Many immigrants to Canada will ultimately inherit substantial wealth from family members who did not follow them to this country.. Usually, those new Canadians are not aware of the Canadian income tax implications of those future inheritances and the fact that careful planning in that regard can often reap rewards, in terms of savings in… Continue Reading
Monthly Archives: November 2015
THE TAX-EFFICIENT WAY FOR FOREIGN BUYERS TO ACQUIRE CANADIAN CORPORATIONS
Envision a situation where a foreign corporation (“Forco”) buys all of the shares of a private Canadian corporation (“Canco”) for $10 million. What happens if Canco generates profits, and Forco would like to use those profits to recover the $10 million cost of its investment in Canco? Can Forco just take funds from Canco up… Continue Reading
THE BASICS OF CANADIAN “DEPARTURE TAX”
When an individual, who was resident in Canada for tax purposes, ceases to be resident in Canada, there is generally a deemed disposition of assets owned by that individual at their fair market value. Any resulting deemed gain must be reported on the final tax return filed as a resident. This is commonly called “departure… Continue Reading
CAN A CANADIAN “PERMANENT TRAVELER” (“PT”) BE A NON-RESIDENT?
The question of whether or not a person is “resident in Canada” (which includes a person who is “ordinarily resident”) is undoubtedly the most pivotal issue under the Income Tax Act[1]. If the answer is “yes”, the person will generally be subject to Canadian tax on all worldwide income[2]; if the answer is “no”, then… Continue Reading
THOUSANDS OF CANADIAN EXPATS IN THE U.S. NEEDLESSLY PAY CANADIAN TAX!
Thousands of Canadian expats living in the U.S. needlessly pay Canadian tax! How do I know that? Well, I don’t really know for sure, but I can tell you that, over the years, I have seen dozens of situations where that is the case, and I have to assume that what I am seeing is… Continue Reading
CANADIAN CORPORATIONS CAN REPATRIATE PROFITS OF OFFSHORE SUBSIDIARIES TAX-FREE
Many Canadian corporations form a foreign subsidiary (“Forco”) in zero or low-tax jurisdictions in order to reduce their tax liabilities. This is a strategy that can work as long as the following four elements are present: Forco is not resident in Canada, having regard to common law concepts of corporate residency (“mind and management”). Each… Continue Reading
HOW WEALTHY IMMIGRANTS TO CANADA CAN USE A HOLDING COMPANY TO CREATE A TAX-FREE “PIPELINE”
There is a little-known method by which wealthy immigrants to Canada can use a holding company (“Holdco”), either in Canada or offshore, to receive, otherwise taxable, money tax-free in Canada. This will be applicable in situations where that immigrant holds a significant interest in foreign a corporation (“Forco”), either alone, or with family members. This… Continue Reading
CANADA-(STILL) A TAX-FRIENDLY DESTINATION FOR FOR WEALTHY IMMIGRANTS!
Probably more than ever before, Canada is considered to be a highly desirable destination for wealthy immigrants. Many non-tax reasons can be cited, including Canada’s: Healthy diverse economy Natural resources that are the envy of the world, including abundant supplies of fresh water, oil and gas, potash, timber and gold Banking system that is considered… Continue Reading