what other other canadians doing to save on taxes with their online earnings? is it possible to set up a corporation in a low tax country and deposit money there only paying yourself dividends each year?
saving on taxes for canadians?
- Thread starter wickedDUDE
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Here's a thread I made not too long ago: http://www.wickedfire.com/shooting-shit/41334-canadian-corporation-tips-thread.html
As for an offshore corp, I've looked into it a bit and it's not really a legal way to do it. Yes, there are ways to do this without the government knowing but if they ever find out you are fucked.
Remember, CRA asks you for your "worldwide income".
If you have your corporation in a low tax country, you still have to report income when you bring the money in.
Again, the little research I did on this basically says yeah you can do it but you are basically hiding your money from the government.
As for an offshore corp, I've looked into it a bit and it's not really a legal way to do it. Yes, there are ways to do this without the government knowing but if they ever find out you are fucked.
Remember, CRA asks you for your "worldwide income".
If you have your corporation in a low tax country, you still have to report income when you bring the money in.
Again, the little research I did on this basically says yeah you can do it but you are basically hiding your money from the government.
you need a lawyer for this kind of stuff. we have a law, i can't remember what it's called, but basically they can come after you for tax evasion even if you didn't break any laws. you need to show you are operating in said country for reasons other than avoiding taxes. plus you still need to pay income tax on whatever you bring into the country whether it's dividends or salary. apparently it's not as easy as it used to be.
I'm in Ontario, have a sole P, and been through two INC's.
Setting up offshore is something I've looked into as well, and is quite complex and risky, I've dropped the idea until (if) I reach a few more zeros on my earnings. From my research, let's say you picked sweden:
* Open a business in Sweden, with a physical address
* Open a biz bank account in Sweden.
* Have a personal beneficiary name/address listed there
* Be prepared to spend your money in Sweden, taxed or not - you can't bring it home without it getting taxed again or trying to wash it.
* Invoice and literally run your business from Sweden.
I'm sure you can get creative with purchasing things there, then having your company here purchase them as expense etc. and run loops that way but this is all asking for trouble, and may not save you all that much.
When you incorporate, there are legal tax shelters/breaks you can seek, and if you have a good accountant you should be able to stay around 23% for taxes regardless of earnings (over 130K). Also as stated above, simply put people on payroll that you can prove did work for you and take on as expense.
Other Tips:
* Save all receipts obviously
* DO NOT do your own taxes no matter how creative you are
* Seek a few accountants, find one that is knowledgeable with creative accounting and understands the laws well, don't go with your first one you research.
* Always create expenses for your business in a manner that crosses work/play, company cars, other companies, expensive business meetings in paris
* Setup an INC and a seperate Sole P., split the income (or many INC's...).
The 40% is horrible here, and I do most of my biz through a Sole P. and don't get too creative with my accountant just to stay safe, however I do make sure that as my fiscal year goes, I do enough things/moves that help keep me in a reasonable % for both INC's and the Sole P. You'll only pay the 40% if you really have no clue what you're doing, and chances are if you are making 100K+/anim you know what you're doing and or will research quickly.
Setting up offshore is something I've looked into as well, and is quite complex and risky, I've dropped the idea until (if) I reach a few more zeros on my earnings. From my research, let's say you picked sweden:
* Open a business in Sweden, with a physical address
* Open a biz bank account in Sweden.
* Have a personal beneficiary name/address listed there
* Be prepared to spend your money in Sweden, taxed or not - you can't bring it home without it getting taxed again or trying to wash it.
* Invoice and literally run your business from Sweden.
I'm sure you can get creative with purchasing things there, then having your company here purchase them as expense etc. and run loops that way but this is all asking for trouble, and may not save you all that much.
When you incorporate, there are legal tax shelters/breaks you can seek, and if you have a good accountant you should be able to stay around 23% for taxes regardless of earnings (over 130K). Also as stated above, simply put people on payroll that you can prove did work for you and take on as expense.
Other Tips:
* Save all receipts obviously
* DO NOT do your own taxes no matter how creative you are
* Seek a few accountants, find one that is knowledgeable with creative accounting and understands the laws well, don't go with your first one you research.
* Always create expenses for your business in a manner that crosses work/play, company cars, other companies, expensive business meetings in paris
* Setup an INC and a seperate Sole P., split the income (or many INC's...).
