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  • Business type - income & support payments

    Days before we broke up i was working on a project that i intended to launch had most of the stuff figured out but then shit hit the fan and .... ,anyways now i want to get back on track, but since now support payments are in the picture i need some help figuring the below out.

    There are going to be two companies
    1- technology services
    2- Endowment fund

    1- Technology services: The idea is to provide some technology services, out of the profits ~70% will go to an endowment fund (separate entity) for charitable organizations, ~30% will be income for me.

    the users will outright know that its a for profit business, but they will also be informed the majority of profits from the business are forwarded to an endowment fund company for charitable organizations

    now what i am left wondering is how do i register this *business* so that the 70% given away is not added to my annual income

    2- Endowment fund: from the 100% of fund the endowment board will purchase franchises (any business, subway, tims, aldo etc), and 100% of the income from the franchises will go to support charitable organizations.

    how do i setup this *fund company* in order to have 0% of this into my annual income since I will be receiving no money at all.

    Important: i never want to hand her over any of the financial documents of any of these *businesses*

    the ex was fully aware of my plans and i had exchanged some emails with her regarding the technology patent i was looking for. i am sure as soon as i register the businesses the witch hunt to increase support will start.

  • #2
    As a receiver of SS who was married to someone in business - I"d be all over your documentation like a bee to honey. You could package it up anyway you want to but if I was married to you for a time I would know that you aren't the sort of individual to go into business just to be a philanthropist.

    My ex can start any businesses he wants but if I learn about them he has to provide ALL income and expense figures - that is written in our divorce judgment.

    From what you describe above your "charitable" fund is no different than an RRSP for tax purposes. Before tax income is of great interest to someone receiving support. How you manage the fund, or what you do with the rest of it (give it away) is of little interest unless you're crying poverty. Its all one and the same - hiding income.

    Technology patents are very, very expensive. That, in itself, would trigger my interest.

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    • #3
      This is true.

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      • #4
        Where's the "Like" button????

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        • #5
          Originally posted by arabian View Post
          As a receiver of SS who was married to someone in business - I"d be all over your documentation like a bee to honey.
          ^ the apropriate term is "leach". honey bees are sacred creatures who collect, rework their collection and provide their earning for the greater good of rest of the beings. leaches at the other hand are a perfect example of spousal support collectors who unjustifiably benefit from the victim due to the sheer fact that the victim cannot get rid of it.
          You could package it up anyway you want to but if I was married to you for a time I would know that you aren't the sort of individual to go into business just to be a philanthropist.
          since you were not married to me *thankfully*, your comment is inappropriate and contrary to the facts. however given your comments i am happy to see that the other guy got rid of you. at the other had i feel sad for him that he even ever met you.

          It is rare that i ever chose to put some one on my ignore list, but congratulations you have met the requirements given your absolutely rubbish posts in several threads and demeaning comments on several of my posts with out knowing the facts or any other just cause.

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          • #6
            Truth huts eh? Scheming and lying to avert income will always come back and bite you in the arse in the end. This is why we have processes and laws set up - for people who lie and cheat.

            I guess I rained on this guys little plan to defraud his ex. Boo hoo, boo hoo.

            Yes he should be very thankful that I'm not his ex as I'm sure he has falsified documents not only to the courts but to CRA. I'd ensure he was audited for the next 3 years.

            Its really very simple. Play by the rules. If you cheat you will be caught.

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            • #7
              now for the rest of the people who would be interested to know how its done, I actually took a break from work and went to meet a corporate CA to figure this out. here is how its done

              1- Incorporate a holdings company with sole proprietorship to yourself
              2- Incorporate a technology company with 100% shares to the ownership holdings company

              commence work under the technology company, (any patents should also be held under the tech company ideally)
              if you earn revenues the technology company can pay you a salary which you will declare for tax and leaching purposes, forward the rest of the funds to the holding company, thats not income since its corporate transfer.

