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Discussion Starter #21
Hey guys,

Sorry i've been tardy to reply but been so busy with traveling. Ill try to answer questions and clarify some things that were asked.

- The market of the asset is the comox valley. Its got its own dynamics, the valleys been in a boom for awhile (since I bought the property) but thats a residential boom. The downtown commercial core of Courtenay has been experiencing a bit of a revitalization due to new businesses moving into available units in the area and proving popular establishments. I know in a lot of smaller cities the commercial cores are dying but I think the Courtenay core is a really desireable location for all the small businesses to wnat to operate. Its the only place in the valley with good foot traffic and alot of events get held downtown which brings in a lot of people during those days.

- My parents are managing the property for me free of charge. The thing is as I mentioned its turn key and all my tenants are reliable hassle-free tenants, so they just pickup/deposit rents once a month and chit chat with my tenants about any problems they are having.

- Im 35 years old. I bought without help from anyone using money made in the retail industry working for myself. I loaned the down payment from personal funds (tax already paid) to the hold co to buy the property, creating a substantial shareholder loan owed by the hold co to me that I can withdraw from the hold co any time without having to pay tax on it. As of right now that remaining amount is about $100k. I intend to withdraw from the hold co and invest a sizeable chunk of that money into stocks very soon through a TFSA brokerage acount... which is a whole other topic to discuss which I intend at some point soon to make a new thread about that here in the relevant section.

- I have a second corporation thats my operating corp which is one of the tenants of my holding corps building (and the holding corp owns shares in the operating corp), the op co leases the $1,250/month unit from the hold co. The op co is involved in retail industry and is my primary source of money. I get money (personally) from the op co by it paying a dividend to me as a shareholder, the dividend caps out per year at whatever that years tax-free allowable limit is (its usually around 30k mark).

- Because op co rents from hold co and something to do with "closely connected cororations" (im still not 100% educated on that), the rent that op co pays for the unit never actually deposits into the hold co account each month. Instead it all happens on paper and my accountant deals with that for me. So even though on paper hold co is pulling the afore mentioned incomes, in terms of funds physically in hold co's bank account that monthly payment from op co's unit does not manifest into the account balance.

- I would think selling the property before becoming a non-canadian resident would be the aim. But I do not know when I would intend to become a non-resident. My accountant advised me to retain residency because it would impact both my hold co and my op co. Also selling the building would only seem most relevant once my op co has outlived its retail lifespan as a business and I shutter it (or sell it). Because the primary reason hold co came to exist and I bought the building originally was because my op co needed a better space to operate in.

- The line drawn by CRA regarding residency status is very murky waters. I've struggled to find clarification from anyone I can but nobody knows the exact point or criteria that will trigger you being no longer considered a resident of Canada. My accountant has a client who he told me was out of the country for 1.5 years and came back without having lost his residency status as a Canadian. I've been out of the country for about a year now but im still filing both corporations taxes and my personal taxes in Canada and I still pay an electric bill for my apartment back home which is one of the units being rented (short term).

- My op co has been producing less income these days verse times past. Its due to changing industry landscape and a variety of emerging regulatory challenges involved. This money has been my source of income whilst living abroad (I do not use any of my hold co profits off the building, those are just idle in the bank account for now). I've been spending my time in the Phils traveling (as was the case with my absence from replying to this thread). The current moments goal is just to enjoy life as I spent the past 10 years working my butt off to get my life to this point. But I still like to contemplate what all my options in life are and thats what this thread was about was exploring my options more.

- Quality of life scores aside the Philippines is the type of country that really appeals to my hobbies and interests. Its in the coral triangle and my preferred hobbies involve free diving, SCUBA diving, surfing, and beach lounging. Philippines is a mecca for that type of lifestyle. Theres a ton of wonderful places here. Im well aware of the challenges with living here. I've been trying to enjoy my life more and have done exactly that whilst being here.

