Partnership Incorporation in US with US and Canadian Partner

Question

2630 viewsApril 1, 2019Cross Border Tax

0

Abishek (anonymous) Posted March 29, 2019

I found your video https://www.youtube.com/watch?time_continue=184&v=kAFt6DCFX3k quite helpful and thought I check with you on additional clarifications. I currently reside in India and am working on the PR process for Canada. A US resident and myself are trying to figure out what the correct entity type would be for incorporation so when I move to Canada I am not double taxed. How does an LP compared to an LLC help in this scenario if I happen to move to Canada in the near future. Is LP the best choice or are there any alternatives?

1 Answer

score 0 · Answer 1 · 2019-04-01T15:33:37+00:00

Thank you for your question. I am assuming that you are carrying on an active business in Canada with your American partner. If this is the case, then you and your American partner should form a Canadian Corporation to do business in Canada. I further suggest that you own a majority of the voting shares (i.e. 50% + 1) so that the Canadian corporation is a “Canadian Controlled Private Corporation” (CCPC). CCPCs are taxed at a low rate of only 12.5% up to $500,000 of taxable profits.

Furthermore, dividends can be paid by the corporation to you and your American partner. However, a 15% dividend withholding tax will be deducted from dividend payments made to your American partner. To avoid double taxation, your American partner can claim a foreign tax credit on his US 1040 personal tax return for the dividend withholding tax.

Partnership Incorporation in US with US and Canadian Partner

1 Answer

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