6 - The Prince George Citizen - Monday, July 11,1994
Business
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Visitors can have problem with U.S. taxes
Keep track of your visits to the U.S.: ■ Exceed certain totals and U.S. tax laws apply.
■ “Closer connection" can cancel "substantial presence.”
■ Or spend six hours completing Form 8833.
How many days do you spend in the U.S. each year, whether on major holidays or cross-border jaunts? If you are a regular visitor, make sure you don’t run afoul of the U.S. tax laws.
“We have heard many rumors of tax problems people are having who spend substantial time in the U.S.,” writes reader K.U. “We work in Canada but holiday in the U.S. and plan to spend more time there, especially in winter. Can you please clarify the rules?”
: Commented Virginia Perry, a senior manager in KPMG Peat Marwick Thome’s U.S. tax group:
’ • “The U.S. taxes its citizens and residents on their worldwide
income. So a Canadian citizen who lives in Canada but spends substantial time in the U.S. may also — sometimes unknowingly — be considered a U.S. resident for tax purposes. You could end up having to file tax returns in both countries on your worldwide income, although you can usually avoid double taxation.
“The key is to carefully record the number of days you spend in the U.S. And a quick trip across the border for gas or other shopping counts as one day.”
Perry provided the following guidelines but warned you must look at all the facts of your situation to decide which approach is best, and possibly get professional advice.
ONE. First take the “substantial presence” test. Count the number of days you spent in the U.S. in 1994; then add one-third of the total for 1993 and one-sixth of the 1992 figure.
“You meet the substantial pres-
YOUR MONEY
byMikeGrenby
ence test if you spent at least (a) 183 days in the U.S. this year, or
(b)	31 days this year and 183 days in total (under the three-year formula) for 1992, 1993 and 1994,” Perry said.
Don’t count the days: you regularly commute to work in the U.S. from a home in Canada (if you meet the regular commuter rules under U.S. law); you spend less than 24 hours in the U.S. in transit between two places outside the U.S.; a medical condition which developed in the U.S. forces you to stay there; you are an exempt individual like a teacher, student or professional athlete competing in a
charitable sports event.
TWO. Second, check the “closer connection exception.” Said Perry: “Even if you meet the substantial presence test, you won’t be considered a U.S. resident for U.S. tax purposes if you also qualify for the closer connection exception.”
Basically, you have to show you (a) have a Canadian place of business, employment, post of duty or normal residence if you don’t have a job, (b) spent fewer than 183 days in the U.S. during the current year,
(c) have a closer connection to Canada (see next paragraph), and
(d) took no steps to emigrate to the U.S.
To establish your closer connection exception for 1994, file Form 8840 by next June 15. You must do this for every year in which you meet the substantial presence test. The Internal Revenue Service estimates it takes about two hours to complete and file this form, with its three dozen questions.
If you are a resident in both the U.S. and Canada, you can apply to be considered only a Canadian resident for tax purposes under the Canada-U.S. Tax Convention, known as “the Treaty.” This means taking an estimated six hours to complete and file Form 8833 — again, on an annual basis as long as you are considered to be a resident of both countries.
(You can get these forms and any necessary U.S. tax returns — you must file a Form 1040NR return if you are submitting a Form 8833, or if you have U.S. income and are filing a Form 8840 — from the IRS, 60 Queens, Ottawa KIP
5Y7; phone 613 563-1834.)
For more information, ask your local tax office for the 26-page booklet Canadian Residents Going Down South, produced by Revenue Canada with input from the IRS.
Here’s one example of how the rules work. Darcie lives and works in Canada but takes a seven-month leave of absence to tour the U.S. this year. She’ll be in the U.S. for at least 183 days in 1994 so won’t meet the closer connection exception. But under the Treaty her permanent home in Canada should establish her as a Canadian resident for tax purposes. She should file Forms 8833 and 1040NR by June 15, 1995.
- Copyright 1994 M & M Creations Ltd.
Mike Grenby is an independent financial adviser who works with individuals. He will answer reader questions in his column as space allows - write to him c/o 2444 Haywood Avenue, West Vancouver V7V 1Y1.
Giant could be swallowed by mouse
by JOHN SPEARS Toronto Star
A small but scrappy gold mining company has launched a $2 billion bid to take over LAC Minerals Ltd., one of Canada’s mining giants.
* . And Royal Oak Mines Inc. says that if it succeeds, LAC’s top management should start looking for -new jobs.
Peggy Witte, Royal Oak’s chairman and chief executive, said that LAC’s Toronto-based management has been slow and sleepy.
Witte told reporters she’ll clean out the deadwood in LAC’s head office, and consolidate what’s left in Vancouver, where Royal Oak is based.
“Our top management will certainly be imposed on LAC’s y assets,” she said.
LAC’s top management said yesterday it’s studying the Royal Oak offer.
Chopping management ranks combined with other cost-cutting will turn the merged company into a money-maker, Witte said.
