Do I need a structure review if nothing in the group has changed?
Nothing changing is itself a reason to look. Most cross-border structures were built one decision at a time, and each entity was right for the situation in front of the owner in the year it was formed. Reviewed as a whole rather than one company at a time, a group usually contains at least one entity whose original purpose no longer exists and whose reporting cost still does. A review maps ownership, how each entity is classified in each country, the character of what it earns, and the reporting each one attracts. That picture is what tells you whether the structure still matches the business.
How do I close a dormant foreign subsidiary without triggering tax?
You plan the wind-up rather than execute it. Simplifying a structure is a taxable event: removing an entity moves assets, realises what has accumulated inside it and changes the character of what is left, and those consequences arise in every country that recognises the entity. So the order of work is to establish what is inside the company, then how each country classifies it, then what the removal does in both systems, and only then to file anything. Done the other way round, the paperwork is complete and irreversible before anyone has priced the outcome.
What does a foreign affiliate structure review actually look at?
Four things, in order. Ownership, meaning who holds what, through which entity, in which country. Classification, meaning how each country treats each entity, because the two answers are often different for the same company. Surplus and the character of income, meaning whether what has accumulated is active or passive and what that means when it moves. And reporting, meaning which return each entity attracts in each jurisdiction, considered separately from whether it has any activity. The reason for that order is that each step forecloses or preserves an option in the next one.
Why am I filing forms for a company that does no business?
Because the reporting attaches to the entity, not to its activity. A company that has stopped trading still exists, is still owned, and still appears in the ownership picture each authority asks about, so the information return remains due and the exposure is per form rather than per pound of profit. That is the cost which outlives a subsidiary usefulness. The way out is to remove the entity deliberately: establish what is in it, how each country classifies it, and what the removal realises. The filing obligation ends when the entity does, and not before.
Can I just strike the overseas entity off and stop filing?
You can strike it off, but the tax result is not neutral and it cannot be undone once the register is clear. Striking off distributes whatever the company still holds, crystallises what has accumulated in it, and ends the entity in one country while the other may still treat it as in existence for part of the year. Filing obligations run to the end of that period, not to the date you decided to stop. Treat it as a transaction to be planned: what is inside, how each country sees it, what comes out, and in which order.
In what order should we simplify a group of overseas companies?
Map before you move. Ownership and classification first, because they decide what every later step means. Then the character of what has accumulated in each entity, since that determines what a distribution or a wind-up produces. Then the reporting each entity attracts, which tells you what the simplification is actually saving. Only then choose the sequence of removals, and expect that sequence to be spread over more than one year. Collapsing several entities at once stacks taxable events into a single period with nothing available to absorb them.
Why are corporations double taxed?
Corporate double taxation happens because the company and its owners are separate taxpayers. The company pays tax on its profit; when the after-tax profit is distributed, the shareholder pays tax on the dividend. Canada softens this with the dividend gross-up and credit, which is meant to leave a shareholder roughly where they would have been earning the income directly. The United States taxes the C corporation and then the dividend, with no equivalent integration. See dividends to a foreign parent.
Why should a Canadian rarely own a US LLC?
Because the two systems classify it differently. The United States generally treats a single-member LLC as transparent while Canada treats it as a corporation, so the income is taxed in different hands in each country and the foreign tax credit does not line up. The result is tax paid twice with no relief to claim. Other structures reach the same commercial outcome without the mismatch. See why a Canadian should rarely own an LLC.
