Part II Canadian in Japan buying property in Manitoba

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    Hello Mr Ingram,
Thanks for your reply. 
I'm also planning to start another business in about 4 years time. 
It isn't exactly to do with RE, but I hope to use my RE to help with the start up costs/collateral needed. 
Can you see any use in keeping the corporation? I will also be doing a JV deal for RE in the future.If you still suggest that I don't need my company, what would be the next step? Can you or your company help me with my tax issues and the (possible) closing of my company and switch over to an alternate plan? What would the costs be in doing a switch and it's possible for me to do everything while being a non-resident and living in Japan? Thanks for your help! ===================================================================
david ingram replies:
Removing the properties from the corporations is relatively simple.  The same lawyer who put them in can take them out or we could give you someone else.
If you just put them in, the take out should be close to the same values.  If you put them in the corporation in 2002, there may be some capital gains issues to deal with.
Have you filed a Corporate return yet?
Did you actually roll the property into the corporation already.
You do not necessarily need to Kill the corporation - it may be that you should keep it for the next business venture (depending upon whether or if it has serious liability issues)
Not enough information.
I have no idea of the cost. I charge $350 Cdn per hour for international cross-border situations.  Others in the office who do the support work are billed out from $100 to $150 per hour.
I doubt if it would cost less than it cost to set it all up.
Remember, that you have a Japanese tax problem here as well.
These rental properties and the corporation are taxable in Japan as well with foreign tax credits being credited back to you on your Japanese return.
   
Following is the original question
      Mr Ingram's tax questions; 
      1) As a nonresident Canadian who is building an investment property portfolio (I own 2 positive CF'ing Duplexes in MB, mortgage note in AB, land in AB) what is the best structure to set up to minimize taxes? 
      2) I formed an LLC in '02. I haven't filed taxes yet. My accountant has been preparing them for Sept.30th. Do you suggest a Dec.31st year end? And if so, can I change my year end next year? 
      3) During the Dec. REAG seminar you suggested to 'kill your corporation'. I understand that my corporation doesn't offer me much legal protection, from liability. But as a nonresident, do you still recommend killing it? If so, what is a better way to protect me (or reduce taxes) from taxes as a nonresident and aid me in building my investment properties? My goal is monthly passive income. I don't plan on returning to Canada for another three years. 
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      david ingram replies:
      1.   Minimizing taxes is only one part. Ease of holding, ease of sale and non-resident matters make the ownership of a Canadian LLC, particularly a new one more likely to trigger interest from the CRA (new name for CCRA which used to be Revenue Canada Taxation)
      I would never recommend that you put your properties into a Corporation.  A Non-resident corporation will pay a higher tax rate on the first $30,000 of profit than an individual does in Manitoba, Saskatchewan Alberta or British Columbia.
      2.    Anything but a Dec 31st year end only makes money for accountants.  The tax year is Dec 31st.  Banks and all financial institutions report the figures on Dec 31st.  Even if you can justify a small savings in tax the first year, you will pay it back in accounting fees. 
      3.    The method is not as important as the "doing".  The corporation will be in your way for ever, requiring accountants and lawyers advice and services that are just not necessary if you have good PL (public liability) and PD (property damage) insurance policies.
      This is really basic.  I thought  I had answered your original Oct 31st question.  However, I cannot find it so it must have ended up in a draft that got killed and never sent.  I remember that I needed your address,
      David Ingram's US/Canada Services
      US/Canada/Mexico Tax Immigration & working Visa Specialists
      US / Canada Real Estate Specialists
      4466 Prospect Road
      North Vancouver,  BC, CANADA, V7N 3L7
      Calls accepted from 10 AM to 10 PM 7 days a week
      Res (604) 980-3578 Cell (604) 657-8451
      Bus (604) 980-0321 
      [email protected]
      www.centa.com www.david-ingram.com
      Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
      This from ask an income tax immigration planning and bankruptcy expert consultant guru or preparer  from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate:
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