Cross Border Taxation Help for Canadian Businesses

Since the taxation system of Canada and U.S. are different it needs careful planning and consideration when Canadian Businesses want to expand into the United States. If you are a Canadian business want to operate in the US, you need to adopt any one of the four business structures:

• U.S. Branch of a Canadian Corporation

• U.S. Subsidiary of a Canadian Corporation

• U.S. Limited Liability Corporation (LLC)

• U.S. Limited Partnership (LP)

Picking the right structure is a critical decision which can cost dearly if made wrong. Canada US tax Treaty overrides many provisions of Internal Revenue Code (IRC) in the United States and Income Tax Act (ITA) in Canada. For example, even if you have an effectively connected income for your business, the net business profits might be exempt from US taxes if the Canadian business does not have a permanent establishment as defined in treaty.

If certain income is exempted from US taxes, it does not exempt Canadian business from reporting. Generally, the tax returns and treaty-based positions need to be filed to claim treaty benefits. If you fail to file US income tax returns or treaty based positions, you might have to pay 30% US tax on your gross receipts.

Does a US Amazon Store of a Canadian business need to file US Income Tax return? Read here.

Do you need help with determining the right business structure to expand your Canadian business to the United States? The Cross Border Tax Consultants at Maroof HS CPA Professional Corporation can help! We’ve both Canadian and U.S cross border consultants available to guide you through the rigorous technicalities of U.S. and Canadian taxes. Feel free to call us on (647)724-4308 for if you have any queries related to cross border taxation.

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