saria1 said:
I hope you don't mind me jumping in on this conversation.
Since we're both Americans, I wonder if we were to keep our American TD account open and opened a cross border account where we can wire transfer into the Canadian TD account as needed. We were thinking of having the American company direct deposit into our American account and wire transfer the money as we need into the Canadian TD account. Would this be the best option for an American living in Canada while working for an American company? Transfer what we need, but always keep it less than 10k in our Canadian checking account? All the meanwhile keep all our American accounts and savings etc here in a America? We have no intentions of giving up all our accounts in this country and continuing to use American Credit cards, since a good Canadian card is 19.99%. We'll be transferring our TD and American express cards into Canadian accounts, but those are cards we don't use much, it's only for credit building purposes. I'd prefer to keep American credits cards with 7-9% interest rates and pay the 3% fee. I read the worst thing an expat could do is to shut all their American accounts down and let their American credit lie stagnant. It's pretty much like coming back to no credit history.
Also how will that work for income taxes? If we only transfer up 75% of what is earned into Canada, do you still claim 100% on the Canadian and American income taxes? And what about the province you live in, I assume it works the same way as federal?
Then here's another tricky one for you Ivan. What about if the PR is a 50% founder in an American company, the other 50% is living in America and dealing with all the finances etc of the company. I'm assuming since it's an American company not earning any Canadian money, because all the clients are American, then there is no concern for filing Canadian taxes on an American business. Oh jeez, something tells me I'm going to need a serious accountant :-\
One last thing, Nova Scotia is being tossed around as a secondary option to stay close to family, if my hubby gets cold feet. They offer something that the distant burbs of Vancouver doesn't offer, they are wired with fiber optic internet. So it might be a good fit as a 2nd option, but I'm a little freaked out by the 15% HST and I can only find info on sales tax breaks on children clothes, children shoes and diapers. Is food taxed in Nova Scotia?
Who knew there'd be such fun questions here!
Keeping your funds in the US in the way you describe would help you avoid FBAR, but you'll need to look into retirement accounts and whether you can contribute in the US while you are a resident here. The tax advantages of deferred income in retirement accounts will outweight the PITA that FBAR is.
At first glance, without doing any digging (you definitely have questions that will need professional guidance on):
Both the US and Canada tax you on your worldwide income.
The difference is that Canada will tax you on your worldwide income only when you are a resident (for tax purposes - not the same as a PR) of Canada. So when you are a resident of Canada, you declare 100% in both places. Tax credits under the US-Canada tax treaty should ensure you'll avoid double-taxation.
Depending on how the US business is set up, it will be treated in the US as either a partnership (including a pass-through entity such as an LLC) or a corporation. If it's a partnership, there's no entity level tax. If it's a corporation, then there's tax at the entity level and then tax on dividends. Canada wouldn't tax a US corporation operating in the US, but as a resident in Canada you'd pay Canadian taxes on his salary, any dividends, and capital gains if you sold part or all of the company. With a pass-through entity 50% owned, the net income is shared between the two partners and that income (the 'draw') would be taxable in Canada (I'm not 100% clear on how taxation of US LLC/partnership income works in Canada, but it should be similar (not identical) in outcome but calculated - of course - in a completely different way). LLCs are hybrid entities because they are pass-through for tax purposes while providing limited liability as separate corporate entities with a corporate veil to shield the owners.
And yes, you'll need a good accountant/US tax advisor for all of this - find someone local so they get your provincial issues right, too. There are lots more US tax experts in Canada than there are Canada experts in the US, so it shouldn't be that hard.
I've got no idea about the sales tax exemptions... that was the easy question you asked, right?
