fee
Close time before10 weeks
Close time after10 days
Year-endReview, not rebuild
The situation — An emigrant who left Canada mid-year, Brampton, Ontario
The accounting file at an emigrant who left Canada mid-year in Brampton, Ontario was built on invoices paid to a non-resident consultant working on site in Canada with no Regulation 105 withholding taken. The year-end had taken 10 weeks each of the last three years.
What we did for An emigrant who left Canada mid-year, Brampton, Ontario
We reported the deemed disposition properly on the departure return and claimed the foreign tax credits that had been left unused and moved the reconciliations into the monthly cycle, so the year-end stopped being a rebuild.
The result — An emigrant who left Canada mid-year, Brampton, Ontario
The file reconciles. Month-end closes in 10 days instead of 10 weeks, and the year-end is a review rather than a reconstruction.
Case Study 5 · Objection and relief
Desk-Review Assessment Of $34,500 Vacated — Florida Property Owner, Red Deer
Client: A family with a Florida vacation property · Where: Red Deer, Alberta · Engagement: 9 weeks, fixed fee
Assessment vacated$34,500
Supporting recordsNow on file
AccountCleared
The situation — A family with a Florida vacation property, Red Deer, Alberta
A family with a Florida vacation property in Red Deer, Alberta was carrying $34,500 of penalties and interest arising from dividends paid to a non-resident shareholder with nothing withheld, leaving the payer holding the liability, much of it accumulated during a period the CRA itself had delayed.
What we did for A family with a Florida vacation property, Red Deer, Alberta
We reconstructed the day count on both sides of the border and documented the residency and treaty position before either revenue authority asked and framed the relief application on the specific grounds the CRA guidelines recognise rather than on general hardship.
The result — A family with a Florida vacation property, Red Deer, Alberta
The assessment was vacated. $34,500 came off the account, and the documentation now on file makes the same position straightforward to defend next time.
Case Study 6 · Deadline rescue
5-Week Turnaround Beat The Deadline And Saved $110,000 — Non-Resident Landlord, Moncton
Client: A non-resident owning Canadian rental property · Where: Moncton, New Brunswick · Engagement: 5 weeks, fixed fee
Late-filing penalty avoided$110,000
Filed with18 days to spare
Next yearPapers ready
The situation — A non-resident owning Canadian rental property, Moncton, New Brunswick
With the deadline for foreign earned income exclusion review weeks away, a non-resident owning Canadian rental property in Moncton, New Brunswick was carrying winters spent in the United States with the day count kept casually and no residency position documented anywhere. The exposure if the date slipped was around $110,000.
What we did for A non-resident owning Canadian rental property, Moncton, New Brunswick
We restructured the US holding so the Canadian and US characterisations aligned, ending the double taxation going forward. The filing went in complete rather than provisional, so there was no amended return to follow.
The result — A non-resident owning Canadian rental property, Moncton, New Brunswick
Filed with 18 days to spare. $110,000 in late-filing penalties avoided, and the working papers are ready for the following year.
Reviewed for the 2025 tax year by Udit Gupta, Founder and Tax Accountant. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
