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Silicon Halton Meetup 63 - Selling into the US - IP & TAX. By SB Partners LLP


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Slide deck from Meetup 63, January 13, 2015, Silicon Halton meetup.
Topic: Selling into the US - IP & TAX

Published in: Technology
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Silicon Halton Meetup 63 - Selling into the US - IP & TAX. By SB Partners LLP

  1. 1. • 7:00 pm Welcomes • 7:05 pm Thank you’s • 7:15 pm Keynote Selling into the U.S. – Taxes & IP • 8:15 pm G2KYM’s • 8:30 pm Mark Your Calendar • 8:45 pm Networking Agenda
  2. 2. Welcome To The MEV Innovation Centre A Dynamic Place to Work, Share Ideas and Grow Your Business Connecting Minds - Igniting Ideas- Inspiring Innovation
  3. 3. Office Suites • Great for Small/ Growing Businesses • Affordable/Flexible Lease Terms Coworking Desks • Available Daily, Monthly • Memberships Available Meetings and Events • Boardrooms – Hour/Day • Private Meeting Rooms • Networking /Receptions • Seminars/Workshops MEV Innovation Centre Business Support Services • Business Advice • Mentoring • Market Research • Access to Capital
  4. 4. Thank you’s
  5. 5. Vinutha Shanmukharadhya CoLab Executive Summary
  6. 6. Meetup 62 Video Montage Thanks to Roderrick Reano of for creating a Video Montage of Meetup 63
  7. 7. SoloP2P Facilitator Alan Montgomery of ModTel Installations is a new key contributor: he’s taking over facilitation of Solopreneur Peer2Peer
  8. 8. Structured Ideation Toolbox Meetup 61 – Nov 2014 Rami Tabbah, Ergonaute Consulting @Ergonaute
  9. 9. Selling into the United States IP and Taxes
  10. 10. Agenda • Taxes on Business Income • Capital Gain Exemption on Small Business Shares • Corporate Structures • Intellectual Property • U.S. Taxes
  11. 11. A Good Problem to Have! The company is making money. What do I do?
  12. 12. Taxes on Business Income • The small business deduction reduces the corporate tax rate down to 15.5% for taxable income up to $500,000 (for active business activities) • Must be shared among “associated” companies
  13. 13. Retain Income in the Business • Retaining funds in the business allows you to earn a rate of return on a higher principal balance than if you bonus or dividend out the funds • After-tax funds in a corporation is 84.5% vs. personal of 53.5% = difference of 31% • Any investment income is taxed at 48% in the corporation but a portion of this tax is refundable later if a dividend is paid out of the corporation
  14. 14. Capital Gain Exemption on Small Business Shares • This is an important tax break for business owners • Allows for each shareholder to realize a gain up to $800,000 tax free = savings of $185,000 • Need to ensure that the shares qualify for the exemption
  15. 15. Capital Gain Exemption on Small Business Shares Rules: • Shares must be of a Canadian controlled private small business corporation • At time of disposition, 90% of the corporation’s assets are directly used in active business carried on in Canada • Shares were held for more than 24 months preceding disposition with 50% of the assets used in active business during that period
  16. 16. Capital Gain Exemption on Small Business Shares • Need to ensure that the company does not have significant excess assets such as excessive cash or investments held in it • Excess capital and investments are at risk from creditors
  17. 17. Problems? • Company retains profits and invests within the corporation. Eventually the company won’t meet the tests for the capital gain exemption as investment assets build up • Excess cash is held in company which is at risk to creditors What can we do?
  18. 18. Holding Company Dividend Pay a dividend up to the holding company and invest the assets in the holding company Still have a problem since the holding company doesn’t get a capital gain exemption Operating Company Holdco Shareholder
  19. 19. What to Do? • Use a Family Trust to own the operating company and have the holding company as a beneficiary of the Family Trust • Allows you to pay a dividend up to the holding company on a tax-free basis for investment • If the company is sold, the gain would occur at the Family Trust level
