He could try this:
You Pay Taxes! But does Your Wealthy Neighbour?
The richer he or she is the more likely it
is that you are paying more in tax than they do. Assuming that
they`re getting competent professional advice of course. But the
wealthier your neighbor is the more likely it is that he or she is
receiving good tax counseling. So, why do ordinary working Joe Canadian
and Jane Canuck pay more in tax than the wealthy?
Well, the process the wealthy use to lessen and/or eliminate their tax
bill can be so simple that you`ll probably kick yourself once you
hear about it. And no, you don`t have to leave Canada or open foreign
bank accounts or even take part in the always questioned tax shelter.
All you have to do is take out a loan.
That`s right, go to your bank and take out a loan. The bigger the
better. Then, take that loan and wisely invest it. Why again? Because
the interest on a loan taken out for legitimate investment purposes is
tax deductible. Yup, that`s correct.
So let`s say that you take out a large loan, invest it in stocks or
mutual funds and your investments increase in value. How much tax do
you pay on the increase? None at the moment. Not until you sell them.
(And we will look at this further down below).
Let`s assume now that you also receive some dividends from your
investment. Of course you will pay tax on your dividends but you can
use the interest from your loan to reduce and/or eliminate any tax as a
result of this.
But it gets better still. Let`s suppose now that your interest
deduction zeroes out any dividends you receive. What then? Well, if you
are gainfully employed, you may be able to reduce and even eliminate
the tax that you pay on your employment income. Yup again.
So it is very possible to reduce your yearly tax bill or even, if you
are very fortunate, pay a bare minimum of tax. But it gets even better
yet! All these years that you are paying reduced or no tax, YOUR
INVESTMENT CONTINUES TO GROW! Subsidized by the government which has
allowed you to deduct interest costs.
But what about when you cash out your investments? No doubt you will
have a hefty tax bill as a result of capital gains (lets assume now
that you want to cash out all of your investments at once).
Well, if you are successful yes you will be billed for tax. But do you
have to pay it? The very wealthy can often get around this if they plan
to depart Canada for sunnier climates. How do they do it?
One, they do not tell a soul that they are departing - they keep it
very secret.
Two, when you sell investments there is no tax deducted at source. You
assess yourself and pay the tax when it comes time to file. April.
Three, when they cash out their investments they cash them out very
early in the year. January. February. March. Never November or
December.
Why cash out early in the year? Because a tax receipt won`t be issued
until the following year. February or March. Since you don`t have to
file until April it can give you a year head start if you cash out your
investments early. And it usually takes the CRA several months after
April before they finally decide that you have a tax debt so could gain
18 months plus. You`re long gone.
Just don`t leave Canada for the USA, the UK or the Netherlands.
And make sure that you keep your exit plans a secret until your assets
are safely out of reach.
So, it is quite possible that your millionaire neighbor, with the
proper tax advice, is paying less in tax then you do right now although r />you might only earn a fraction - $40K, $50K, $75K or whatever - of what they earn.
------------------------
Canadians can and do get away without
paying their assessed arrears. Want some examples?
Let`s start with Ed Fitch of Fitch Research Corporation in BC. He
racked up a $5 million dollar tax debt under the SRTC. When RevCan came
knocking on his door he fled. Rumoured to be in Southeast Asia. He did
no pay. He did not go to jail.
How about Harold Arviv of Ontario? He too ended up millions in debt to
the tax man it is rumoured. And he did go to jail. But not for not
paying his tax arrears. Nope. He ended up going to jail for bombing his
nightclub for the insurance money. Not one thin dime was collected
there either.
Then there is Frank Hertel. He ended up owing the tax man (and woman)
in excess of $30 million dollars. That`s right $30 million. Not one
penny was collected there either. Frank resides in Brazil now.
North of Toronto there was a senior married couple by the last name of
Monaco. They left Canada for; you guessed it, Monaco. For good. And
owing approximately $30K. No payment was ever received and the
husband`s debt was deleted as uncollectible.
Want another? How about the Niagara Hotelier who resided in the Golden
Horseshoe, Mr. Tse. He owed well into six figures and moved to
Massachusetts under the watchful eye of RevCan. The US Customs was so
concerned that they actually warned RevCan that Tse was moving assets
into the US. RevCan did nothing.
Now, obviously, this could be a neverending story. Canadians walk away
from Canada, and their tax arrears, quite regularly. They get away
without payment in full (and very often without even payment in part).
And they do no go to jail for non payment.
You don`t have to believe it. But that doesn`t mean that it
doesn`t happen.
