Offshore Corp - Canada 0% tax strategy

[incognitoct]

Hello offshoretalk,

I'm currently evaluating this strategy with respect to legality and legitimacy, its a little grey zone. I've been advised by an accountant that its definitely doable and now I'm curious to see what the offshore community thinks. For context, I'm a crypto trader with a trading corp and a holding co in Canada, I am also born/raised here. In the last 2 years I've managed to make a good deal of money from the markets from futures, spot, memes etc. Lets say for hypotheticals I've made over 3m cad this year. Last year my company declared 400k cad (whatever the value declared from last year is fully accurate). Here's the interesting part.

This year I would declare something like 600k. Now let's say I were to move my company to Dubai from a CCPC to now a Dubai Corp, register there, open bank account, get law + accounting firm. Prior to moving, for my final year of my Canadian corp I'd pay income tax for the year lets say again at 600k. I would also pay a departure tax from the value of my company at 600k.

Now next year I could create a new wallet and transfer funds/continue trading and when its tax time I'd do another portion of the 3m so 800k now and file tax etc at 0% rate in Dubai. My holding co in Canada would fully own the foreign entity and file a t-1134 indicating foreign entity is owned. CRA verifies for up to 3 years (statute) and comes back to ask about my holding co filings, inquires about foreign co, and I give them the tax paperwork and filings related to my Dubai corp. I can now pull the money from Dubai corp to my holding co in Canada tax free at 0%. Continue process until all the money is back in Canada. FYI I open a trading desk in Dubai with an employee or contact work (Prove not FAPI).

What do you guys think? How much of a grey zone is this? How much risk do you guys believe this is taking?

 

[daniels27]

You have gains of 3M CAD now, that you want to pay taxes on in the future in a Dubai company that does not even exist yet? Why would this be grey?

Have you noted that Dubai does have 9% tax, not 0%?

Also, are you sure that dividends the Canadian holding recieves from Dubai would be tax-free in Canada?

 

[forward]

Hello offshoretalk,

I'm currently evaluating this strategy with respect to legality and legitimacy, its a little grey zone. I've been advised by an accountant that its definitely doable and now I'm curious to see what the offshore community thinks. For context, I'm a crypto trader with a trading corp and a holding co in Canada, I am also born/raised here. In the last 2 years I've managed to make a good deal of money from the markets from futures, spot, memes etc. Lets say for hypotheticals I've made over 3m cad this year. Last year my company declared 400k cad (whatever the value declared from last year is fully accurate). Here's the interesting part.

This year I would declare something like 600k. Now let's say I were to move my company to Dubai from a CCPC to now a Dubai Corp, register there, open bank account, get law + accounting firm. Prior to moving, for my final year of my Canadian corp I'd pay income tax for the year lets say again at 600k. I would also pay a departure tax from the value of my company at 600k.

Now next year I could create a new wallet and transfer funds/continue trading and when its tax time I'd do another portion of the 3m so 800k now and file tax etc at 0% rate in Dubai. My holding co in Canada would fully own the foreign entity and file a t-1134 indicating foreign entity is owned. CRA verifies for up to 3 years (statute) and comes back to ask about my holding co filings, inquires about foreign co, and I give them the tax paperwork and filings related to my Dubai corp. I can now pull the money from Dubai corp to my holding co in Canada tax free at 0%. Continue process until all the money is back in Canada. FYI I open a trading desk in Dubai with an employee or contact work (Prove not FAPI).

What do you guys think? How much of a grey zone is this? How much risk do you guys believe this is taking?

to clarify, you had the account on the trading desk (like Ndax) under your corporate name - that's why you're mentioning the trading \ holding co in Canada ? otherwise, how is the company related to your trading activities ( unless it's your Canadian Family fund/ corp that holds those assets?)

 

[incognitoct]

You have gains of 3M CAD now, that you want to pay taxes on in the future in a Dubai company that does not even exist yet? Why would this be grey?

Have you noted that Dubai does have 9% tax, not 0%?

Also, are you sure that dividends the Canadian holding recieves from Dubai would be tax-free in Canada?

Thanks for the reply, locations are still being evaluated for specific rates my apologies - bahamas 0%, dubai maybe. But yes, I'd be paying taxes on income 'earned' in the future.

Yes dividents coming back would be 100% tax free

 

[incognitoct]

to clarify, you had the account on the trading desk (like Ndax) under your corporate name - that's why you're mentioning the trading \ holding co in Canada ? otherwise, how is the company related to your trading activities ( unless it's your Canadian Family fund/ corp that holds those assets?)

There is no trading desk involved, given its crypto its mostly on dex and ledger wallets in very secure and remote locations. There is no direct relation other than when offboarding from crypto accures (hits the bank). My wallet address/es are not given to the CRA, I only file PnL statements at year end

 

[daniels27]

There is no trading desk involved, given its crypto its mostly on dex and ledger wallets in very secure and remote locations. There is no direct relation other than when offboarding from crypto accures (hits the bank). My wallet address/es are not given to the CRA, I only file PnL statements at year end

But you realised gains that you don't want to pay tax on.

I don't know why you tell us it is grey. If you ask me, is it outright tax evasion and illegal. Nothing else.

If you come here and ask me whether and how they can catch you, well this is another story. But hard to prove / catch does by no means make it legal.

 

[daniels27]

Thanks for the reply, locations are still being evaluated for specific rates my apologies - bahamas 0%, dubai maybe. But yes, I'd be paying taxes on income 'earned' in the future.

Yes dividents coming back would be 100% tax free

Yes, you could add enough substance and ensure you are not part of the company and it could work. I am not sure about the laws in Canada in regards to dividend taxation and FAPI rules. But if you are sure that they cannot claim any is those profits are taxable in Canada, it probably should work.

 

[forward]

There is no trading desk involved, given its crypto its mostly on dex and ledger wallets in very secure and remote locations. There is no direct relation other than when offboarding from crypto accures (hits the bank). My wallet address/es are not given to the CRA, I only file PnL statements at year end

from my perspective, if it's not linked in the first place thru Cex's corp accounts - then you need to treat it only as your personal trading income. finalize the gains reported with the CRS and move on into the low-rate jurisdiction for physical trading income gains = that way you can cover your taxes for 2024 in Canada and treat yourself freely when you become a resident of Dubai on your personal gains.

Plus, why you wanna move all your fiat proceeds BACK to Canada ??

 

[JimBeam]

Well, I could "hack" your account and steal all your money and then you have nothing to worry about in Canada.
You lost all your funds and access to the account (can't provide the statements).

Your money awaits you once you move to UAE.

/jk

 

[forward]

Well, I could "hack" your account and steal all your money and then you have nothing to worry about in Canada.
You lost all your funds and access to the account (can't provide the statements).

Your money awaits you once you move to UAE.

/jk

lost funds is a separate criminal case \ negligence
have nothing to do with the DUE taxes from 2024...