The 40% is horrible here, and I do most of my biz through a Sole P. and don't get too creative with my accountant just to stay safe, however I do make sure that as my fiscal year goes, I do enough things/moves that help keep me in a reasonable % for both INC's and the Sole P. You'll only pay the 40% if you really have no clue what you're doing, and chances are if you are making 100K+/anim you know what you're doing and or will research quickly.
EDIT: (the forum ((or my connection)) is acting up, couldn't edit in time sorry for two posts).
Will also add that as your money sits in your bank all year, don't just let it sit there. Even an account with ING gives you like 4%, if you're green to investing this is the easiest way to get a little perk on your earnings without tying your money for any amount of time. Or get into RRSP/BONDS/GIC's (I hate them all and would rather flip/grow my money in other ways but they are good options for those scared to risk or invest in unproven portfolios)...
I keep giving my bank heat because they don't want me to move too much money from them into my other stuff and I'm like "give me options, at least do better than ING without a hold on the money" - and they can't Take advantage of the small things you can do throughout the fiscal year and look into low/no risk growth on you moniez.
Also note that your ON bank accounts are only legally insured up to 100K if they should ever fold/get robbed/whateva, so open more accounts, get other banks, move money to ING etc. just to be safe and covered.
NC.
Will also add that as your money sits in your bank all year, don't just let it sit there. Even an account with ING gives you like 4%, if you're green to investing this is the easiest way to get a little perk on your earnings without tying your money for any amount of time. Or get into RRSP/BONDS/GIC's (I hate them all and would rather flip/grow my money in other ways but they are good options for those scared to risk or invest in unproven portfolios)...
I keep giving my bank heat because they don't want me to move too much money from them into my other stuff and I'm like "give me options, at least do better than ING without a hold on the money" - and they can't
Take advantage of the small things you can do throughout the fiscal year and look into low/no risk growth on you moniez.Also note that your ON bank accounts are only legally insured up to 100K if they should ever fold/get robbed/whateva, so open more accounts, get other banks, move money to ING etc. just to be safe and covered.
NC.
Some good tips...btw the offshore thing just to add to it, there is a slightly better way to do it (not that I would or would condone it). There is some risk involved since you have to put trust into someone else/company that set this stuff up.
But basically the way it works is you have an account overseas setup under someone elses personal name. They ship you a debit card that you can then use to make purchases here or take money out of the ATM. That is the absolute safest way I came across during my research but again I would personally not do this. I imagine the one thing I'd hate even more than taxes is the CRA if they ever got on my ass.
Btw, in regards to:
"you should be able to stay around 23% for taxes regardless of earnings (over 130K)"
For the corp ya, but I don't see how that's really legally possible if you want to pull that kind of money out to yourself as personal income. Unless you are referring to the work/play scenario that will total that amount over let's say the corp and yourself.
If you've got a solution to do that legally I'm willing to pay
But basically the way it works is you have an account overseas setup under someone elses personal name. They ship you a debit card that you can then use to make purchases here or take money out of the ATM. That is the absolute safest way I came across during my research but again I would personally not do this. I imagine the one thing I'd hate even more than taxes is the CRA if they ever got on my ass.
Btw, in regards to:
"you should be able to stay around 23% for taxes regardless of earnings (over 130K)"
For the corp ya, but I don't see how that's really legally possible if you want to pull that kind of money out to yourself as personal income. Unless you are referring to the work/play scenario that will total that amount over let's say the corp and yourself.
If you've got a solution to do that legally I'm willing to pay
Leave the country, claim non resident, open up a BVI company, keep your money in offshore banks and live a nomadic lifestyle.
I'm not 100% on this but I don't think you need to "claim non resident", it just happens after a certain period of time out of the country (6 months I think?). And in that case you don't need to hide your money in offshore accounts because they won't tax you anyway.
There is obviously a huge downside to this unless you're already in retirement.
There is obviously a huge downside to this unless you're already in retirement.
I think we wrote a letter to CRA with a final tax return, just to put the date we left in writing with them. They were sending tax forms so we wanted to be clear that we weren't around to be filing them. Haven't been back for 4+ years now. Fact is that you never really claim "non resident" after any period of time, it's entirely up to them to determine your resident status. There is no time period threshold. If you maintain enough ties in Canada, like bank accounts, credit cards, property, a car, etc. it may be determined by CRA that you were never a non resident and you'll have to file.
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