Chinese high net worth individuals and families moving to and investing in Canada

In recent years, rising numbers of Chinese high net worthindividuals and families have invested in—and even begun living in—Canada. Toooften, however, new investors and residents overlook taxation issues that canresult in unnecessary tax implications and charges. Outlined below are the topfive considerations you should be aware of to help minimize any costly tax impacts.

What should I be thinking about:

  • When do I become a Canadian resident?

  • What is my resident status?

  • How can I tax-efficiently finance my Canadian lifestyle and real estate investments?

  • Are there any ongoing reporting requirements and tax implications in China/Hong Kong??

When do I become a Canadian resident for tax purposes?

Your tax residence status will have a significant impact on the taxation of your worldwide income. The Canadian tax residence rules are complex and are determined under the Income Tax Act in a substantially different manner from the way permanent residency statusis determinedunder Canada’s immigration laws. We can review and evaluate you and your family’s personal circumstances to advise when you become Canadian tax residents and help you comply with your reporting requirements to the Canadian tax authority, the Canada Revenue Agency (CRA).

What is my tax residence status?

Residence is regarded as the jurisdiction where you maintain your ordinary mode of living. It is often described as the country/province in which you have significant ties. Your residence status does not necessarily correspond with your nationality. For example, you could bea Canadian citizen but a non-resident of Canada for tax purposes if you reside outside of Canada formost of the year (the case for each individual will need to be looked at on its own merit, as this is a highly complex area of law). As a Canadian tax resident, you will be taxed on your worldwide income and gains, including those sourced outside Canada. Non-residents are generally taxed only on theirCanadian-sourced income.

How can I tax-effciently finance my lifestyle in Canada?

Many people who become Canadian tax residents are unaware of there quirements to report their offshore accounts, assets, and overseas income and gains, resulting in costly tax charges and burden some administration. We can help you structure your bank accounts and assets, and advise you on how to report foreign assets and income that you earn to tax effciently fundyour personal expenditures in Canada.

How can I tax-effciently finance and structure my real estate investments?

The tax implications of your property investments will depend on the type of the property you invest in,what your intentions are with respect to the investment and how it is structured. There is a difference between trading in properties and property investments for tax purposes. There are also different types of structuring options available,such as direct ownership or using an offshore corporate or trust structure, depending on your personal objectives. We can help you create a tax-effcient structure and strategy to finance and grow your property portfolio.

Do I still have to report to the China State Administration of  Taxation (SAT) or the Hong Kong Inland Revenue Department (IRD)?

We have a very close working relationship with Grant Thornton International Ltd member firms in China and HongKong, who will be able to help you understand any ongoing reporting requirements to the China SAT and Hong Kong IRD. We will be able to provide seamless service by considering the interaction of Canadian tax planning with Chinese or HongKong tax.