              As long as the holdings company does not utilize the funds, they are tax free, if they are taken out by the owner they are taxable & leachable.

              the holding company will buy frenchizes (taxable income) but since all that income will be given to registered charitable organizations i.e. united way, sick kids etc. it will be tax free

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              • #8
                I do corporate law, and I understand the structure you are describing.

                However, judges are also generally very intelligent. They are also provided a fair amount of discretion when it comes to making rulings.

                I wouldn't be surprised if a judge deemed the income of the TechCo as income attributable to you, as you have ultimate control being the shareholder of the shareholder. Further, any income/revenue derived by the holdings company through investments etc. can also be attributable to the shareholder and any write-offs would have to be deemed appropriate.

                I'm not saying your structure wouldn't work as a means of limiting tax. However, I don't believe a family law judge wouldn't look right through the structure and deem that it is an attempt to reduce/hide income and thus impute that persons income at a level in line with the revenues/profits of the corporations.

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                • #9
                  exactly ! How much money spent on lawyers and accountants is a dead give away.

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                  • #10
                    Originally posted by HammerDad View Post
                    I do corporate law, and I understand the structure you are describing.

                    However, judges are also generally very intelligent. They are also provided a fair amount of discretion when it comes to making rulings.

                    I wouldn't be surprised if a judge deemed the income of the TechCo as income attributable to you, as you have ultimate control being the shareholder of the shareholder. Further, any income/revenue derived by the holdings company through investments etc. can also be attributable to the shareholder and any write-offs would have to be deemed appropriate.

                    I'm not saying your structure wouldn't work as a means of limiting tax. However, I don't believe a family law judge wouldn't look right through the structure and deem that it is an attempt to reduce/hide income and thus impute that persons income at a level in line with the revenues/profits of the corporations.
                    Now this is a very valued contribution, the CA wouldnt have known what the Judge would say.

                    So the real question is how do we drive to the income to the charities without it ending up biting me. once i am done paying the criminal lawyer I should be ok with paying whatever leaching amount i am currently paying plus the fair CS, and wont really need income from the TechCo.

                    for that reason I am more than willing to let some one else make a buck and simply volunteer my idea & time to charity. though some money would have helped given the current financial situation.

                    this is not to boast but to give a fair idea of my intents: since my school days i have been very active in charitable organizations, been on board of directors of several organizations and president of one, though i never even bothered looking into the accounting side of any, simply the function of charity.

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                    • #11
                      Originally posted by sahibjee View Post
                      1- Incorporate a holdings company with sole proprietorship to yourself
                      2- Incorporate a technology company with 100% shares to the ownership holdings company
                      I'm afraid it is not going to work. If your ex gets a hold of the holding inc, she is likely to be able to impute your income with all retained earnings.

                      You can inc the #1 however you can't hold any shares if you don't want any additional income imputed to you.

                      I say the way to go is offshore corp owned by nominee shareholder. Legal (well, sort of...) if shit hits the fan, otherwise non-existent and invisible to leeches.

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                      • #12
                        Originally posted by sahibjee View Post
                        ...
                        So the real question is how do we drive to the income to the charities without it ending up biting me...
                        My opinion is that the only way it should not be considered income for support purposes is if you can guarantee you will never receive it, and don't have control over it.

                        If the companies earn the money and you intend to put some to charity is not enough to avoid paying support based on the companies' income.

                        You would have to prove that that money will never be your income or your financial benefit, or anyone you know.

                        Also, you would have to prove that the charity angle is what is driving your profits and without it you would make less.

                        Just as I can't take part of my income and send it to charity and then reduce my support payments, neither can you, no matter what complex entities you set up.

                        If you proved that you can't get the money and that it would not exist if the charity was not part of the business model, then I would be fine with not including it as income for determining your support obligations.

                        But if that is not the case, then you pay based on full income of the companies under your control. And if you want money to go to charity, then do it with after support dollars and ask your ex to do the same.

