Does an estate freeze still work if my children live abroad?
A freeze can still do its job here — fixing the present value in your hands and letting future growth accrue to the next generation — and that domestic result is unaffected by where your children live. What changes is whether the other country recognises it. A successor who is resident or a citizen elsewhere brings that system's rules to the shares they receive, and those rules decide independently whether the reorganisation was a taxable event, whether the new shares carry the old cost, and whether the structure itself must be disclosed. So the freeze is assessed twice, on two sets of criteria. We establish each successor's status before the steps are drafted, because the order of the steps is often what decides the outcome.
Does the other country recognise a Canadian rollover on a share reorganisation?
Not automatically, and recognition is a separate question from validity. The provisions that defer tax on a reorganisation here are domestic law; the other country applies its own recognition rules to the same transaction and can treat it as a realisation, as a distribution, or as the creation of a structure that has to be reported. Where it does not follow the deferral, tax can fall due abroad on a transaction that produced no cash and no Canadian liability, and the difference in timing can also strand a credit. The practical approach is to test the intended steps against both systems on paper first, and to change the sequence or the vehicle where the second system will not follow.
Should we do the freeze before or after my successor emigrates?
Sequence is usually the whole answer. The same set of steps — a freeze, a trust, a share exchange — can be a deferral in one order and a taxable event in the other, because each system tests the status of the parties at the moment each step happens. A transfer made while a successor is still resident here is a different transaction from the identical transfer made after they have arrived somewhere else, and the departure itself may carry its own consequences for shares already held. So the planning question is not only which structure, but which step happens first and who is resident on that date. We set the order out in writing before anything is signed.
Can a family trust hold the company shares for a child living abroad?
It can hold them, and the more useful question is what that costs on the other side. A trust that is unremarkable here can be a reportable structure elsewhere, and a beneficiary who is a foreign person may acquire personal disclosure obligations over their interest and over distributions, whether or not anything is payable. Some systems also look through the trust and attribute its income to the settlor or the beneficiary directly, which defeats part of the reason for using one. None of this rules the trust out; it prices it. The residence and citizenship of every beneficiary is tested first, and the deed is then drafted knowing which obligations come with each of them.
Who pays the tax when a successor is resident in another country?
Two answers can be true at once. The transferor may have a liability here if the reorganisation is not, or not fully, a deferral in their hands; the successor may have one abroad if their system treats the receipt of shares as a realisation or a distribution. Neither obligation displaces the other, and relief between them depends on whether the two systems are taxing the same person on the same income in the same period — which, in a succession, they frequently are not. That is why succession across a border is planned as one transaction with two tax analyses, rather than as a domestic plan with a foreign footnote at the end.
Will our succession plan have to be disclosed to a foreign tax authority?
Possibly, and disclosure is a separate test from tax. A number of regimes require the existence of a trust, a holding company or a reorganisation to be reported by anyone within their reach who settles it, benefits from it, controls it or receives shares from it. The obligation attaches to the person, not to the plan, so a structure created entirely here can be reportable because of who stands inside it. The reporting can also begin in the year the step is taken rather than when value is eventually received. We list, for each successor, which disclosures their status brings, and we do that while the steps can still be changed.
Is "fund transfer pricing" the same thing as transfer pricing?
No — and if you came here to calculate FTP, this is not it. Fund transfer pricing is a bank's internal allocation of funding costs and benefits between its own business units, a treasury and asset-liability management discipline used to measure branch or product profitability. Tax transfer pricing is about prices between legally separate related parties across borders, and about which country taxes the resulting profit. The words overlap; the fields do not. See our transfer pricing work.
How does a remittance actually work, and is it taxed?
A remittance is a transfer of money, not a category of income, and moving your own funds between your own accounts is not what creates tax. What can create tax is the income behind the money and the rules of the country it leaves. India, for instance, collects tax at source when a resident individual remits abroad under the Liberalised Remittance Scheme, and requires certification before certain payments leave. The transfer is the trigger for paperwork rather than for tax. See the LRS and tax collected at source.
