Canada Offshore

Summary: Certain taxation anomalies exist in Canada that make it an interesting country for tax planning.

The tax haven opportunities available in Canada!

Certain taxation anomalies exist in Canada that make it an interesting country for tax planning.

Canada can be an attractive location in taxation terms for individuals and companies alike.

It is worth investigating which taxation advantages may be available to you if you are considering relocating to Canada or setting up a business there. 

‘Canada Offshore’ a favourable tax jurisdiction of note.

For example, there is a rule called ‘the exempt surplus rule’ and this makes Canada an attractive location in which to set up a holding company.  Under this exempt surplus rule, dividends paid by a foreign affiliate to its Canadian parent are exempt from taxation. 

The utilisation of Canada for private individuals.

As an individual, if you are interested in relocating to Canada you’ll find that the Canadian authorities have established a whole regime of ‘tax sheltering’ to attract new residents.  The benefits of the regime are not available to the indigenous Canadian population; they really are in place simply to attract immigrants.

Through the application of proper pre-immigration tax planning it’s possible for wealthy individuals to move to Canada and avoid income and capital gains tax on their non-Canadian sourced income and capital gain producing assets for up to five years after emigrating to the country. 

The rule comes into effect back dated to the 1st of January in the year in which you move to Canada.  If at this time you were to move any income generating non Canadian assets into an offshore trust for example, you could make the most of this tax shelter period.  Any income earned or capital gains accrued on these assets in trust would be free from Canadian taxation for the full five year period.

If after five years the assets remain in the trust and you remain a Canadian citizen, the trust itself becomes a Canadian resident taxpayer!  This simply means that the trust is liable for Canadian taxation on its worldwide income from this date onwards.  This five year ruling used in this way would allow non Canadian assets to be protected from Canadian taxation for a period of at least five years.

If you took Canadian citizenship during the five year period and then emigrated away from Canada before the five years was up, any income and capital gains made from the Canada offshore trust would actually be totally free from Canadian tax full stop!

If you wished to remain in Canada however, and had placed non Canadian appreciating assets into trust you could further benefit from this five year sheltering. 
How? 
Well, if after the five years was up you were to take the assets from trust you would be re-acquiring them at their current market value.  By doing this you would gain a tax free lift in the base cost of the appreciating asset!

Another way Canada is interesting from a reduced taxation point of view is in the form of inheritance tax.  Canada does not have any form of estate taxation (also known as death duties).  For this reason alone Canada is often considered as a favourable ‘domicile of choice’.

And if you are after even more top tips, Shelter Offshore recommend you read the following: -

Choosing an Offshore: Cybertax in the New Millennium

Michael Grosh, Eric Greif

The Book is a pioneer in its approach to choosing and using offshore tax havens.

It is an important tool for the professional and other interested parties seeking practical means for choosing an offshore. It looks to the essence of the choice, starting with what the user’s needs are and progressing to what the user must look at.

It also includes a detailed analysis of tax laws, Trusts, an overview of international law and implication of the internet.

Business is a beast whose thirst is only quenched by success and wealth. The objective of this book is to reveal a set of programs that will assist major businesses, professionals and others in making a choice of using international tax havens efficiently and effectively.

This indepth analysis provides a structure for use by the non-specialist as well as the specialist. The book is for the business owner to use to maximise their wealth. It is also for the individual and gives insight into many locations.

Through over 20 years of working with domestic and international tax, Dr. Grosh has put together a work that is designed to give a different perspective on the topic. There are many other books on the topic that normally fall into a set approach that is not really designed with the reader in mind.

The approach taken is designed to help the reader come up with ideas and broaden their insight into the use of tax havens. A new refreshing approach to the analysis of offshore taxation is presented in a manner equally informative to the consumer as to the professional.

Click here to order a copy directly from Amazon!

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