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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience:  15years with H & R Block. Divisional leader, Instructor
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I will be performing some consulting work for foreign customers

Resolved Question:

I will be performing some consulting work for foreign customers (outside of Canada).
Is it legal to set up an offshore company to perform these services, and not being liable for Canadian taxes until after I pay myself (e.g., by dividends)?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.
Hello and thank you for using Just Answer,
Residents of Canada, including individuals, businesses, corporations, trusts,and members of partnerships must report their worldwide income on their income tax and benefit returns, and pay the appropriate taxes on this income.
Tax havens can be used in very straightforward ways such as setting up an offshore bank account to hide assets and income with the intention of not reporting the income. The CRA sees this as tax evasion.
If you are resident in Canada and performing the services the company could be deemed a Canadian company under the common-law principles.
I would be very cautious about this.
Customer: replied 1 year ago.
Relist: Answer quality.
Expert:  kcox79 replied 1 year ago.
I agree with Robin D. She gave an excellent response. Do you have any further questions?
Customer: replied 1 year ago.

Robin's response imply that an offshore corporation performing active business outside of Canada may be deemed Canadian by CRA.

So will the corporation be subject to tax in Canada? Just federal tax or provincial tax as well? Then in what province?

 

I could imagine that I (a person) could be subject to tax in Canada on corporate income (as a beneficial owner of the corporation), but could you pleease confirm that a corporation itself will be subject to tax in Canada?

Customer: replied 1 year ago.

My follow up question was not answered.

Expert:  Robin D. replied 1 year ago.
Sorry, I have been away but to answer your follow up, the corporation would be subject to federal and provincial. The province where the owner resides and does the work would be the deciding factor. The fact that the corporation would really be based in Canada and not outside of Canada (except on paper) could make it deemed in Canada.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7363
Experience: 15years with H & R Block. Divisional leader, Instructor
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