- To Mukhang, I was just in Cebu and also Bohol for my first time over xmas/nye. My fav is Palawan though which i've been to 3 times now and will go a 4th time in the coming weeks. I'd love to buy a big chunk of land outside Puerto Princesa and build a ranch/farm. Im well aware that foreigners cannot own land directly but theres several options for going around that. Not saying I am going to, but its just something i've always dreamt of. If I did that it would be after selling my real estate asset back in Canada almost certainly.

Hope that clarifies some things that were asked.
 

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I see your situation has having two distinct parts. What to do about your business and property and what to do about wanting to live in another country. I will respond only to the second part here.

Re legal Residency status, there are different rules for different things. For example, your eligibility for health care in BC probably says you lose 'residency status' after an absence of 6 months. For CRA, they will attempt to 'deem' you resident using any reason they can find. So owning property is one such reason but so is just having a bank account in Canada or a driving license. To be 'deemed non-resident for tax purposes' by the CRA took me 3 years after leaving Canada, to achieve. You basically have to cut ALL ties with Canada. Paying that electric bill for example is probably enough to keep you from being 'deemed non-resident for tax purposes.'

So yes, you will have to sell to become 'non-resident' or 'deemed non-resident for tax purposes' by the CRA. Your accountant's advice there makes sense but the comment about someone being away for 1.5 years without losing residency does NOT make any sense to me at all. If you are a Canadian citizen you will never lose the right to residency in Canada unless you renounce your Canadian citizenship which you should certainly never do. When talking about legal residency, you always have to make it clear just what you are talking about. The criteria differ for being resident for Provincial health cover, income tax, the right to live in the country. Confusing the criteria for one with the criteria for another may be part of the reason you find, " nobody knows the exact point or criteria that will trigger you being no longer considered a resident of Canada."

For CRA purposes ONLY, read here: https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/film-media-tax-credits/residency-status-determination.html

Look at the list under 'Ties with Canada' found here: https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/nr73/nr73-17e.pdf Basically, if you tick any of those boxes the CRA will probably try to say you remain 'deemed resident' for tax purposes.

Re what you will do after you leave Canada, that is yet another question entirely. You do not say for example what you would do for an income if you decided to settle 'permanently' in the Philippines (assuming you can legally do so).

I would also caution you that what looks good at age 35 and what looks good at age 65 are rarely the same thing. After years of living abroad in places that suited my interests and needs at the time, here I am back in Canada because it is one of the best countries in the world to live in, in so many ways. That's why I say you should never renounce your Canadian citizenship, it's your insurance of being able to return if you chose to do so one day down the road.

Having spent time in quite a few countries, I have my own idea of the best countries to live in and particularly when retired and growing older. Interestingly, my own two top picks are the same as the recent US News report. https://www.usnews.com/news/best-countries?src=usn_pr

My first choice would be Switzerland but I can't afford to live there. Canada is my second choice and I can afford to live here and so I do once again. Cost of Living rankings become less important as you age, it is Quality of Life that matters most. At 35, I realize your view will differ from mine, but one day you will be the age I am now. My guess is that at some point you will no longer find some countries as appealing as they are now.
 

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Thanks TB for returning to this thread and providing a bit more info.

I am back in Canada and thinking I should have stayed in the Phils. Woke up to a foot of snow today. I am not far from Campbell River and I know Courtenay somewhat. We make regular Costco runs to Courtenay. I know from a few Lower Mainland types, who have relocated to the Comox Valley in recent years, that what you say about a residential real estate boom is true. Maybe running out of steam now, I don't know. I have no firsthand knowledge of that and I really know nothing about the commercial real estate environment there.

Thank you for the note about the Phils. I too like Palawan a lot. When there a few years ago I looked at a house in the Baker Hill area of Puerto Princesa. It was a big box of a place, reminded me of the type of houses being built on the west side of Vancouver in the 80s, when builders started buying and demolishing the old houses and putting up monstrosities with as many square feet of floor space as the law would allow. It was priced at about CAD725,000! Kano price, I suppose.

As I alluded to in an earlier post, be cautious about the "going around" solutions to land ownership in the RP. Part of the reason for my most recent sortie to the Phils was related to that very thing. An expat who had invested in land and a business, only to find himself excluded from it. I am not a Filipino attorney, but I know a few and I enlisted one from Makati to help out. He managed to salvage something for the unfortunate expat, but it was not quick, easy or cheap and there was still a net loss.

