Canada. Buy a boat in the name of my corporation

[Stu Jackson]

For those of you who are not yet familiar with dmitry:


https://www.cruisersforum.com/forums...ip-240840.html


He's just getting started.


Good luck, d.

[NaClyDog]

Originally Posted by dmitrytoda

The main goal is not to protect the capital, the main goal is to own a boat. The choice is not between "spend the money on the boat" and "invest elsewhere", the choice is between "pay it to myself as dividends, pay income tax, buy a boat" and "start a marine business with this money that may or may not be profitable".

Honestly, I'm not trying to discourage you but you may be approaching your plan with rose coloured glasses. Speak with your accountant sooner rather than later because you may be in for a surprise or three.

[dmitrytoda]

I totally welcome all the critique. Of course I am looking through rose-colored glasses, this is why I am asking here so that impartial and more experiences people could correct for my bias.

[Stu Jackson]

Originally Posted by dmitrytoda

I totally welcome all the critique. Of course I am looking through rose-colored glasses, this is why I am asking here so that impartial and more experiences people could correct for my bias.

It's not a bias, dmitry, it's lack of background in boating that is hampering your understanding. You are attempting to try to start a business in a field that you don't know much about, yet.


Try this: you're in IT, right? What would you say to someone who walked into your "office" and said: "I don't know anything about IT, I don't even know which end of the computer is the front or the back or where you park one when you wanna go shopping for food, but how do I start a computer consulting business that includes software, hardware, customer service, mail order, online business, and a store?"


How would you answer that guy?

[dmitrytoda]

You can definitely start a business in IT without knowing much about it. It will most likely fail to make a profit. If that's the only issue, I'm fine with that.

[Flod]

My advice is don’t try something like this. I don’t know Canadian tax law but in most European countries this would be begging for trouble. I actually read about a case about a guy that actually ran a marina, bought a sailboat and rented it out 5-6 weeks during the summer, user the boat 2 weeks himself and paid his own company the rent. The tax authority came down on him and made him pay taxes for the boat as a “benefit” for another 16 weeks because he “could” have used the boat as it was at his disposal. In Sweden I can assure you that we normally don’t have a 25 week sailing season... this ended up in a really expensive way of trying to avoid income tax

[Stu Jackson]

Originally Posted by dmitrytoda

You can definitely start a business in IT without knowing much about it. It will most likely fail to make a profit. If that's the only issue, I'm fine with that.

OK, let me try again:


Could we take a course in capitalism together, since you live almost closeby?

[Mike OReilly]

Originally Posted by dmitrytoda

Running a successful and profitable marine business is of course hard, I do not doubt that. Running a business that honestly tries to make a profit but does not necessarily manage to do so because, well, it is hard there is a lot of competition and whatnot, that does not sound sound so bad.

But, the way you've presented it here, you're not honestly trying to run a successful business. You're trying to avoid some tax and get a liveaboard boat. Intent matters when it comes to Rev. Canada. Your plan to save the difference between your corporate tax rate and your private tax rate is interesting, but unless you're in the far upper tax tier, and are talking major bucks, the difference is not going to add up to the cost of a decent boat and running a marine business.

I'm all for your plan to live on a boat. I tuned into your other thread about living in Vancouver because the idea intrigues me. Although I think it would be far more viable further north, or up-island, as they say.

[SVTatia]

Dmitry,
I am in the same busines as you are, IT consultant, incorporated, etc. Best bet is to buy the boat, pay the taxes and don't call attention to yourself. Once you are in the CRA's bad books you are fried for life.
Max out your RRSP and then withdraw when you are no longer on an income.
To get into the business you'll may need a Cost Guard ticket, licenses, Insurance and all that good stuff that takes your money, all going out and not much coming in, specially in the situation we are all in. At the end of the day you may have a boat but can't go sailing.

[redneckrob]

So you're clearly attempting to do this for a tax write-off and nothing more, as you yourself have admitted and clearly know. You seem to think that a bunch of wink wink nudge nudge "well if I just don't happen to get any customers it's not my fault" thing will somehow fool the CRA folks who catch folks like you for a living. Very simply if they decide to start digging then what you're proposing won't pass muster, no matter how flawless the "logic" is in your head. Not even a question on that.

So if you do decide to do it, then go in admitting to yourself that you're running a tax evasion scheme with bad consequences if you're caught. Everything you've typed here clearly indicates a person attempting to convince themselves that somehow what they know to be true isn't true. Just be honest with yourself, and if you're having a hard time with that get a reputable tax attorney or accountant to sign off on it and when they run away screaming maybe that will be enough of a reality check.

[LittleWing77]

Originally Posted by NaClyDog

Would you be so kind as to update this post when you get the relevant / required insurance for your going concern?


Cheers.

Right on, Salty!

Har-dee-har-har,
LittleWing77

[Heath68]

Originally Posted by dmitrytoda

Required insurance is a good point, haven't thought about that.
I am at very early stages of planning as you can see

Then of course there is the matter of kitting the boat out for commercial use...

[ChrisJHC]

Step 1: Don’t put your real name on a post like this!

[nicholas_isaac]

You’re literally describing tax evasion, and asking about how to get away with it on a public sailing forum. Go speak to an accountant and/or a lawyer. If you do, and they don’t instantly tell you this is a surefire way to invite a CRA audit, go speak to a better one.

[GordMay]

“Aggressive tax planning” refers to domestic, and international, strategies that “push the limits of acceptable tax planning.” When a series of transactions is undertaken, not for a genuine business purpose, but to obtain a tax benefit, the CRA can invalidate the tax-free consequences of the transaction, or series of transactions, and taxes may be owed.
There is also the General Anti-Avoidance Rule (GAAR) in our tax law, which is available to the CRA, to help deal with unanticipated circumstances. The GAAR provides the CRA with broad powers to challenge tax avoidance activities including those of financial advisors who set up schemes to hide their clients' or employers' money.
Outright “tax evasion” involves concealing income or assets, or by making false statements, to deliberately avoid tax on them. Tax evasion violates the object, spirit and letter of the law. Both tax advisors and taxpayers can be criminally prosecuted.