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I have an ontario corporation that I use for some consulting work. I am planning to move to the US for few years and I was wondering if I can keep my ontario corporation without any tax implications. I understand the residency requirement for ontario corporation and I can solve that by adding new directors. However, is there any work around for the residency requirement (e.g incorporating in a province with no residency requirement). What are my options for maintaining a corporation in canada and what are the tax implications while in the US and exiting from the US eventually?
There are two major tax implications. First, the tax status of your corporation will change from a Canadian Controlled Private Corporation to an Other Private Corporation. As a result, the tax rate will increase from 15% to 26%. Second, you could be liable for departure tax when leaving Canada to the US. When you leave, you will be deemed to have disposed of your shares in your corporation for a price equal to fair market value. If the value of your shares is more than the amount you paid for them, you will have a taxable capital gain upon departure.