An NSULC is incorporated pursuant to the Nova Scotia Companies Act.
A Nova Scotia ULC (or NSULC) is formed under section 9 of the Nova Scotia Companies Act, RSNS 1989, c.81 (NSCA), which permits a company to be incorporated with or without liability and not having any limit on the liability of its members. An NSULC is a separate legal entity and is the proper party to a contract. As a result, treaty benefits such as the reduced rate of withholding tax are not available to a limited liability company. An advantage of a ULC to an individual U.S. investor is that they can claim a foreign tax credit on their individual U.S. tax return for Canadian taxes paid by the NSULC. An NSULC is incorporated pursuant to the Nova Scotia Companies Act. A memorandum of association, a solicitor’s declaration and a list of officers and directors must be filed with the Registrar of Joint Stock Companies. Another option would be to use two NSULC’s in order to allow the U.S. purchaser to deduct purchase price interest. First, Targetco would be continued in Nova Scotia as an ordinary Nova Scotia company. As a Canadian incorporated entity, the NSULC is a resident of Canada for the purposes of the Canada Income Tax Act (the “CITA”) and, as such, is taxable in Canada on its worldwide income. An NSULC is also a resident of Canada for the purposes of the Canada-US Tax Convention (the “Convention”). The only ordinary purpose for which an NSULC is a “partnership” or “branch” is for US tax purposes. This is not so unusual, since the check-the-box regulations recognize similar-type hybrids in virtually every major country in the world. Under the Canada-U.S. Tax Treaty, an NSULC is a “company” for Canadian purposes of applying the treaty and is a “resident” of Canada under Article IV of the treaty. Therefore, unlike a U.S. limited liability company, an NSULC benefits from the treaty. Another option would be to use two NSULC’s in order to allow the U.S. purchaser to deduct purchase price interest. First, Targetco would be continued in Nova Scotia as an ordinary Nova Scotia company. An NSULC will be a Canadian resident and, therefore, rent payments made to an NSULC will not be subject to the 25% withholding requirements imposed by the Canadian Income Tax Act. Under the Act, a Canadian resident who pays rent to a non-resident must withhold tax from the rent payment at a rate of 25%. Another option would be to use two NSULC’s in order to allow the U.S. purchaser to deduct purchase price interest. First, Targetco would be continued in Nova Scotia as an ordinary Nova Scotia company. An unlimited liability corporation (ULC) is a Canadian corporation designation, wherein shareholders are liable up to unlimited amounts for any liability, act or default of the corporation. By comparison, in most corporations, shareholders are not usually liable due to a limited liability model. In essence, the ULC can act as a “ flow-through ” or “disregarded” entity for US tax purposes as the US tax rules “look through” the ULC to its shareholder(s). Under the Canada-U.S. Tax Treaty, an NSULC is a “company” for Canadian purposes of applying the treaty and is a “resident” of Canada under Article IV of the treaty. Therefore, unlike a U.S. limited liability company, an NSULC benefits from the treaty. Another option would be to use two NSULC’s in order to allow the U.S. purchaser to deduct purchase price interest. First, Targetco would be continued in Nova Scotia as an ordinary Nova Scotia company. 1 Answer. 0. 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 Company An 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 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. An NSULC is incorporated pursuant to the Nova Scotia Companies Act. A memorandum of association, a solicitor’s declaration and a list of officers and directors must be filed with the Registrar of Joint Stock Companies. Another option would be to use two NSULC’s in order to allow the U.S. purchaser to deduct purchase price interest. First, Targetco would be continued in Nova Scotia as an ordinary Nova Scotia company.
http://www.worldservicesgroup.com/publications.asp?action=article&artid=533 http://www.mktaxaccounting.com/2010/05/27/nova-scotia-unlimited-liability-company/ http://corporate.findlaw.com/corporate-governance/making-use-of-nova-scotia-unlimited-companies.html http://www.mktaxaccounting.com/2010/05/27/nova-scotia-unlimited-liability-company/ http://www.taxvancouver.com/category/nsulc/ https://en.wikipedia.org/wiki/Unlimited_liability_corporation http://www.taxvancouver.com/category/nsulc/ http://www.experts123.com/q/what-is-a-nova-scotia-unlimited-liability-company-nsulc.html http://www.experts123.com/q/what-is-a-nova-scotia-unlimited-liability-company-nsulc.html http://www.taxvancouver.com/category/nsulc/
what is an NSULC