Media people are known to diminish offshore investing. They paint a picture of how investors stash away their illegal money with some illegal company that is located in an island in the Caribbeans. Here the offshore tax rate is next to nothing. It is true that there are instances of offshore deals that are illegal in nature but there are many forms of offshore investing available for people that are also done the legal way. It depends upon the situation that one is in. Accordingly; there are many advantages that one can encase upon.

About Offshore Investing

If you wish to know what is offshore investing you would be referring to a wide range of investment strategies which exist in order to capitalize on the advantages that exist outside of one’s home country. There are limitations as well as advantages that exist for offshore investing. The range of investment products is wide. These vary from money market o equity assets, bonds and other forms of investment strategies that are time tested, fiscally sound and perfectly legal to opt for.

What Are the Advantages of Offshore Investing

There are many reasons why offshore investing is looked at by different investors:

• Offshore tax reduction – it is the main reason due to which offshore investing looks attractive to many. Many countries are known to have tax incentives that are attractive to foreign investors. The offshore tax rates being favored in another country is designed to attract investments and outside wealth. When a country is tiny and has few resources of its own, it is vital that investors from outside are attracted in order to increase the economic activity in the country.

• The shield of an offshore corporation – when one invests in a foreign corporation their investments are shielded from higher tax burdens. The tax burden they incur in such a form of investing is less than compared to what they will incur in their home country.

• Enjoying tax exemptions – many countries enjoy tax exemptions when they invest in US markets. Thus, many wealthy individuals seek to invest through such foreign corporations since they will enjoy offshore tax exemptions rather than when they invest as an individual.

Paying Non-Resident Taxes

A related term in case of offshore investing is paying of non-resident tax. This has reference to paying taxes in a country of whom one is not a resident of. When one is a nonresident of a country and they pay taxes it usually fall in the category of non-resident tax. This is over and above the federal taxes that one needs to pay. In fact, non-resident tax is calculated as a percentage of the federal tax returns in case of the US. The laws vary from one country to another. One needs to know what are the rules in case of payment of such a tax when residing and working in another state or country. You need to seek the assistance and advice of a lawyer who will provide the rules and even help you make the tax payment.

Determining Your Residency Status

The taxation in Canada differs with your Residency status. If you are a Canadian Resident, then you are taxed on your worldwide income and filing of returns to the Canadian Revenue Agency is mandatory. If you are a non-resident, the taxation policy is different and you have to declare all Canadian income while filing the returns. But to know how to file your taxes, you first need to determine your residency status for tax purposes.

• You Are Considered As Non-Residents If

o You live normally and routinely outside Canada and are not a resident of Canada.

o You do not have any residential ties in Canada and

o You were living outside Canada during the entire tax year or

o You have lived for less than 183 days in Canada during the tax year

• You Are Considered a Deemed Resident If

o You have been staying in Canada for more than 183 days of the tax year

o You have no residential ties with Canada that are significant and

o You are not considered to be a resident of any other country as per the terms of the tax treaty Canada has signed with another country

• You Are a Deemed Non-Resident If

o You are considered to be a factual resident of Canada and also the resident of another country which has signed a tax treaty with Canada, and under the terms of that treaty, you are considered a resident of that other country rather than Canada

Non-Resident Tax Obligations

Any non-resident of Canada is obliged to pay non-resident tax tips on that income that he or she received from Canadian sources and the type of tax one has to pay or the requirement of filing the income tax return is decided by the type of income you receive. Generally, non-resident tax is filed under Part I tax or Part XIII tax. If you receive income from dividends, rental payments, royalty payments, pension payments, management fee, retiring allowances, old age security pension, Canada Pension Plan, registered retirement savings or income plan payments or annuity payments then you will be taxed under Part XIII. If you are running a business in Canada or if you sell, transfer or plan to sell a Canadian property, then you will pay tax under Part I.

Offshore Tax Planning

If you are planning on doing some offshore tax planning, by investing some money offshore, then you should be aware that almost all countries have signed tax treaties with Canada, and if you are a Canadian Resident, then income from these investments will also be calculated and considered as income and will have to be declared while filing the income tax returns. But if you are a non resident of Canada, there are options for you to do some offshore tax planning, but it is always better to avail the services of a tax expert to help you.

Is It Better To Hire Tax Experts For Offshore Tax Planning

Taxation can be tough to master and there are tax experts who will be aware of all the different tax laws that a country will have. This is why it is always better to opt for the services of a tax expert, especially if you are a non-resident and you are looking for offshore tax planning. Find a reputed tax expert company and get their advice before you start any activity off-shore.