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The Great White Tax Haven: Canada, Eh?
Journalists in Canada, our good neighbor to the north, suddenly have discovered something about their country that I have been telling you for a long time.
Twice in the last ten days both the Montreal Gazette and Macleans magazine have published interesting articles confirming what we have been saying for some time now; that Canada is a safe, stable, lower tax country with well capitalized banks where, as I wrote last year, “…you can find an easy, affordable, manageable, accessible offshore bank account.”
Before I continue, let me make something clear – our neighbor to the north is not a tax haven in the no-taxes sense, nor is it ideal in every respect for asset protection.
But for general investment diversification or simply to make a prudent move of some of your cash and other assets outside the immediate jurisdiction of the U.S. government and the IRS, Canada might very well be the right place for you.
Even more importantly, Canada is the country where a beleaguered, over taxed U.S. citizen can acquire second citizenship and a passport that is respected worldwide – as the first step to never paying U.S. taxes again. (More about that in a moment).
High Tax Reputation
Canada in the past had a deserved high tax reputation, but under Conservative Party control, in coalition since 2008 and with a majority since May of this year, taxes have been reformed and lowered. Tax specialists even use terms like “the Great White tax haven” and “Switzerland of the North” when talking about Canada.
Meanwhile big spending politicians like Obama in the U.S. and in other high tax countries have run up crushing debt loads and caused economic stagnation — and they have made special tax targets of their richest citizens.
The combined federal-provincial top marginal Canadian tax rate is 39% in Alberta while in Ontario it’s 46.41% compared to an average federal and state rate of 39% in the U.S. Quebec has the highest combined tax at 53%.But Canada’s tax laws also contain tax breaks that appeal to wealthy foreigners. High-net-worth immigrants can benefit from a five-year tax holiday under the Immigrant Investor Program if they place their assets in a trust held outside Canada.
That program allows immigrants to become Canadian citizens without immediately incurring taxes on assets they accumulated before moving there. Only income earned in Canada is taxable. Better still, Canada does not impose any of the punitive U.S. anti-wealth taxes. Since the 1970s there has been no inheritance (death) tax and Canada has no gift taxes either, making it easy to distribute assets tax free to offspring.
Last year, nearly 12,000 foreigners moved to Canada under this federal Immigrant Investor Program, up from 4,950 a decade ago. The figure includes spouses and dependents. To qualify, immigrants must have a minimum net worth of at least C$1.6 million, and are required to “invest” C$800,000 with the government, which is returned after five years.
Note that for a year or more the Canadian dollar (‘loonie”) has been on a par with the U.S. dollar, or even higher in value. Today (7/27/11) the loonie closed at US$1.05 in value.
Safe Haven Close to Home
Canada offers a sound banking system, conservative lending regulations and a currency that should continue to appreciate versus the U.S. dollar. During the global recession when U.S. financial institutions were faltering and collapsing, banks in Canada were among North America’s largest and safest.
Canada is an easy-to-access banking destination that offers many of the same services Americans are accustomed to, including the same language and deposit protection. The Canadian Deposit Insurance Corporation (CDIC) provides C$100,000 protection per account.
In their home market, Canada’s top five banks — the Royal Bank of Canada, the Toronto-Dominion Bank, the Bank of Nova Scotia, the Canadian Imperial Bank of Commerce and the Bank of Montreal — offer a complete range of banking, from retail to investment banking through a nationwide chain of branches. Changes in regulation have also allowed them to expand, on a limited basis, into insurance while most brokerage houses became bank subsidiaries.
Canada as a Haven from U.S. Taxes
In combination with several other factors, Canadian law offers the possibility for Americans of a complete end to paying U.S. income and other taxes.
This tax freedom can be accomplished by a process called “expatriation” that some may consider drastic, even extreme. It is both. In the Expatriation Report I explain how this can be accomplished, legally and consistent with U.S. and Canadian law.
Expatriation requires professional advice and much careful pre-planning. A leading Canadian immigration and tax attorney we recommend is Joel Guberman in Toronto. For information about Canada’s Immigration Program consult the web sites of Citizenship and Immigration Canada. Guberman, Garson. Immigration Lawyers. 130 Adelaide St. West, Suite 1920, Toronto, Ontario M5H 3P5, Phone: (416) 363-1234 Fax: (416) 363-8760 E-Mail: joel@ggbilaw.com Web: http://www.gubermangarson.com/
Business Migration
For potential investor visa applicants, the government rolls out the proverbial red carpet, officially known as the “Business Migration Program.” Business experience, marketing skills, contacts within Canada, an adequate credit rating and available funds all greatly increase your chance of success.
Applicants are usually required to submit detailed business proposals or general business plans, which must accompany the application for permanent residence. Such plans must detail the nature of the business, operating procedures, key personnel (which may just be the applicant), a marketing plan and a financial strategy.
Come On Up
As Mcleans observes: “Rich immigrants have found the tax haven of Canada can be good for them—and their bank accounts—too.”
PS: I also explain the Canadian immigration option in detail in my two books, Where to Stash Your Cash Legally and The Passport Book.
Other Posts from the Author
- Are You Among the 23% Entitled to a Second Passport? - May 14th, 2012
- The Real Problem With the French Elections - May 4th, 2012
- The Life of a “Sovereign Individual” - April 24th, 2012
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Hi. Is there any way to apply and get second citizenship legally or permanent residency visa in Europe or USA/Canada in short time?
BOB SAYS: Without knowing a number of factors about your present status it is impossible to advise whether you might qualify for a faster citizenship or residence in any country. Both the US and Canada require physical presence of 3-5 years before citizenship is granted and that is, if you qualify in the first place. Several EU countries (Ireland, Italy, Poland among others) grant citizenship based oh the citizenship of parents or grandparents. For details of admission to over 90 countries, see The Passport Book which I authored, or you can use the search engine on the Sovereign Society web site where you will find many articles on these topics.