Global Intangible Low - Taxed Income and Canadian Corporations
                     Global Intangible Low-Taxed Income and Canadian 
Corporations
https://www.maroofhs.com/post/gilti-for-us-citizens-in-canada/
If you are a U.S. person and shareholder of a Canadian corporation, 
especially Canadian controlled private corporation (CCPC) or 
professional corporation, you might be struggling around GILTI.
What is GILTI?
How is GILTI calculated?
How to avoid GILTI?
If you are having all these questions, you are not alone!
Let’s simplify the GILTI for you. 
If you need a more detailed but simplified understanding of G
ILTI and how it affects the U.S. shareholders of Canadian corp
orations, read here
.
GILTI is a complex tax topic and ideally should be dealt by a cross 
border tax accountant in Toronto. However, you can avoid the GILTI 
altogether by one simple decision – Pay yourself Salary from your 
Canadian corporation!
Yes, by paying yourself salary you can remove the earnings from the 
corporation. The income is reported as an employment income on 
your Canadian income tax return. Foreign tax credit against the 
income tax credits paid in Canada are available to apply against US 
income tax liability of this foreign income. Personal Income tax rates 
in Canada are generally higher than the U.S. ones so you don’t end 
up paying taxes in U.S.
Another way to optimize your GILTI tax lability is to file section 962 
election. This election allows you to treat income of your foreign 
controlled corporation as a domestic corporation so apply 21% 
corporate tac rate. The down side is when you take dividends from 
Canadian corporation, you will pay additional 15% tax on dividend 
income. However, you will eb able to claim foreign tax credits at both 
corporation and individual level. BY far this is the best option for 
many small business owners.
GILTI is taxed at the highest marginal rate for the individuals. For 
corporate taxpayers, it is taxed at 21% and a sec 250 deduction 
brings it down to 10.5%.
Maroof HS CPA Professional corporation are 
cross border tax experts in Canada.
You can reach us at:
3-100 Hanlan Road, Woodbridge, ON L4L 4V8
Phone: (647)724-4308
Email: [email protected]
https://www.maroofhs.com/contact/
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