Canadian companies are expanding into international markets at an ever-increasing pace. Once the realm of only the largest multinational corporations, today small and medium-sized companies frequently have international activities. Sometimes, insufficient attention is paid to tax consequences of international expansion and the opportunities for a tax-effective international structure are not pursued.
We can analyze a business structure with international dealings to determine whether it has been arranged in the most advantageous way and assist in restructuring it, if necessary. We also assist with the detailed and meticulous compliance requirements that are necessary for Canadian tax-filing purposes. Finally, we can advise on favourable jurisdictions.
At the same time, we analyze the tax position of the company’s shareholders to determine how an international structure could be of benefit at the personal level.
With working experience in over 40 countries, we are experts in international tax treaty networks. These can be used to minimize taxes (especially withholding taxes) and to make a tax plan more resilient.
The Canadian tax system encourages Canadian businesses to expand internationally. Provided that a bona fide active business is carried on abroad, income from that business can often be earned through a corporation located in a favourable jurisdiction. We are experts in structuring such arrangements, advising on possible locations, and implementing the necessary components. We have experience in setting up companies in numerous jurisdictions around the world.
In assessing an international business arrangement, we
We also assist in maintaining the tax integrity of the structure and the required Canadian tax filings.
Certain international tax strategies can be effective for high net worth families, especially if they have non-resident members. However, to the uninitiated, the offshore world is complex, confusing, and fraught with difficulties. The Canadian tax legislation in the international area is extremely complicated. In addition, it can be difficult to find reliable people in foreign jurisdictions to assist with tax-planning structures.
Our extensive experience in implementing international structures, our contacts through the Society of Trust and Estate Practitioners (STEP), and our other connections uniquely qualify us to implement an international tax plan for an international family.
In advising high net worth clients, the scope for international tax planning very much depends on individual circumstances.
Despite recent changes which cancelled the 60 month “immigrant trust” exemption, Canada still offers tax exemptions and incentives for new immigrants. We are very experienced in advising new immigrants on how to take maximum advantage of these. We closely coordinate this tax planning with professional advisers in the immigrant’s country of origin.
With appropriate planning, a tax exemption can be obtained on funds withdrawn from a foreign active business. Also, for persons who remain resident less than 5 years, other exemptions can apply. Lastly, this area has many traps which can create a large and unintended tax bill. All situations need a Canadian tax review.
In handling such cases, we
Sometimes valuations are required in this type of work. If so, we can supply valuation reports in a format that is acceptable to Canadian tax authorities. We have experience in valuing foreign businesses and can do so where required.
Executives coming to Canada find the Canadian tax system confusing and complex, full of reporting forms, deadlines and paperwork. This combined with high tax rates can be challenging at best and demoralizing at worst.
We can assist in a variety of ways.
Prior to coming to Canada, we can do a preliminary assessment of the executive’s tax position. At the same time, we will address tax planning ideas and consider various planning strategies. These may include:
We can also advise on executive compensation and moving reimbursements as well as tax equalization policies. Through our international contacts, we can coordinate tax planning in the executive’s home country and assist with tax filings. We will prepare all required Canadian tax filings, and handle correspondence with the tax authorities. For U.S. persons we can prepare their U.S. tax returns.
Through our international contacts, we are often asked to assist non-residents who wish to invest in Canada. This may take the form of a real estate purchase for investment or development, an equity investment in a Canadian business (private or public) on loans. We can advise on the tax implications of the investment; how to structure it using a corporation, trust, or other entity; and whether and how to make use of Canada’s international tax treaty network.
In these types of assignments, we
In handling this kind of assignment, we are pleased to work with the client’s existing professionals or, where required, to call on our international contacts for further assistance.
Athletes and entertainers have unique tax issues that require specialized consideration.
We are very experienced in analyzing the tax affairs of athletes and entertainers who come to Canada to work, perform, or participate in an event. We can sometimes structure creative and effective tax-planning arrangements to substantially reduce Canadian tax. We can also attend to tax filings, including a waiver or reduction in tax withholding, filing tax returns, and claiming tax refunds.
