How to Legally Pay Less Taxes as a Canadian? 🇨🇦🇨🇦🇨🇦

Get personalized advice about tax, asset protection, offshore banking, residency, and citizenships: https://clarity.fm/michaelrosmer
You can visit our websites for more information about us: https://offshorecitizen.net & https://www.offshorecapitalist.com

Today we are going to cover International Tax Planning for Canadians or How How Canadians Can Pay the Lowest legal amount of Tax possible by setting up International Structures.

Recently I had a Canadian client who was running most of the business through Canada, despite the fact that lots of their operations and partners were abroad. This is not very optimal, as they were paying way more tax than they should.

Let's note that Canada has a small business tax rate that's not very unreasonable, the federal rate is 9% and on top of that, there's the provincial rate that will vary by province and can be anywhere from 2-3%. So this means that you will end up paying 11-12% in tax as a small business. This is for up to 500 000 CAD in profit per year.

Having this in mind, if you're a small business that makes less than half a million CAD per year, it doesn't really make much sense for you to structure yourself internationally.
However, once you cross the small business threshold it makes a lot of sense to do so. Once you make more than this amount you will be paying 26,5% in Ontario on the corporate level. In certain cases this rate will be higher.

It's also important to note that Canada actually has one of the most favorable international tax laws, even though domestic ones are not so great. This means that it's easy to have a foreign company, make money, get taxed at a favorable tax rate (ideally zero) and then bring money back to Canada tax-free.

One important thing to keep in mind is that you will need some operations abroad as you will need to have substance. If some of your work can be done abroad that's what you should be aiming for. Also, from a purely financial point of view, it makes lots of sense to hire abroad, since the costs of hiring in Canada are much higher.

First thing, you need to form a company abroad. But it's not so simple to choose a country since there are many things to pay attention to besides the headline tax rate. You will want to choose a country where you'll be able to take advantage of what's called ''the exempt surplus rules''. This means that you need to set up in a country that has a tax treaty with Canada. Historically, Barbados was often used for this purpose.

Another very important thing to keep in mind when talking about taxation of companies by the Canadian government is that the management and control rules are what determines whether your company will be taxed in Canada or not. This means that your company can not be run from Canada unless there is a tax treaty that overrides these rules. Ideally, your company is actually managed and controlled from abroad.

Your foreign company should be owned by a Canadian company. How to transfer money from a foreign to a Canadian company will depend on your type of business, so we need to plan what makes the most sense for your situation.

Who are we and what do we do?

We are Offshore Citizen team. We help people become global: get a second passport, set up a second residency, pay less taxes, do banking abroad, etc.

We have lots of interesting articles on different topics, we have relevant information up to date.

Author: Michael Rosmer

Feel free to join our community!

Don’t forget to subscribe to our channel
https://www.youtube.com/channel/UCZDToCpuHc4kEHDurkQpVPg?sub_confirmation=1

Видео How to Legally Pay Less Taxes as a Canadian? 🇨🇦🇨🇦🇨🇦 канала Offshore Citizen