.For several years, Canadians with substantial assets have been transferring their assets offshore in order to avoid the impact of Canadian taxation. In recent times, with high disciplinary and other damages being awarded by the courts against directors and officers of corporations and other professionals, more and more individuals are transferring their assets offshore, in order to achieve a degree of asset protection.

Offshore trusts and offshore corporations are viewed as a means to avoid the high level of Canadian Taxation and protect assets against catastrophic judgments.

Residents of Canada are subject to income tax on their worldwide income. Assets which are transferred by residents to foreign trusts and foreign corporations as passive investments may be deemed to be income of Canadian residents, to the extent that Canadian residents control such foreign trusts or foreign corporations or to the extent that Canadian residents are beneficiaries of such foreign trusts or foreign corporations.

You may benefit from using an offshore trust if you are a Canadian resident and:

• You have assets in various locations throughout the world;

• You intend to distribute assets to individuals living outside Canada during your lifetime;

• You have recently immigrated to Canada; or

• You intend to leave Canada.

If you are not a Canadian resident, an offshore trust can:

• help you distribute assets to Canadian residents tax effectively, either during your lifetime or through your will; or

• provide significant tax benefits if you plan to immigrate to Canada.

An offshore trust is established under the laws of another country and is administered by a non-Canadian trustee, typically a financial institution. A foreign trust has a settler, a trustee and beneficiaries. If you are the settler of the trust, you will fund the trust either by giving or lending property to it. A trust is separate from you and your beneficiaries, and is governed by the laws of the country in which the trustee is resident.

The trustee becomes the legal owner of the trust property and is required to manage the property as directed in the trust deed. The trustee is also responsible for distributing trust assets to the beneficiaries you have named in the trust deed. The trustee has full decision-making powers over trust assets based on the provisions of the trust deed, and it is essential that you have complete confidence in your choice of trustee. To maximize their effectiveness, offshore trusts are generally established in jurisdictions with little or no income, capital gains, or estate taxes.

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.