  20. 20. Family Trust Structure • The beneficiaries of the Trust include family members and a corporate beneficiary • Beneficiaries over the age of 18 can receive a dividend to split income • Assuming no other sources of income, a dividend of $49,000 would be essentially tax-free
  21. 21. Family Trust Structure • Provides ability to multiply the capital gain exemption over several beneficiaries. A typical family of four results in an overall capital gain exemption of $3,200,000 • Excess cash can be transferred to the corporate beneficiary without triggering additional tax on the dividend
  22. 22. Family Trust Structure Operating Company Family Trust BeneficiariesTrustee Dividend Corporate Beneficiary
  23. 23. Problem? • What about my intellectual property? Is it at risk? What can we do?
  24. 24. IP Held in a Separate Corporation Operating Company Family Trust BeneficiariesTrustee Dividend Corporate Beneficiary IP Services charge
  25. 25. Sales to U.S. Customers • If you earn income from sales to the U.S., you should file a U.S. Corporate Tax Return • If you don’t have a physical presence in the U.S., then it will likely qualify under the U.S.- Canada Tax Treaty and no taxes apply • Protective filing • Don’t charge HST to customer outside Canada
  26. 26. Sales to U.S. Customers • If you have a physical presence in the U.S. (i.e. office, employees) then you will need to file a full U.S. Tax Return and pay tax to the IRS • Need to determine effect of U.S. state taxes and possibly city taxes
  27. 27. Questions Greg Clarke (905) 633-6323 @GregClarkeCA
  28. 28. Announcements
  29. 29. SiliconHalton 2.0 Changes • Recognizing Backers • We need way more help – Greeter – Contributors to own/run one Meetup in 2015 • Paid vs. Free in 2015 • Crowdfunding – 2015 Meetup on Crowdfunding – Workshop series to actively run our 2015 Crowdfunding • Business Directory - $250/year – Conceived at Meetup #3, Jan 2010 – Sign up here:
  30. 30. #G2KYM(Get to Know Your Member) Key Contributor: Kimberly Neale Job Developer at Halton Region / Employment Halton @ImOnit4U
  31. 31. Focus • patent drafting, filing, prosecution and opinion work • industrial design and trademark protection Education B.A.Sc., University of Toronto, 2000 LL.B., Queen's University, 2004 Qualifications Admitted to the Ontario Bar, 2005 Registered Canadian Trademark Agent, 2006 Registered Canadian Patent Agent, 2009 Registered United States Patent Agent, 2009 Contact Us | | Matthew Graff, Partner B.A.Sc. (Matl. Eng.), LL.B. | 905.817.6107
  32. 32. Kyle Bissett, Co-Founder Phone 905.334.9862 Twitter @gradpotential • Allowing employers to realize the full potential of graduating or recently graduated students • Using 12 years of Hiring Simulation experience • Working with Silicon Halton, I hope to be involved in discussions on the Hiring Process and how software can be used to aid it. realize candidate’s potential by seeing them in action
  33. 33. Scoring Candidates
  34. 34. • Perception vs. Reality
  35. 35. Logical Decision Making • Compare candidates • See who sticks out
  36. 36. • @gradpotential
  37. 37. Mark Your Calendars
  38. 38. Meetup #64 – Wearable Technology Wearable tech in the health care industry & regulations Presenter: Dr. Jayson Parker, Medical Biotechnology Analyst & Lecturer University of Toronto When: Feb 10/15, 7pm Where: O’Finns Irish Temper, Oakville
  39. 39. Women In Tech Peer2Peer #5 Topic: What would you do if you weren’t afraid? • Feb 12, 2015, 11:30am-1pm • Location: Panera Bread 220 North Service Road, Oakville Key Contributors: Lisa Denis Founder/President at Enrolink Inc. Kathryn Lagden VP Digital Strategy and Integration School Family Media
  40. 40. BigData Peer2Peer Topic: Big Data & Mobile Apps • Thursday Jan 15, 6:30pm • Trafalgar Ridge Montessori School 2379 Trafalgar Road, Oakville • LinkedIn discussion: • Register: Key Contributor: Andy Wang Software Engineeer Null Pointer Software Inc.
  41. 41. SoloPreneur Peer2Peer #42 • Thursday, Jan 15, 8:30 - 10am • Topic: 2015 Objectives • Location: Hampton Restaurant at the Quality Suites Hotel, Oakville (QEW/Bronte Rd) Key Contributor Alan Montgomery ModTel Installations
  42. 42. Open Floor
  43. 43. linkedin/siliconhalton @siliconhalton