“One of the first things we’re going to do is get rid of the company jet they just bought,” she vowed.
But LAC could make a fight of the takeover proposal. The company has a “poison pill” in place that allows existing shareholders to buy new LAC shares at half price, if a takeover is launched.
That would force a company such as Royal Oak to buy even more shares in order to gain a control position.
LAC spokesperson Patrice Merrin Best said the poison pill is in place to give LAC’s board time to examine takeover proposals.
Witte said she’ll rely on pressure from shareholders to bring LAC’s managers and directors on side.
“We believe that our offer will be attractive enough to the shareholders that the shareholders will overwhelmingly encourage LAC’s board of directors to waive the poison pill,” she said.
“The board of directors has a fiduciary duty to do what is in the best interest of the shareholders of the company,” she said.
In fact. Royal Oak says it won’t proceed with its offer unless the poison pill is waived.
The company also says the deal is off if it fails to get at least two-thirds of LAC’s shares or if the price of gold falls below $360 (U.S) an ounce.
The offer expires Aug. 9.
j Royal Oak has quietly been buying LAC shares for several weeks. I) now holds 3.8 million LAC shares, about 2 per cent of the total.
I
Bruce Reid, a mining analyst with Yorkton Securities Inc., said the takeover bid will depend on how LAC shareholders size up Royal Oak’s shares, since that’s how holders are mostly being paid.
LAC shareholders are being offered $3.75 in cash plus 1.75 Royal Oak shares for each LAC share. Or they can forgo the cash and take 2.416 Royal Oak shares.
iThe offer is worth $13.59 a share, or 20 per cent more than the market price for LAC, according to Royal Oak.
• LAC’s shares closed up $1 at $12.38 yesterday on the Toronto
Stock Exchange.
The ending could come down to an assessment of the two chief executives, Witte at Royal Oak and Peter Allen at LAC, Reid said.
“Basically, I’d rather have Peggy than Peter. But that’s just a personal opinion,” he said. “I have no idea what the general investing public is thinking.”
The takeover looks like a mouse trying to eat an elephant. Royal Oak produced about 276,000 ounces of gold last year, a quarter of LAC’s 1.1 million ounces.
But Witte said Royal Oak has lined up the cash needed to finance the bid through Bankers Trust and Bank of Montreal.
The takeover would result in a “major, top-tier gold company,” she
said.
The contrast between Royal Oak and LAC extends beyond the companies’ size.
Witte is a hard-nosed brawler.
She has built Royal Oak by taking unwanted properties, squeezing out cost savings and making them profitable.
Royal Oak’s Giant mine in Yellowknife was the scene of a bitter strike after the company tried to wring wage concessions from workers.
The company kept operating the mine through the strike, and nine miners died in an underground explosion in 1992. A striking miner has been charged with murder in the deaths.
LAC’s chief executive, Peter Allen, projects a quiet, patrician image.
But he can gamble, too. LAC tried to grab a fabulously rich chunk of the Hemlo gold play in Northern Ontario in the 1980s from under the nose of a competitor.
But a court ruled in 1986, after LAC had already built its mine, that the company had acted unfairly. LAC had to hand over the mine, containing about $5 billion worth of gold, to International Corona Resources Ltd.
But LAC still has big mines in Canada, Chile and the United States.
Witte said LAC’s problem is cost.
LAC’s gold deposits are high-
quality and relatively cheap to mine, she said. But because LAC has a swollen head office and has failed to control other costs, total mining costs are higher than the industry average.
“We really want to unlock this
value for shareholders by imposing an aggressive management on these assets,” Witte said.
She says she’ll trim $40 million a year from LAC’s costs. LAC’s revenues last year were $486 million.
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IN THE
Fort St. John
TIMBER SUPPLY AREA (TSA)
An analysis of the timber supply will examine today’s forest land use and management practices to determine the availability of timber, now and in the future.
This analysis is part of a three-year timber supply review which is examining all TSAs in the province. The review will provide the Chief Forester with information to determine harvesting levels that are environmentally sound and that ensure the sustainability of B.C.’s forests.
The timber supply review for the Fort St. John TSA has begun. The review will include four documents to be released by the fall of 1995. These reports include a timber supply analysis, a socio-economic analysis, a discussion paper for public input, and the Chief Forester’s allowable annual cut determination and rationale.
The information to be used in the analysis has been assembled and is available for public review and comment at:
Fort St. John Forest District
8808 72nd St., Fort St. John, B.C.
Prince George Forest Region Office
1011 4th Ave., Prince George, B.C.
Please send your comments in writing by August 12,1994 to:
Dave Lawson, District Manager Fort St. John Forest District 8808 72nd St.,
Fort St. John, B.C.
V1J 6M2 or fax to 787-5610
• *■, > ■» ■ t tt i" 7
Province of British Columbia Ministry of Forests	'	‘	-v-	~-i:	~
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