I expect to be back on Palawan, in the far north, in March or April. I have an invitation as well, to visit the Babuyan Islands. Beautiful there (even though "babuyan" means "piggery" in Tagalog), but decidedly in the typhoon belt. No volcanoes though. That whole north end of Luzon, including such places as Santa Ana, Aparri, Claveria, are all worth a visit.

On the volcano topic, in 2002, I came very close to buying (well, my SO buying) one hectare of land at Talisay, overlooking Taal Lake and the volcanic cone on the middle of the lake. It was a beautiful lot and a fine view. On a hillside, but flat, with lots of space to build and grow things. There were mature banana and mango trees, as well as suha (pomelo), langka (jackfruit), etc. The price even then was unbeatable - about CAD65,000. We had made many trips to the Tagatay/Taal area looking at land and that was the best by far. I transferred the money to our account at the Equitable Bank and had our attorney neighbour check the title and poised to to the transfer when my SO got cold feet. So we killed the deal. I regretted that until just the last week or so. Since that time, one would never find a lot like that at that price. But now, with the volcanic eruption that is in the news, that hectare is under a thick layer of ash, I suppose. It lies in the evacuation zone. Reminds me of the Garth Brooks song - Thank God For Unanswered Prayers. We had architectural drawings for a very nice house we wanted to build on that lot. It would be a sorry mess now, I think. So now I can get over missing out on owning a place overlooking the lake and volcano.
 

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... - I would think selling the property before becoming a non-canadian resident would be the aim. But I do not know when I would intend to become a non-resident. My accountant advised me to retain residency because it would impact both my hold co and my op co.
The it would seem you might be better to be more of a snow bird, living as much as possible outside Canada. It only partially meets your life goal.

You probably also want to make sure any capital losses are built up to reduce the capital gains as well as make sure you've planned with your accountant for what can be done.


... - The line drawn by CRA regarding residency status is very murky waters. I've struggled to find clarification from anyone I can but nobody knows the exact point or criteria that will trigger you being no longer considered a resident of Canada.
The factors are easily available ... where the primary ones are minimal or aren't in play, how the secondary ones add up isn't all that clear.

For income tax purposes to determine if you are Canadian tax resident, the primary residential ties are owning a home in Canada, a spouse/common-law partner in Canada and/or dependents in Canada. Secondary ties are personal property, social ties, economic ties (ex. bank accounts, credit cards), Canadian driver's license, Canadian passport and health insurance with a Canadian province or territory.
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html

There's also the possibility that where one is claiming to have moved to a new tax residency, a tax treaty between Canada and the new tax residency country may add tie breakers to the mix.
https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-5-international-residency/folio-1-residency/income-tax-folio-s5-f1-c1-determining-individual-s-residence-status.html


... My accountant has a client who he told me was out of the country for 1.5 years and came back without having lost his residency status as a Canadian. I've been out of the country for about a year now but im still filing both corporations taxes and my personal taxes in Canada and I still pay an electric bill for my apartment back home which is one of the units being rented (short term).
Sure ... but keep in mind Canada uses a self-reporting tax system. Where neither of you have filed a final tax return that spells out a date of departure (i.e. that you are emigrating) and nothing has flagged you to CRA's notice like say requesting a determination of your tax residency, CRA is going to assume you are still a Canadian tax resident.

There's nothing in it for CRA as the both of you are filing tax returns while paying through taxes for things you aren't in the country to use (ex. health care). If the non-resident taxes would be at a more favourable rate, it might be you who are losing out.


If you keep your op co and hold co running while becoming a Canadian tax non-resident, I'm not sure what the tax implications would be. I expect that the corps would lose their tax advantages (or at least some of them) as they would no longer be Canadian Controlled. It looks like at a minimum, the small business deduction would disappear.
https://www.taxtips.ca/glossary/ccpc.htm

It's likely why the accountant advised you to keep your Canadian tax residency.


