Are you establishing or acquiring a business in Nova Scotia? A Nova Scotia Unlimited Liability Company (NSULC) may be advantageous to you and your business.
What is a Nova Scotia Unlimited Liability Company (NSULC)?Created under the Nova Scotia Companies Act, an NSULC permits the incorporation of a company with no limit on the liability of its shareholders. The result is a hybrid entity – a taxable corporation for Canadian tax purposes and a flow-through entity for U.S. tax purposes. This allows for unique opportunities in cross-border tax planning – making it even more attractive to U.S. investors with business in Nova Scotia.
Advantages of a Nova Scotia Unlimited Liability CompanyAn NSULC is useful in transactions for a company doing business in the U.S. or Canada and where a U.S. resident has a direct or indirect interest in the NSULC. The following are some examples of the benefits of using an NSULC:
Tax
- A U.S. taxpayer may be able to use losses from its Canadian business as a deduction against its income for U.S. income tax purposes.
- A U.S. taxpayer could use the NSULC to limit transfer pricing issues to Canada.
- A U.S. individual could have a local corporate presence in Canada (avoids, among other things, the cumbersome Canadian branch tax calculation) while at the same time having the benefit of a flow-through entity for U.S. income tax purposes (e.g., an NSULC structure could be utilized by a U.S. individual so that he or she could use the NSULCs Canadian income tax as a credit against U.S. income tax; something a U.S. individual could not accomplish using a Canadian limited company).
Director’s ResidencyNSULCs do not have residency requirements for directors of Nova Scotia companies. The board of directors may be comprised entirely of non-residents, allowing the company to appoint a board based on skill and ability rather than geography.