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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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  #21 (permalink)  
Old 09-20-2012, 12:36 PM
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Originally Posted by HammerDad View Post
Are you suggesting having someone (because, if you up the ladder for shareholdings, it eventually has to be a person) to hold the shares in trust for the benefit of the OP....there are obvious risks involved for all parties here.

For the trustee, there could be tax risks. A tax agency may try to tax the trustee for the income and then the trustee would have to turn around and say "no this isn't for me it is for them".

The beneficial owner of the shares would have to worry about whether or not the trustee actually acts in their best interests and not go rogue on them or take advantage of them.

Further there are complications of where or not that would fall under embezzlement or other tax evation and possilby be deemed a criminal matter.
Let say if we register the HoldingCo under my grandfather's name, who is a retiree, and he would look after every thing (i.e. marketing, accounts, HR and so on) except TechCo's operations, then since he is really putting in the work it wouldnt be embezzlement etc right? and he would be free to donate the money to unitedway on his will? that makes it all legal .. right?
  #22 (permalink)  
Old 09-20-2012, 12:50 PM
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Originally Posted by sahibjee View Post
Let say if we register the HoldingCo under my grandfather's name, who is a retiree, and he would look after every thing (i.e. marketing, accounts, HR and so on) except TechCo's operations, then since he is really putting in the work it wouldnt be embezzlement etc right? and he would be free to donate the money to unitedway on his will? that makes it all legal .. right?
Would he be the shareholder of Holdco (ie. the person who legally owns holdco, and as such owns TechCo and be entitled to all of the assets/liabilities of both companies in the event of liquidation/dissolution/winding-up)?

If you mean putting simply as a director/figure head for the purposes managing the day to day activities, and you are still the shareholder, you would still be obligated to report the ownership of the corporation if your ex requested financial disclosure. If you don't and they find out you are the owner, a judge will get pissed. If you make him the owner of the corporation, but holding the shares in trust for you, you will likely still have to disclose that you are the beneficial owner of such shares and entitled to all dividends and proceeds attributable to such shares declared by the corporation.

But as a director, he would be allowed to donate funds. But that still doesn't mean that you, being the shareholder, wouldn't have those funds deemed as income for you.

I am not sure whether or not it embezzlement is the right term, or even tax evasion. But the structure would be one that a judge could easily see right through and risky to both of you when it comes to how things are getting handled and who is responsible if something goes wrong.
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Old 09-20-2012, 04:14 PM
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Originally Posted by HammerDad View Post
So I can't see where it provides that an off-shore corporation need not register in Ontario if they are carrying on business in Ontario.
An ontario corp. can sell to anybody anywhere in the world, it does not mean it has to register everywhere it once sold something. Similarly, foreign corp does not need to register if it ONLY sells into Canada. Clearly we are talking about B2B type of deals.

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About the only grey area would be is if it is an internet based business also based off-shore. Ontario may not cover that. But if said internet based company has an office/agent/representative in Ontario
Yes, I said it too, no office in ON, for sure.
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Old 09-20-2012, 04:17 PM
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Quote:
Originally Posted by HammerDad View Post
Are you suggesting having someone (because, if you up the ladder for shareholdings, it eventually has to be a person) to hold the shares in trust for the benefit of the OP....there are obvious risks involved for all parties here.

For the trustee, there could be tax risks. A tax agency may try to tax the trustee for the income and then the trustee would have to turn around and say "no this isn't for me it is for them".

The beneficial owner of the shares would have to worry about whether or not the trustee actually acts in their best interests and not go rogue on them or take advantage of them.
Yeah, valid concerns, but that is the service routinely offered by companies that help set up an off-shore.
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Old 09-20-2012, 04:22 PM
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Quote:
Originally Posted by sahibjee View Post
Let say if we register the HoldingCo under my grandfather's name, who is a retiree, and he would look after every thing (i.e. marketing, accounts, HR and so on) except TechCo's operations, then since he is really putting in the work it wouldnt be embezzlement etc right? and he would be free to donate the money to unitedway on his will? that makes it all legal .. right?
It could work, but then again, if they find out your grandfather owns the hold.co. then the transactions between hold.co and tech.co. might be deemed non-arms-length and it is only downhill from there.
  #26 (permalink)  
Old 09-20-2012, 04:24 PM
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Further there are complications of where or not that would fall under embezzlement or other tax evation and possilby be deemed a criminal matter.
You are right. You can PM me if you want to discuss this further.
  #27 (permalink)  
Old 09-20-2012, 04:35 PM
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Originally Posted by randomjohndoe View Post
An ontario corp. can sell to anybody anywhere in the world, it does not mean it has to register everywhere it once sold something. Similarly, foreign corp does not need to register if it ONLY sells into Canada. Clearly we are talking about B2B type of deals.

