Thank you, this is very enlightening.
Any chance you know what tax avoidance strategy Tavares is employing that will cost him hundreds of thousands in fees?
It is a tax deferral/lowering strategy. Basic idea is you buy a corporation with tax losses and transfer loses over many many years to a deferral corporation so as to defer/reduce taxes to a point in time when your income is reduced. The deferral spreads income earned over a lengthy period to reduce taxable income in early years. Now your money is locked up too so you can't get at it either.
Basically you take income and spread it over over a longer time frame and match tax loses to deferred income. You still pay your tax but pay less a highest tax brackets thus reducing overall tax.
It is all legal but you have to be in the know to know where these vehicles are parked. And how to best access full value from the transactions. And then you need the brand name stamp saying it is legal. Now that all said the CRA recognizes why these professionals are getting paid hundreds of thousands to do it so they question every transaction. And there are not a lot of people doing it so it is inherently risky. But the old saying applies when you have a lot of money you can pay a lot of money to reduce what you could have paid the government. and you get a net savings from a bottom line cash perspective after tax. Trump has been using every trick in the book in the US for years. He always says it is legal so i can do it so why wouldn't I. and he is right.
Lastly instead of taking money out of vehicle as income you dividend it out as much as you can through shareholders loans.
Other strategy the US and Canadian governments are starting to shut down which is the transfer of intangible assets from a corporation out of country to lower/no tax countries. And this strategy is largely used by mega MULTI national corporations to reduce income taxes in countries where they have more revenue to transfer that revenue to match assets in lower/no tax countries. And it is legal in tax code but ethically it is tax avoidance. So past few years Canadian and US governments have hired these top guys to rewrite the laws to make it much more difficult to use the loopholes.
Again this stuff is very complex stuff and you have to look at each corporation and each transaction in each corporation and make sure it can survive an audit.
