US CANADA Questions & Advice/councelling

I have read and listened to David Ingram on the radio and internet. So now I am writing with a few questions, as I am confident that you are the expert in this field. I have been very impressed by your skills and professinalism as well as attitude.

I am a xxxxxxxxx citizen, temporary resident in Canada. I work in xxxxxxxxxxxxx for the xxxxxxxx Ministry of Defence. I work in an international setup with DND Canada, training a mix of international student military pilots at xxxxxxxxxxxxx. I have been here on a ’Visiting Forces Act’ Visa for 3 years. I have just been extended in my job for at least another 3 years. I have a xxxxxxxx wife and 1 xxxxxxxxxxxxxxxxx child  and 2 canadian kids (1 and 2½ years).

I have just aquired a temporary SIN number.

My considerations are that we might decide to stay in Canada to raise our kids, after my contract ends, if we can.

I pay tax from my pay check to the xxxxxxxxxxxx government. I have extensive experience with investing in equity and bonds from xxxxxxxxxxxx.

Now, I have come to a point (after many years of thoughts and talk) where I want to invest for the future on a more professional level, for the benefit of my family.

My first question to you is:

How do I make investing the most profitable in relation to tax ? I assume that I will pay canadian tax of the money I invest here in Canada. At least I think that would be more desireable for me J .
  • I have a friend (another xxxxxxxxxxxxdane working in xxxxxxxxxxxx in a similar situation) who I talked about making the investment company together. The advantages would be that you have something together and can encourage each other vice doing everything yourself. Some advice would be appreciated.

In xxxxxxxxxxxxxxxxx I know how to setup an investment company for my self, enabling to limit risks and to be compensated for office supplies and other expenses. I don’t know how that works in Canada. Therefore I also don’t know if it is an advantage to invest as a ’private person’ or as a ’company’ in some form. It is gonna be a part time ’job’ for me as I will still keep my job as a flight instructor with the military. I have previously attempted to make a xxxxxxxxxx company, but due to me livng in Canada they wouldn’t allow me to do that. Generally in xxxxxxxxxxxx you pay 40 % in tax on the profit you make on capital (stocks) gain, while a company pays up to 30 %.

If I succeed in setting up an investment company or arrive with a good plan for making investments on my own after your advice I anticipate an ongoing business relationship.

My pay check from the xxxxxxxxxxx government is app 220.000 can$/year. I pay tax on most of it, up to 60 %. I have some funds (cash) available for investments and my long term goal is to be able to live of off those investments in hopefully 5-8 years.  I am 48 years old.

I hope I have provided enough information to get us started and I hope that you would ask for more information to be able to give the best advice and information back to me.

In much anticipation,

All the best and thanks for your nice program on the radio.


david ingram replies:

As an employee of a foreign govermnment, you are exempt fropm tax under Article XIX of the Canada Denmark Income Tax Treaty.

There is an exception which would have you taxable in Canada if it was determined that you were working for a 'business' set up by the danish government.

If you and your friend were to set up a Canadian company to make investments, the tax on a non-resident foreign owned holding company is about the highest you can pay in Canada.

In general, I would not recommend that you have a holding comapny

If you own shares or investments in your own name, any profits would be taxable in Denmark which would give you a foreign tax credit for the taxes you woul dhave to pay first to Canada.

Interest would be taxable first in Canad at 10% under artuicle XI of the Treaty

Dividends would be taxable at 15% under article X of the Treaty unless you own more than 25% of the shares in which case Canada would tax 50% of the profit (see Article XIII.)

You should have received a 'too many to answer reply before'

In reality, your question is too specific to apply to many people and I would usually only deal with it on a paid consultation basis. �