Fund Management Qualifying Activities
Managing investments, providing financial advice, managing foreign exchange, preparing financial research
Investment Fund Management
- Managing an investment portfolio
- Managing foreign or Canadian investments for a non-resident
- Managing securities for a resident that are issued by a non-resident and not listed on a Canadian exchange
- Dealing in short-term securities with a non-resident person or broker
Financial advice and research
- Providing financial advice to a non-resident (this excludes legal, accounting or tax advice provided by a corporation in the business of providing that advice)
- Preparing financial research for a non-resident (this excludes legal, accounting or tax research provided by a corporation in the business of providing that research)
Managing foreign exchange activities for a non-resident
- Administrative support services directly related to a financial activity of a non-resident financial business
- Aco is incorporated in Canada with a fixed place of business in British Columbia. Aco is 100% owned by Parentco LLP, a limited partnership located in the Cayman Islands.
- Aco is a hedge fund manager in the business of buying and selling investments such as shares, debt, and other financial instruments.
- Parentco LLP transfers an executive to British Columbia to manage the hedge fund.
- Aco is eligible to apply for registration under the International Business Activity Act (IBAA) since it will be carrying on an “international financial business”, was incorporated in Canada and has a permanent establishment in British Columbia.
- Aco will be required to become a member of AdvantageBC in order to remain registered.
- Aco is carrying on an active business of managing foreign investments (consisting of securities not traded on a Canadian exchange) for Canadian and non-resident clients.
- Aco is also managing Canadian investments for the benefit of its non-resident clients. Aco also provides financial advice to its non-resident clients.
- These activities qualify as international financial activities.
- The executive being transferred can qualify as an Executive Specialist once the company registers its qualifying activities of managing foreign investments and providing non-residents with investment advice.
- Once registered, the Executive Specialist will be eligible to claim a refund of provincial income tax of 100% in Years 1 and 2; 75% in Year 3, 50% in Year 4; and 25% in Year 5.
- Aco will be eligible to claim a refund of its provincial corporate income taxes paid in respect of its international financial business.
- Aco may also be able to qualify for reduced taxation (50%) on capital gains, which may apply to realization of carried interest.