USA Corporate structure for US/CA Citizen


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Current scenario:
•$150,000 CAD yr taxable sole-prop income (Canadian sourced)
•US/CA citizen
•Canadian resident

Wishful scenario:
•Canadian Corp (SBD) tax rate (15%)
•$47,630 Non-Eligible Dividend Salary (6.87%)

Not sure if Canadian Corp is viable because CFC and Subpart F / GILTI tax. With "current scenario" whats the most economical tax strategy? Is a Canadian Corp still advantageous tax wise?
 

kirby

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The good news is at your income level you can afford to hire a tax person to give you tax advice based on your own unique situation.
 
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$150,000 is not my income. This is a scenario im asking for advice on potential future income. All I want is to create dialogue on this scenario.

It appears I can deduct Canadian Corp tax (15%) from US subpart F tax liability which would be ordinary dividends. This "works" for lower incomes but gets bad as income increases. Between ~$38,000 - $500,000 USD tax brackets ill be paying 7% - 20% in additional taxes after deducing the 15% Canadian corp FTC.

Subpart F "High Tax Exemption" is 18.9%. Decline the Small Business Deduction for Federal corp taxes the corps tax rate would be 18.5%. If I could increase that >18.9% this could be one solution.
 

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