I think we have answered this question before, since it is not eligible for small bus tax rate investment income is taxed at the hi rate of say 46.5% which includes a refundable dividend tax of approx 28% that will be refunded at the rate of $ 1 for every $3 of taxable dividends paid out to shareholders so in effect if you dividfend out enough you get the tax rate down to about 20% same as the small bus tax rate, but the shareholder ends up with taxable dividends.
Another important note if you are not a ccpc you can not get this refund.
Its complex, you need prof help do not navigate alone in these type of scenarios pay your accountant who should be qualified to explain this to you before you do anything else.
Need Advice
Moderator: Mark T Serbinski CA CPA
Yes, as a layperson you are correct it is difficult to decipher the tax rules on both sides of the border that will apply to my situation. The withholding regime is not terrible, because it is only 25% of net. the consequences on a sale of the properties while Im a non-resident are punitive, however.
I am going to an accountant for help preparing my US tax returns and I appreciate your assistance very much so far.
I am going to an accountant for help preparing my US tax returns and I appreciate your assistance very much so far.
Make sure the US accountant and the CND accountant communicate because what you do on one side could seriosly effect you on the other, for example you say that 25% wt is taken on the rental income that means that its a non resident corp that is not a ccpc so you also have the corp now non resident controlled since it owns the property. A regular US cpa can not help you out here you need competent cross border or at least pay for advise that your accts can tehn implement.
A one hr consulting fee for $250 may say you thousands.
A one hr consulting fee for $250 may say you thousands.
JG
One final thing, if i did incorporate, it would be as a can res, but non-CCPC corporation (because corp would retain residency in Cda, de facto and de jury control 50-50 NR-R) allowing that the tax rate would be around 46% for investment income and ineligible for credit for $$ dividended out to the resident 50% shareholder, what about on disposition? Would the corp be entitled to the $750,000 cap gains exemption?
The attraction of the corp structure is that I am personally a US citizen, so if I am only a s/h in a Cdn resident corp, the US tax laws only become relevant if I have income (from dividends or a disposition of my shares - which I can control the price of, presumably) hence the PFIC regime won't apply.
At 46% tax on income without a credit for dividends paid (even those paid to a resident???) this could be worth it IF it was accompanied by a CG exemption, because I am losing my PR exemption on one of the properties by moving to the US. The alternative is what I have been planning and doing so far, i.e., filing an NR6 and making an election under s 216 for the net 25% withholding. But this will kill me if I have to sell when I'm an NR - not only do I forfeit the PR exemption, but will have to pay flat 25% on any CG.
Thoughts?
Am I understanding the tax consequences correctly?
The attraction of the corp structure is that I am personally a US citizen, so if I am only a s/h in a Cdn resident corp, the US tax laws only become relevant if I have income (from dividends or a disposition of my shares - which I can control the price of, presumably) hence the PFIC regime won't apply.
At 46% tax on income without a credit for dividends paid (even those paid to a resident???) this could be worth it IF it was accompanied by a CG exemption, because I am losing my PR exemption on one of the properties by moving to the US. The alternative is what I have been planning and doing so far, i.e., filing an NR6 and making an election under s 216 for the net 25% withholding. But this will kill me if I have to sell when I'm an NR - not only do I forfeit the PR exemption, but will have to pay flat 25% on any CG.
Thoughts?
Am I understanding the tax consequences correctly?
JG, I would be careful about drumming up business for yourself on another accountant's website.
Not very courteous and professional.
Not very courteous and professional.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
The post below is not quite weeding out unrelated posts.
http://forums.serbinski.com/viewtopic.p ... ght=#24641
It's pure solicitation of business.
http://forums.serbinski.com/viewtopic.p ... ght=#24641
It's pure solicitation of business.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Read the entire history of this poster, first he is a down and out student, then he has no money for an accountant, then he's incorporated, then he is not, then he has a meeting with a US accountant that knows Canadian tax, then he asks for info on how to manouvere with the $ 750K super capital gains exemption , to me its weeding out, call it as you may .
Anyone I do not care who they are who wants this type of free info is asking too much.
You have no problem in entertaining this type of poster go right ahead my pleasure as you have done so already. Someone calls me a jerk I do not forget I weed them out for good for what they are let the entire post speak for itself. If the guy ever wanted me to do any work he would have been quoted a fee that he would have run for the hills, I never expected to get any work from him.
Anyone I do not care who they are who wants this type of free info is asking too much.
You have no problem in entertaining this type of poster go right ahead my pleasure as you have done so already. Someone calls me a jerk I do not forget I weed them out for good for what they are let the entire post speak for itself. If the guy ever wanted me to do any work he would have been quoted a fee that he would have run for the hills, I never expected to get any work from him.
JG
Since when did this turn into an attack on me? I AM a student. A law student, actually. I thought this forum was for advice - which is what it is held out to be. I am going to see an accountant to file my US tax returns - that's not a "story". I DO have a tax issue that I am trying to resolve. What is wrong with that? This forum purports to be a discussion forum for people - anyone, professional or not, to post and discuss cross-border issues. In no way shape or form does it say that I have to be pay for the advice I receive. If you offer advice, I appreciate it. I am not a freeloader or a "weed" as you have put it simply for posting on this board and asking for advice. You need not respond. And frankly, attacking me for doing so, i.e., not paying you for advice that you offer free on this board, is unprofessional. Yes, you are a jerk. An enormous jerk.
And how in letting the "entire post speak for itself" are you exposing me as someone who is a nuisance/fraud?
I am asking questions, to anyone on the forum. If you feel taken advantage of, don't respond. And you're right, I would never pay you to help me with my taxes. Because you are a scumbag #######. Now let the thread speak for itself. You jackass.
I am asking questions, to anyone on the forum. If you feel taken advantage of, don't respond. And you're right, I would never pay you to help me with my taxes. Because you are a scumbag #######. Now let the thread speak for itself. You jackass.