Private Foundations

A private foundation is a vehicle through which wealthier individuals and families benefit others.   They can be used instead of trusts, and are particularly beneficial for tax reasons.

What is a foundation?

Unlike trusts, a foundation does not comprise separate legal and beneficial ownership and interests, and is more akin to a company.  Though a foundation is an incorporated legal entity, it does not have shareholders and there are no trustees.  Instead, the assets are held by the foundation on behalf of the beneficiaries – which can include the founder.  Council members (which, again, can include the founder) carry out a role similar to that of trustees in a trust situation.

The extent to which foundations can protect assets from third party claim depends on a number of factors, not least your personal aims.  For this reason, it is vital that expert advice and planning goes into any proposals to establish a foundation.

Benefits of a foundation

Effective asset protection can be achieved through a private foundation, if properly planned, as the actual ownership of the assets is effectively divorced from the founder. 

Tax benefits

The CRA has previously tried to tax some foundations as though they are trusts, applying the punitive tax regime applicable to non-resident trusts (NRTs).  However, the CRA has clarified that it will look at the characteristics, notably the nature of the relationship between the various parties and the rights and obligations of the parties under the applicable laws and agreements, in determining the status of an entity for Canadian tax purposes.

in an important case on the issue, the Tax Court’s focus was more on whether there was a trust relationship and whether the foundation could be seen as a trustee – and whether it could be a corporate trustee – rather than whether the foundation in that case was a trust.  If correctly established, an offshore foundation may provide many or all of the tax benefits previously available to offshore  trusts.

How can we help?

If you are considering establishing a foundation for the purposes of asset protection, robust advice and sound planning is key. To ensure a foundation will protect your interests, and minimize the risks of legal claims and taxation, it is vital to take specialist tax advice from experienced asset protection solicitors with successful experience in private foundations.

Our asset protection lawyers are highly experienced in setting up foundations and trusts.  Our practice head, Andrew Rogerson, is an internationally known, award winning asset protection specialist barrister with many years’ practical experience in onshore and offshore jurisdictions.

Rogerson Law Group provides asset protection and Canadian tax law advice throughout Canada and internationally. In the GTA we are easily accessible in Toronto, Scarborough, Mississauga, Vaughan, Brampton, Richmond Hill, Etobicoke, and Barrie and surrounding areas with offices located in downtown Toronto, Barrie, and an associated office Ottawa. We visit Dubai every two months.