The need for an Ontario/CBCA corporation to register else where in the world would depend on the laws of that jurisdiction. Quebec's laws for example, if taken literally, would mean any corporation that attempts to makes profits within Quebec's borders would need to register.

As for foreign corp's needing to register in Ontario for things like sales....the need to register is questionable. I believe the current case law on this asks the question "where did the sale take place". If an Ontario corporation orders something off of the internet from a corporation in Ohio, it is likely to deem that the sale took place in Ohio.

But if a representative of an Ohio company comes into Ontario to make sales to corporations in Ontario, the point of purchase was in Ontario, thus subject to registration and taxation. I am sure there are companies that don't bother registering and makes sales anyway. It is just a matter they won't have any problems...until they do have a problem and get caught up in court in Ontario and are forced to register in order to maintain the action.
  #28 (permalink)  
Old 09-20-2012, 04:47 PM
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Originally Posted by HammerDad View Post
But if a representative of an Ohio company comes into Ontario to make sales to corporations in Ontario, the point of purchase was in Ontario, thus subject to registration and taxation. I am sure there are companies that don't bother registering and makes sales anyway. It is just a matter they won't have any problems...until they do have a problem and get caught up in court in Ontario and are forced to register in order to maintain the action.
Hm... does this actually ever get to the court? I mean, the cost of tracking this down and enforcement... For what? For 60 bux master business license???
  #29 (permalink)  
Old 09-20-2012, 05:05 PM
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Originally Posted by randomjohndoe View Post
Hm... does this actually ever get to the court? I mean, the cost of tracking this down and enforcement... For what? For 60 bux master business license???
Ohio company sends agent into Ontario and makes a sale to OBCA corporation. OBCA corporation defaults on payment. Ohio company tries to sue in Ohio but OBCA corporation successfully argues that Ontario is the proper jurisdiction to hear the case. Ohio corporation is prevented from starting the action until they are registered.

Or, Ohio company sends an agent to Ontario and OBCA corporation buys something. The product is defective and Ontario corporation sues. Ohio company wouldn't be able to defend without registering or leave from the court.

And we are talking about corporate registrations. The $60 master business licenses are registrations under the Business Names Act. Proprietorships, partners and corporate trade names. The registration under the Corporations Informations Act (this filing is fee) and the Extra-Provincial Corporations Act (which I think is maybe $300 max).

Anyway, give the details here, I don't think OP could get away with having an offshore corporation not registered in Ontario as OP would be the corporations agent and he lives in Ontario. And unless OP plans on leaving the country, the need to register would be high.

Offshore corporations are great for holding assets like money, shares or other forms of assets that don't have a tangible presense (art). Something like real estate would cause a corporation to register in the province where the real estate is held.
  #30 (permalink)  
Old 09-20-2012, 10:51 PM
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HammerDad is very articulate on this imho.

I also think it is REALLY simple. Despite the debate about whether a foreign held co. might have a legal liability to report here or not, the fact remains a bunch of Canadian citizens want to start a couple co.s. They may want to start one abroad in a known tax haven like Netherlands Antilles or Costa Rica or something. They want these companies to associate with one another.
One of the real people related to all of this is going through a messy divorce arguing to reduce the level of support he has to pay.
I am a judge. I learn about this. Doesn't matter if you are George Soros and one of the most sophisticated businessmen on the planet, I call bullshit. I then decide you should pay the most support I can possibly order.
If I am wrong, good luck as you are braver than I.
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