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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 3833
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I have a US LLC company that has shareholder loans of 60K (to

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I have a US LLC company that has shareholder loans of 60K (to me). I was a US resident but this year (2013) I have moved back to BC. I will be earning 10K in the month of November (2013) and I am sending the invoice to be paid to my US LLC. Can I claim that 10K in Canada as a shareholder loan repayment and not as personal income?
Submitted: 8 months ago.
Category: Finance
Expert:  Rakhi Vasavada replied 8 months ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

If you are raising an invoice on your US LLC, then any payment received against that invoiced HAS to be treated as income and not as repayment of a loan. Let me explain more on this.

To begin with, you are doing a self contradictory thing. If a loan is to be repaid by your US LLC, you need not raise an Invoice. Secondly, if you are anyway raising an invoice, then the money received against that Invoice cannot be treated as repayment of a loan but HAS to be treated as income.

If you raise invoice and still treat it as loan repayment, it would be viewed as an attempt to camouflage income in eyes of CRA.

If you can do away with raising invoice, i.e. if you can avoid raising any invoice and simply get your US LLC to pay you, ONLY THEN, you would be able to treat it as repayment of your loan.

I am sure this would help. You may please leave a positive rating if this helps as this is the only way we get compensated for assisting you. Alternatively please feel free to reply back if you need further assistance.

Warm Regards,

Customer: replied 8 months ago.

Thank you for your response but I am not quite understanding your answer. I thought this was a two part process. First, I have to get money into my LLC. I do not need an invoice to have the company wire 10K into my LLC bank account. The second part is taking the money out as a loan. I personally won't be sending an invoice to my LLC to take out the 10K. If this is not the process - ie putting earned money in to take out - how am I ever going to get my loan out of the LLC?

Expert:  Rakhi Vasavada replied 8 months ago.
Dear Elaine,

Sorry if my answer sounded bit confusion to you.

Let me come straight to the portion applicable to you so as to avoid further confusion.

If you are not invoicing the US LLC, or not sending the invoice, if the US LLC wires you the money, you can certainly treat them as repayment of loan.

Feel free to continue conversation if I am missing any aspect of your question.

I am sure this would help. You may please leave a positive rating if this helps as this is the only way we get compensated for assisting you. Alternatively please feel free to reply back if you need further assistance.

Warm Regards,
Customer: replied 8 months ago.

You said, "If you are not invoicing the US LLC, or not sending the invoice,"


 


Just for clarification, this is dealing with the second issue - me, personally not invoicing the LLC, to get my money out as a loan. This I understand.


But initially, does it matter if I send an invoice to the contractor from the LLC to get the payment? I'm not sure I understand why this would be considered personal income if the payment is going into the company bank account. Don't most companies have to get money into the business via invoices before they can get money out?

Expert:  Rakhi Vasavada replied 8 months ago.
Dear Elaine,

You have understood it correct. Both of us. correctly understand that you are not invoicing your LLC in your personal capacity.

Further to this, it does not matter if you send the invoice to the contractor. Even in this case you would be able treat the receipt of $10,000 from the LLC as repayment of loan to you.

I how I am clear.

I hope this would help. You may please leave a positive rating if this helps as this is the only way we get compensated for assisting you. Alternatively please feel free to reply back if you need further assistance.

Warm Regards
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 3833
Experience: Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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