People who work in Canada in support of entertainers (such as directors, producers, camera operators, make-up artists, and so on) are often not taxable in Canada if they are resident in a treaty country. In such cases, we can obtain a full refund of any withholding tax deducted.
Actors involved in Canadian films may elect to pay a flat 23 percent tax on gross receipts and benefits instead of paying regular income tax. This simplifies tax filings and may reduce the overall tax rate.
It may also be possible to reduce Canadian tax by structuring a retirement plan, or carrying on the activity through a foreign corporation.
Canada is a land of immigrants. While more people arrive than leave, a sizable number do emigrate for personal, financial, retirement, or tax reasons. Some are simply returning to their country of origin.
We can advise on the tax consequences of leaving Canada, recommend the optimal way to tackle various issues such as departure tax and withdrawal of amounts from retirement plans, and determine the tax treatment of such items in the country to which the person is moving. We can also assist with interpreting and using various international tax treaties.
We will prepare a checklist of how to sever ties to Canada to make sure there is a clear break of residency status.
Sometimes a person will consider leaving Canada purely for tax reasons. If specifically requested, we can advise on the feasibility of such a plan and the possible tax benefits. This type of planning requires pinpoint precision and often relies extensively on international tax treaties.
We prepare valuation reports where necessary to support the tax planning or tax returns. In addition we can prepare the tax returns for the year of the move.
Certain offshore strategies can be effective for high net worth individuals. However, to the uninitiated, the offshore world is complex, confusing, and fraught with difficulties. The Canadian tax legislation in the international area is extremely complicated. In addition, it can be difficult to find reliable people in foreign jurisdictions to assist with implementing tax-planning structures.
Our extensive experience in implementing international structures, our contacts through the Society of Trust and Estate Practitioners (STEP), http://www.step.org/ International, Tax Specialist Group (ITSG) http://www.itsgnetwork.com/itsg/index.asp and our other connections uniquely qualify us to implement an international tax plan.
The scope for international tax planning very much depends on individual circumstances. In advising high net worth clients and recent immigrants to Canada, we evaluate the possibility of an international tax-planning arrangement that involves either an offshore company or an offshore trust.
Certain offshore strategies can be effective for high net worth individuals. However, to the uninitiated, the offshore world is complex, confusing, and fraught with difficulties. The Canadian tax legislation in the international area is extremely complicated. In addition, it can be difficult to find reliable people in foreign jurisdictions to assist with implementing tax-planning structures.
Our extensive experience in implementing international structures, our contacts through the Society of Trust and Estate Practitioners (STEP), and our other connections uniquely qualify us to implement an international tax plan.
The scope for international tax planning very much depends on individual circumstances. In advising high net worth clients and recent immigrants to Canada, we evaluate the possibility of an international tax-planning arrangement that involves either an offshore company or an offshore trust.
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Oct 09, 2020
As part of the Canadian government’s efforts to combat money laundering, aggressive tax avoidance and tax evasion activities relating to trusts, enhanced income tax reporting requirements for certain trusts will be required for the 2021 and subsequent taxation years. The new rules also contain harsh penalties for knowingly fail to comply with the new trust reporting requirements or non-compliance due to gross negligence…
Jul 29, 2020
On July 27, 2020, the Canada Revenue Agency (the “CRA”) announced a further extension to the tax payment and filing due dates for certain taxes from September 1, 2020 to September 30, 2020. The extension applies to current year individual, corporate, and trust tax returns, as well as instalment payments. Interest will not be charged on these amounts if payments are made by the extended deadline of September 30, 2020. Whether or not full payment is required in order to receive this relief is unclear.
Apr 15, 2020
The Canada Emergency Wage Subsidy (“CEWS”) legislation has been released and is now law. In general, the CEWS will reimburse eligible employers 75 per cent of the amount of remuneration paid to eligible employees (to a maximum benefit of $847 per week).
The legislation was prepared under less than ideal circumstances so it is not surprising that there are a number of questions and observations we hope the government will address. However, we can now provide more answers than in our April 7, 2020 Tax Tip.
