CAN ALTERNATIVE INVESTMENTS BE TAX EFFICIENT?

In Canada the answer to the question is quite likely yes!

The challenge in Canada is the complexity of the tax environment given the two layers of government involved in reaching in to your pocket.

I am certainly not an accountant or a tax planner, but a few things you should know about if you don’t already is that the government gives you a tax break on small business investments.

The Alternative Investment sphere is often a very creative space where a willing investor meets an entrepreneur and an agreement is stitched together that solves a few problems – cash for the entrepreneur and a return for the investor.

In some specific instances, the investor may very likely qualify for Canada’s Business Capital Gains exemption. There are some rules, one of which is you must be a shareholder in the company. That alone narrows down your options in terms of how the deal is structured but lets face it, no matter what the deal is, if your return is tax exempt, what else is there to think about.

The lifetime exemption is now $800,000 per person, a massive amount of savings.

You obviously need to get professional advice in regards to your personal situation, but if you are investing in businesses in Canada you need to make sure you can capitalise on this opportunity. Who knows how long it will be there for.

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