With the OECD, EU and US continuing to put pressure on traditional financial centres, clients from emerging markets such as Russia, China and Brazil are now looking to new jurisdictions to plan for their financial security. One of those jurisdictions may be Canada.
In the case of Fundy Settlement v. Canada, 2012 SCC 14 [April, 2012], the Supreme Court of Canada ruled that a trust should be taxed where its "mind and management" is located, not where the trustee is resident. Although these locations could be the same, tax residency for Canadian purposes is now determined to be where the principal place of business of the trust is conducted.
Therefore, a company can be incorporated in Canada. That company can enter into a trust indenture as trustee (either on declaration, or settlement) on behalf of a client and, if the trustee engages a co-trustee or a trust administrator from outside of Canada to perform the day to day management of the trust, no tax consequences will arise in Canada. As a trust not subject to tax in Canada, there is also no requirement to file any sort of information or tax return. Continue reading "Canada – The New Evolution in Financial Security"