ARTICLES
Investing in Early-Stage Ventures: The Questions That Everyone Should Ask
Broadly speaking, there are two schools of thought when it comes to investing in early-stage ventures. There is the “same boat” approach whereby investors’ interests are aligned with those of the controlling shareholder. And, there is the “bells and whistles” approach whereby lengthy and complex documents try to anticipate all future contingencies. The object of this note is to get beyond the auto-pilot, one-size fits all, approach and identify the questions that any investor should ask when presented with an early-stage investment.
Buying and Funding Canadian Companies: The Foreign Buyer's Perspective
As a foreign purchaser of Canadian shares or business assets, simple steps may be taken today to reduce consequent costs tomorrow. Looking ahead pays off and it begins both by leaving room in the purchase agreement for a Canadian acquisition company and by properly characterising the target’s up front operational funding.
Deferred Payment on the Sale of Owner-Managed Businesses
Deferred payment on the sale of an owner-managed business is commonplace. Getting it right, however, by addressing the issues across a range of legal practice areas, is not. The purpose of this note is to cross the usual boundaries of corporate, tax and employment law to address payment deferrals coherently and in one place.
Investing in U.S. LLCs: The Canadian Perspective
Canadians investing in the U.S. are frequently asked do so through U.S. limited liability companies (LLCs). Unfortunately, while this structure works well for U.S. taxpayers, it represents a serious tax trap for Canadians. And. while these traps can generally be avoided by interposing a U.S. C-Corp, doing so raises additional issues. The nature and purpose of LLCs and C-Corps, and the tax issues they raise, are the subject of this brief note.
Flow-Through Shares for Canada's Innovation Sector?
What is to be done for Canada’s innovation sector when our banks are the most risk averse in the OECD, our venture capitalists venture little and the angels live abroad? How do we fund new technologies and the enterprises to develop and commercialise those technologies when Canada’s financial sector is still tied to asset-heavy 20th century industry? Ironically, the solution may well lie in the past—with asset-heavy 20th century industry.
Avoiding Canadian Tax When Licensing Software Into Canada
When software companies license or “sell” into Canada from abroad, there is often some leeway in how they allocate their fees between the license itself and related services. How that allocation is made results in very different tax consequences and so should be taken into account in the early planning stages.
Minimizing the Income Tax Consequences of Sending Employees to Canada
When a foreign employer sends its employees to Canada, that employer must consider its own income tax position as well as that of its employees. The following identifies the Canadian income tax issues on both sides of the coin and, in the process, maps out the route to minimizing the consequences.
Tax Loopholes: Devious Dealings or Dumb Drafting?
This week’s announcement that Ottawa is closing a loophole which allows non-residents of Canada to claim the principal residence exemption must have the country scratching its collective head. Surely if people who have never lived in Canada qualify for an exemption intended for Canadian residents then black is white, up is down and the whole sorry tax system is done for. Hopefully so. But does the problem lie with a devious cabal of tax professionals or elsewhere?
Avoiding Tariffs and Beating Bullies with Lessons Learned from Canada's Liquor Industry
Markets and supply chains are global, diktats to the contrary by Canada’s southern neighbour notwithstanding. Global trade is older than the written word and the earliest precursors to the written word signified trade goods. Global trade is, then, good. It was ever thus and ever will be. So what then, is to be done about those contrary and costly diktats?