Cheers
- My op co has been producing less income these days verse times past. Its due to changing industry landscape and a variety of emerging regulatory challenges involved. This money has been my source of income whilst living abroad (I do not use any of my hold co profits off the building, those are just idle in the bank account for now). I've been spending my time in the Phils traveling (as was the case with my absence from replying to this thread). The current moments goal is just to enjoy life as I spent the past 10 years working my butt off to get my life to this point. But I still like to contemplate what all my options in life are and thats what this thread was about was exploring my options more.

- Quality of life scores aside the Philippines is the type of country that really appeals to my hobbies and interests. Its in the coral triangle and my preferred hobbies involve free diving, SCUBA diving, surfing, and beach lounging. Philippines is a mecca for that type of lifestyle. Theres a ton of wonderful places here. Im well aware of the challenges with living here. I've been trying to enjoy my life more and have done exactly that whilst being here.

- To Mukhang, I was just in Cebu and also Bohol for my first time over xmas/nye. My fav is Palawan though which i've been to 3 times now and will go a 4th time in the coming weeks. I'd love to buy a big chunk of land outside Puerto Princesa and build a ranch/farm. Im well aware that foreigners cannot own land directly but theres several options for going around that. Not saying I am going to, but its just something i've always dreamt of. If I did that it would be after selling my real estate asset back in Canada almost certainly.

Hope that clarifies some things that were asked.[/QUOTE]
 

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Discussion Starter #25
I got ash rained down on me pretty good in Manila when Taal first went. It was more sand than ash though. I'd gladly take ashfall over snowfall anyday however ;)

Northern Palawan is great, i've been to almost every part of the province except for the outlier Cuyo islands, Cagayancillo, and Tubbataha reef. Balabac down in the south is very nice too and practically no tourists and same is true with Linapacan area up north. I just got back from latest trip and it was as expected beautiful, did Port Barton and El Nido. This time I did some surfing both at Nagtabon beach near Puerto Princesa and Duli beach up near El Nido. Both offered better than expected surfing experiences which only served to heighten my lust for living there. The freediving is also great allover the province, but the best reefs I ever freedove were in Taytay bay just southeast of El Nido by about 1 hour. Namely a privately owned island called Abaton, you can visit it if you book island hopping through Casa Rosa hotel in Taytay town whose owner is the owner of that island. If your in that area and you snorkel/dive/freedive I highly recommend you go island hopping in Taytay bay theres very little tourism there and the reefs are the best i've ever seen anywhere in Palawan, or anywhere in my lifetime.

I've yet to get up to north luzon, ive been to the southern tip and allover the central area to as far north as la union and baler for surfing but no further than that yet. Im sure I will though, theres gotta be some good surfing up there.
 

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Discussion Starter #26
As to the topic at hand, I appreciate the information clarifying more things with canadian tax residency status. It definitely seems to be in my best interest to maintain tax residency status for the time being so it's been a fair concern of mine as to where that line is truly drawn. It sounds like I should be okay with my current situation.

I have no intention to renounce my citizenship ever just to clarify that.

As to lifestyle, yes your right at 35 years old my priorities are a lot different on a personal level than they likely will be at 65, although I do hope I will be in good health to still partake in my hobbies at that age. I've known a few guys who even into their 60's were still incredibly active and fit people. I totally idolize that and aim to be the same as I get older but who knows what health matters may come into play in the future. I've always been a very physically active person in life so it would be hard for me to not live that way.

Thanks for all the input guys. I think I will just stay the course for now and focus on what to do with other funds for investment unrelated to my building while letting it build up a small nest egg of surplus funds to finance a future exterior renovation. Maybe talk with a real estate agent to get an idea of what they think its worth just to satisfy my curiosity.
 

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Not sure what the "renounce citizenship" part is about. I've heard of only two countries that tax based on among other things, citizenship - the US and Eritrea.

I suppose renouncing Canadian citizenship might matter if one wants citizenship in a new home country, where it does not allow dual citizenship. I didn't get the impression from the thread that citizenship in a new country was desired.


Cheers
 
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