The first Canadian in the White House?

Ted Cruz has just become a famous Canadian — he’s about to do something few choose to do. He’s going to give up his Canadian citizenship.

Read: Does your client have U.S. tax risk?

Cruz is a Republican U.S. Senator from Texas likely to appear on the shortlist of GOP candidates who might run for U.S. President in 2016. He’s also a dual citizen.

That’s because was born in Calgary in 1970 to a U.S. mother; his father is a naturalized U.S. citizen from Cuba. The family returned to the United States when he was 4 years old.

Read: Republican Senator renounces Canadian citizenship

By virtue of being born in Canada, Cruz is a Canadian citizen. Further, because he was born to a U.S.-citizen mother, he is also a U.S. citizen.

Now, to eliminate confusion about his birthplace, he’s renouncing his Canadian citizenship, something I’ve not seen in the 30 years I’ve been providing cross-border advice.

Fortunately, renouncing Canadian citizenship doesn’t have serious tax or financial implications. Unless Cruz generates Canadian-source income through a trade or business in Canada, or sells a Canadian real property or business interest, he has no Canadian income tax issues. (Given Cruz’s confusion over his citizenship, it’s likely he’s never filed a tax return to the CRA.)

But if the situation was reversed and Cruz had just discovered he was born in the U.S., he’d have bigger problems.

Read: Should clients renounce U.S. citizenships?

The American income, gift and estate tax system is a system based on citizenship. Therefore, regardless of where a U.S. citizen lives, dies, generates income or transfers assets, she must file U.S. income tax returns each year, and fulfill a myriad of other compliance requirements.

Given that system and the implementation of the Foreign Account Tax Compliance Act (FATCA) next year, several American citizens who live or work abroad have chosen to renounce their U.S. citizenship as a means to escape taxes.

Read: Tax problems with cross-border life insurance

According to the most recent U.S. Treasury Department statistics, the number of people who renounced their U.S. citizenship or gave up their Green Cards last quarter was a record-breaking 1,130.

(Incidentally, the U.S. government publishes these people’s names in its Federal Register. Ruth Abbott is first on the list for last quarter, with Anna Zwahlen last. Check for your clients!)

The highest number of annual published expatriates was 1,781 in 2011, so the 2013 tax year will likely end with the highest number of expatriates in U.S. history.

Read: 4 ways to save cross-border tax

As for Cruz, keeping his Canadian status wouldn’t be so bad for us. A recent headline in the National Post was “If Obama can’t get along with Canada, who can he get along with?” If Cruz overcomes the U.S. birther noise and becomes the next U.S. President, Canada might gain a friend – and we’d see the first (former) Canadian in the White House.

Terry F. Ritchie is the Director of Cross Border Wealth Services for Cardinal Point Wealth Management (www.cardinalpointwealth.com).