Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I am going through this also, and from what I have learned having an LLC in the states is not a good option. For example, it would be subject to an estate tax in the event of death, etc. I currently have a Delaware LLC and am dissolving it. I am starting a Canadian Corp (in BC) and will invest through that for tax purposes. I am anticipating difficulties opening futures accounts, but I have a lot of history and do a lot of volume. We'll see
If you are at the highest personal rate in Canada (combined provincial and federal of 52%) then if you make
$10,000 capital gains profit, 50% is Taxable Capital Gains (or $5,000) and tax payable on that is ($5,000*.52=) $2,600. (see Schedule 3).
The corporation will pay the corp rate (~40% depending on the province if provincially incorporated) on profits (*) and losses are contained within the corp. If your corporation pays 40% and that is (10,000*.40=) $4,000. Then should you withdraw dividends from the corporations - ie pay yourself) you will pay tax on this at a personal level. Taxes are paid twice.
Also to note CRA has a general anti-avoidance look-through for personal corporations such that if the purpose of the corporation was to reduce taxes it will "see through" the corporation and tax you as if the corp didn't exist.
You can telephone the CRA and ask questions anonymously.
e.g. If a personal corp is set-up for investing .... etc
(And no they do not give you an advance tax ruling but yes they are required to explain how the tax act would apply to a situation you describe. And you can ask for the sections they are referring to and then read about it in the CCH handbook on the tax act at your local library - which is what they use. However, what you propose is quite simple).
----------
(*) I am assuming the profits are income for the corporation. If you have another main source of income for the corporation and these are capital gains for the corporation then 50% of the above (I believe) I have not read up on corp taxation. BTW non of the above is "expert" opinion - just a heads up based on my understanding of the tax regs.
One of the few ways to defer taxes (for Cdns) is with an RSP (Cdn version of IRA).
Contributions are tax deductible in the year of contribution (+60 days meaning end of Feb). You pay taxes when you withdraw money in later years on what is withdrawn. A wide range of instruments are permissible but I believe futures and put options are excluded.