small business in Vancouver BC Canada and living in

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Sent: Tuesday, March 09, 2004 12:30 AM
Subject: small business in Vancouver BC Canada and living in Point Roberts or Blaine Washington WA USA - from ask an international income tax and immigration expert and 
QUESTION:
One Canadian Cit. w/US Green Card
One US Cit & US Resident.
We are think of opening a business in BC and living in the US.  We are
concerned about the heavy tax problem, not to mention the exchange rates.
Based on a $100,000CAN. income for one, would we get taxed both in Can & US
and how much roughly? 60%?
Thanks for your help.
==================================
david ingram replies:
Because this goes out across the country, I am not bothering with the BC rate alone.
Roughly speaking, at $100,000 Canadian of net profit after all expenses and depreciation (CCA) had been claimed, your tax would be $29,000 or so to Canada.  In addition, there would be another $4,000 or so to be paid to the Canada Pension plan.  
You would then report the same income on your US return and claim a foreign tax credit on your US return.  
Of course, if you are living in the US and self-employed in Canada (proprietorship - not a corporation), then you are not supposed to be paying CPP in Canada under the terms of the US / Canada Totalization Agreement for Social Security.  In that case, you would pay the $29,000 to Canada for tax but owe the US some $11,000 to the US for Social Security.
Of course, you could likely set it up as a partnership (even with your partner in the USA) and that would reduce the Canadian Tax bill by some $6,000 and spread the pension qualifications between the two of you and would be the preferred method.  This assumes that your spouse has no other income.
You need to have us (or someone like us) do some pro-forma returns for you so that you understand it exactly.
Hope this helps
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