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                        • #13
                          Originally posted by randomjohndoe View Post
                          I say the way to go is offshore corp owned by nominee shareholder. Legal (well, sort of...) if shit hits the fan, otherwise non-existent and invisible to leeches.
                          this might be a very good idea, we need to talk more about this, what exactly is a nominee shareholder and would that be me in this case? if yes wouldnt the nominee need to declare the income? also arent the taxes higher for offshore corps?

                          Originally posted by billm View Post
                          My opinion is that the only way it should not be considered income for support purposes is if you can guarantee you will never receive it, and don't have control over it.

                          If the companies earn the money and you intend to put some to charity is not enough to avoid paying support based on the companies' income.

                          You would have to prove that that money will never be your income or your financial benefit, or anyone you know.

                          Also, you would have to prove that the charity angle is what is driving your profits and without it you would make less.

                          Just as I can't take part of my income and send it to charity and then reduce my support payments, neither can you, no matter what complex entities you set up.

                          If you proved that you can't get the money and that it would not exist if the charity was not part of the business model, then I would be fine with not including it as income for determining your support obligations.

                          But if that is not the case, then you pay based on full income of the companies under your control. And if you want money to go to charity, then do it with after support dollars and ask your ex to do the same.
                          billm your post makes total sense, i absolutely agree with the rational. but i doubt that the judge will see it this way even if i prove that i can never touch the money and that the business wouldnt work without the charity side.
                          i actually do intend never to touch the endowment fund money, it is going to be under a board's control, who will decide what other businesses to buy and then those businesses will generate the money directly for charity. but since the principal is an endowment fund, i doubt the judge will think its "for charity"

                          another suggestion that i was given was to find a retiree and make him/her the owner of the company, that would mean I do all the work, they "control" the company i.e. taxes etc. though i am not sure what will happen if the retiree perishes

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                          • #14
                            offshore corp is not present in Canada and pays no taxes here. in the country off the incorporation they pay usually ridiculously small tax, or none at all. As long as you inc in a 'tax heaven' country. Nominee shareholder is basically a make believe 'owner' who acts only on your behalf. So in an unlikely event that someone finds out about the off-shore corp, the money in it can't be attributed to you. The scheme is obviously falling into rather grey area of legality, I mean, it is legitimate, but only on paper.

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                            • #15
                              Originally posted by randomjohndoe View Post
                              offshore corp is not present in Canada and pays no taxes here. in the country off the incorporation they pay usually ridiculously small tax, or none at all. As long as you inc in a 'tax heaven' country. Nominee shareholder is basically a make believe 'owner' who acts only on your behalf. So in an unlikely event that someone finds out about the off-shore corp, the money in it can't be attributed to you. The scheme is obviously falling into rather grey area of legality, I mean, it is legitimate, but only on paper.
                              Just know that in order to "carry on business" in any province in Canada, the corporation would have to be registered in such province.

                              The definition of carrying on business varies from province to province, but most have a catch all phrase of "solicits business in the province" and/or has an office or representative in the province. In Quebec you are carrying on business if you carry on an activity for the purpose of obtaining profit. You would likely be subject to pay some provincial income taxes.

                              From what I understand, you aren't divorced yet? But are you close? Why can't you just hold off incorporating until after you are divorced and then use whatever structure you want. Yeah, she can argue that she deserves more in SS, you can argue that you had the idea post divorce and didn't use matrimonial funds to setup the business so why should she participate in increased revenues when she never contributed to process? I see no difference in this scenario than lets say a person divorces and 4 years later comes up with a great idea and becomes successful. Why should the ex spouse be entitled to anything from this success. SS should be based off of the standard each spouse had when they were together. Not if one spouse later on becomes more successful then the other.

                              But I could be wrong here, and there could be case law saying the exact opposite...but it pretty much where I sit on the topic.

                              Comment

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