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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 as a US citizen?
Generally speaking, it is not advantageous for US citizens residing in Canada to incorporate a Canadian company, because the income earned by the corporation may be treated as sub-part F income for US purposes. This means, you will be personally taxed in the US on your Canadian corporation's profits, and you will be taxed again in Canada, when your Canadian corporation pays dividends to you. As a result, you will be double taxed.