TAX EFFICIENT STRUCTURES

1

A tax efficient structure is a business structured to provide benefits by utilizing tax laws to your advantage.  Axiom provides structures that:

– Raise capital more efficiently

– Provide a faster and cheaper approach to Going Public

– Trigger tax refunds not otherwise possible

2

Axiom does this through three tax efficient structures:

1.

PPC (Public-Private-Company). 

A company that is “public” for tax purposes, but has “private” shareholdings.

2.

Subco (Subsidiary of a Public Company). 

A subsidiary of our publicly listed company, Axiom Capital Advisors (CSE: ACA), and is treated as “public” by CRA for certain type of transactions.

3.

MFT (Mutual Fund Trust). 

Tax structures allowed by CRA that are treated as “public” entities for tax purposes.

Axiom will create the tax efficient structure that will help you succeed in business:

PPC – Raising Capital.  Every year Canadians contribute approximately $50B to their RRPS accounts, but most businesses are unable to receive investment from RRSP and other registered accounts.  A  PPC allows private corporations to raise Registered Funds (RRSP, TFSA, etc.) from investors by issuing debt and/or equity securities.  A PPC can be reused.

MFT – Raising Capital. MFT’s are a very tax efficient structures, allowing capital gains and all types of income to keep their characteristics when flowed through to the investor.  This makes it ideal for real estate projects that typically have a large capital gain component.  An MFT is viewed as “public” by CRA, allowing investors to use their Registered Funds when investing.

Rent-A-Subco. Companies listed on stock exchange, such as Axiom Capital Advisors, can create subsidiaries that can accept debt investment from investors using their Registered Funds.  Rent-A-Subco is a “pay-as-you-go” model, so it is well suited for companies raising small amounts of capital or when the success of the capital raise is uncertain.

PPC – Go Public. Obtaining a listing on public stock exchange is difficult, time-consuming, and costly.  Axiom can make the public-listing process easier, faster, and cheaper.

  • Axiom creates a PPC that serves as the company that obtains the public listing.

    • Shares or assets of the operating company are vended in to the PPC

    • The PPC allows investors to use their Registered Funds for private placements during the Go Public process

    • The 150+ shareholder base of the PPC meets the number of shareholders required by the Exchange for the public float.

    • The shareholders of the operating company can retain up to 99% of the public company, depending on ownership composition.

    • A clean shell and a straight-forward ownership structure allows for a faster public listing.

  • Axiom also partners with legal and tax firms to provide a full public listing service, including:

    • Management of the listing process

    • Legal experts on Going Public

    • Tax experts to review the vend-in transaction

    • Structuring share capital to meet the shareholder’s objectives

    • Prospectus preparation and completion of Exchange forms

PPC – Advanced Tax Uses. CRA recognizes a PPC as a public company, so dividends, investment income, rental income, and other types of non-active income are not subject to Part IV tax, as they would be in a private company.  Uses include:

  • Taxable Capital Gain Deferral – Taxable capital gains are subject to 30% corporate taxes, which can be deferred by using a PPC.  When dividends are paid to the shareholder, the dividends are eligible dividends, which reduces the personal tax liability.
  • RDTOH (Refundable Dividend Tax On Hand) – RDTOH is a pool of tax already paid on dividends and other non-active income received in a private company.  Once a dividend is paid from a private company to a shareholder, a refund of the RDTOH is triggered, which means the shareholder must pay taxes on the dividend received. The use of a PPC can trigger the RDTOH refund and defer any taxes payable by the shareholder.  This can result in a substantial tax refund, depending on the size of the RDTOH pool.
  • Other Advance Uses – Because a PPC is not subject to Part IV taxes, it can be used in a variety of advanced tax transactions.