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Sent: Thursday, March 11, 2004 5:20 AM
Subject: Re: Mind & Management for a Canadian company which is a sub of a US company - what does it mean?
Treat as Proprietary.
Good Morning David ,
Thanks for the reply , I guess what I am asking is , what are the Tax
implications if the US parent is making certain business decisions that
monetarily affect the Canadian corp since the Cad corp company is suppossed to
be operating at "arms length " in intercompany dealings , does this go against
the intention of " mind & management " and "arms length " business
transactions since it could be constarined that inter co transfers of material
values are not entirely "arms length" is someone in the USA is calling the
shots ?
Thanks & Regards,
TXXXXXXXXX
===================================
The CRA can always come along and charge that dividends are been stripped or that there is unfair pricing.
If the Canadian company is wholly owned by the American (or French or German or English) company, it is only logical that major decisions are being made by the parent company and major shareholder.
Any company can be charged with "dumping" their product into the other country. Hyundai Cars, and Interprovincial Pipe come to mind.
The WTO usually rules on this subject. The IRS and CRA rule internally on whether profits are being stripped from a subsidiary company.
Read the following and follow the links.
Anti-dumping
If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be "dumping" the product. Is this unfair competition? The WTO agreement does not pass judgement. Its focus is on how governments can or cannot react to dumping - it disciplines anti-dumping actions, and it is often called the "Anti-dumping Agreement".
Introduction back to top
Introduction to anti-dumping in the WTO Links to anti-dumping section of the WTO guide "Understanding the WTO".
Technical information about anti-dumping Links to the anti-dumping section of the WTO training package.
I am mising your concern somehow.
>>> David Ingram at home - bus at [email protected] 03/11/04 03:03am >>>
QUESTION:
Can you please explain what "Mind & Management " means in the context of a
Canadian Corporation which is a subsidiary company of a US head office
company ?
Are all decisions to be generally made by management in Canada with input
from the US head office for this to be true ?
=========================================================
david ingram replies:
The residence of a corporation is generally where its management resides.
However, no matter where the mind and management resides, all corporations
incorporated in Canada after 27th April 1965 are resident in Canada for tax
purposes.
I do not understand your question however. For Canadian purposes, mind and
management is usually used to determine if a :Residence of a corporation
normally is where its management resides. However, all corporations
incorporated in Canada after 27th April 1965 are resident in Canada for tax
purposes, regardless as to where the mind and management resides.
I do not understand your question however. Mind and Management is usually
used by the Canadian government to make a foreign company (usually in a tax
free country) taxable in Canada. In your case the Canadian sub is
automatically taxable in Canada because it is incorporated in Canada
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