Bermudian families: This week we cover fast approaching Bermuda Government filing deadlines in June of this year of our Lord 2010 for two very important Acts that have:

a) significant impact on non-Bermudian spouses of Bermudians, and

b) on Bermudian families trying to preserve their family homesteads from death duties.

United States citizens, dual citizens of Bermuda / US and green card holders (and their families) living in Bermuda need to be aware of new tax developments enclosed within The United States Hiring Act (signed into law on Thursday March 18, 2010 by President Obama.

The Foreign Account Tax Compliance Rules embodied within the Hiring Act include comprehensive new disclosure and reporting requirements for US persons who own foreign accounts and financial interests outside of the United States, foreign financial institutions maintaining such accounts, and trusts / other entities.

Deadline June 21, 2010

In the spring of 2007, The Bermuda Immigration and Protection Act 1956 was amended. The Regulations made pursuant to that Act and the related policy was to preserve the majority of land in Bermuda for ownership by individuals who possess Bermudian status by:

• Requiring restricted persons (e.g. non-Bermudians) to have licences to hold or acquire land in Bermuda and by preventing them from appropriating it.

• Requiring trustees of trusts to have licences to hold or acquire land in Bermuda for the benefit of restricted persons.

• Preventing corporations from acquiring or holding land except in accordance with Part VI of the 1956 Act.

This meant, in general, all non-Bermudian spouses who, before June 22, 2007, held an interest in land, including as beneficiary of a constructive land trust, and who continued to hold such an interest in land, required a licence, or needed to dispose of the land. Such persons have until June 21, 2010 to comply. Licences will be issued to the Bermudian spouse as trustee for the non-Bermudian spouse's equitable interest for all such properties.

As of June 22, 2007, non-Bermudian spouses of Bermudians who wished to acquire land jointly with the Bermudian spouse, whether as joint tenants or as a beneficiary of a constructive trust, are limited to one licensed parcel of land.

This provision does not preclude the property having more than one residential valuation unit. Where the non-Bermudian spouse has no interest in the land, no licence is required. Restrictions on the non-Bermudian spouse of a Bermudian remain in effect until such time that the non-Bermudian spouse obtains Bermudian status.

The filing time is short and the penalties for non-compliance are large.

Note that this is only a short summary of a very complex subject of ownership of Bermudian property. If you have additional questions on this subject, I urge to seek legal counsel that specialise in real estate property law as soon as possible.

Primary Family Homestead Certificate

Several e-mails have circulated in recent days indicating that the deadline for filing for this exemption for a Bermudian family property is June 30, 2010.

This is not the case and I believe it may have been confused with the Alien Licence described above. Reviewing the procedures at the Office of the Tax Comissioner of Bermuda's website (http://www.taxbermuda.gov.bm/news.htm#special) does not indicate any deadline. For those not aware, the Stamp Duties Amendment Act 2005 exempts the Primary Family Homestead from Stamp Duty which would otherwise be payable upon the death of an owner.

It provides that an owner can designate a property for this exemption. In particular, it will allow an owner of more than one property to choose which one should benefit from the exemption.

The exemption is from the Stamp Duty chargeable on the estate of an owner upon death and it would be granted on the Affidavit of Value. It does not affect the existing exemption from Stamp Duty on assets passing to a surviving spouse.

Who is eligible to designate?

The Primary Family Homestead provisions apply to individuals who own or otherwise have a legal interest in residential property which is situated in Bermuda. Those individuals must have Bermudian status.

Bermudian status has the meaning which is assigned to that expression under Section 4 of the Bermuda Immigration and Protection Act 1956. If you have not applied for this free exemption for death tax provided under Section Section 47A(6)(c) of the Stamp Duties Act 1976, you are literally losing out on thousands of dollars in death taxes that will have to be paid by your family, i.e. $235,000 on a $2 million property, and $435,000 on a $3 million dollar property.

Take care of your estate planning - the application is free, for goodness sake.

Every country it seems, is doing it. Raising taxes, that is. The Bermuda Government is not alone in seeking new revenue to spend by taxing its citizens.

The 2010 Hiring Incentives to Restore Employment Act signed into law by President Obama last week incorporated after the hiring incentives, worker retention credits, and tax credit bonds a section called the New Foreign Account Tax Compliance Act.

Here that we learn that the Hire Act initiatives will be paid for partially by new measures heightening disclosure and reporting requirements for foreign accounts.

What does this mean for Bermuda residents?

I've written previously and extensively about changes in US taxation and reporting of foreign accounts for citizens abroad. If you are a United States citizen or permanent resident (green card holder), or married to a US citizen or a dual citizen of the United States and other country living here in Bermuda, these new provisions will probably apply to you or your family.

Among various provisions related to foreign accounts and entities, The HIRE Act requires:

1. Foreign Financial Institutions are subject to withholding on income from the US for non provision of certain information to the Internal Revenue Service, such as the names of US citizens and residents who directly or indirectly own foreign financial accounts

2. New reporting requirement details for Foreign Assets and new aggregate account asset values for qualified individuals

3. US shareholders owning PFICs (Passive Foreign Investment Company) are required to file an annual report with US Internal Revenue Service. PFICs are types of passive investment foreign entities or offshore mutual funds

4.Foreign Trusts having US beneficiaries as well as US owners of foreign trusts have new reporting requirements and penalties for non-compliance.

5.Significantly increased penalties for failure to disclose interests in specified foreign financial assets and file certain informational returns.

6.The statute of limitations increases to six years for assessment by the Internal Revenue Service if there is a significant omission of income in connection with foreign offshore assets.

Our times and tax regimes, they are a' changing.

Martha Harris Myron, CPA, CFP(US) TEP(UK) JP- Bermuda is an international Certified Financial Planner™ practitioner in private wealth management. She specializes in independent fee-only investment, tax, estate, retirement and personal strategic planning services for Bermuda residents with cross-border and multi-national connections, internationally mobile people and US citizens living abroad. For more information, contact martha.myron@gmail.com or 296 3528