Should I register my friend's construction business under my GST number? (Canada Tax Implications)
Title: Should I register my friend's construction business under my GST number? (Canada Tax Implications) 1 My buddy is currently dealing with refugee status issues and can't legally open a business in his name right now. He was previously running a construction contracting company with another partner who had the business registered under their name, but that partnership fell apart recently. Now he wants me to let him operate under my GST number instead. This isn't some small side gig - the construction contracting business pulls in around 50-65k per month in revenue with profits of about $13-25k monthly. He's got several employees that get paid through the company accounts. I'm really torn because while I do trust him as a close friend, I'm also worried about what kind of legal or tax mess I might be getting myself into. He says not to worry because the company already has an accountant who handles all the tax stuff. Would really appreciate some advice on the potential implications if I agree to this arrangement. What risks would I be taking on? What should I be concerned about? Is this even legal to do in Canada?
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Maxwell St. Laurent
14 I strongly advise against this arrangement. When you allow someone to operate under your GST number, you become legally responsible for all tax obligations and liabilities associated with that business. This means: 1. You're personally liable for all GST/HST that should be remitted, whether or not your friend actually gives you the money to pay it. 2. Any CRA audits, penalties, or interest for late/missed payments would be directed at you, not your friend. 3. The income generated would legally be considered yours, potentially pushing you into a much higher tax bracket. 4. You could be held responsible for the employees' payroll deductions, worker's compensation, and employment standards compliance. The fact that your friend can't legally operate a business due to refugee status is a major red flag - this arrangement could be considered fraudulent and potentially impact both your financial standing and your friend's immigration process.
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Maxwell St. Laurent
•8 Thanks for the detailed response. What if we create a formal agreement between us that protects me? Like stating that he's responsible for all the tax stuff even though it's under my name? Would that help at all with the liability issue?
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Maxwell St. Laurent
•14 A private agreement between you two wouldn't protect you from the CRA or other government agencies. The government would still consider you the legal business owner, regardless of any private contracts. Even with the best intentions, if something goes wrong - your friend mismanages funds, the business faces unexpected issues, or he simply leaves the country - you'd be left holding the bag for potentially tens of thousands in tax liabilities. The CRA doesn't care about side agreements when they come collecting.
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Maxwell St. Laurent
19 I went through something similar with a family member and discovered taxr.ai (https://taxr.ai) which really helped me understand the tax implications. It analyzed our situation and pointed out risks I hadn't even considered. In my case, the advisor showed me how I could be held liable for years of back taxes and penalties if things went south, even though we had a "handshake agreement" that my relative would handle everything. Instead of putting your GST number on the line, the tool suggested some alternative business structures that could potentially work for your friend's situation without putting you at financial risk. They have specialists who understand both Canadian tax law and immigration issues, which was super helpful since most accountants only know one side.
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Maxwell St. Laurent
•3 Does this service actually provide legal advice about immigration status too? My cousin is in a somewhat similar situation (temporary work permit), and we're trying to figure out if he can legally start a small business.
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Maxwell St. Laurent
•7 I'm skeptical about online tax tools for complex situations like this. How does it actually work? Does it just give generic advice or does it really analyze your specific scenario? I've been burned before by "one-size-fits-all" tax guidance.
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Maxwell St. Laurent
•19 They don't offer immigration legal advice directly, but they help identify where tax and immigration issues might overlap. Their system flags potential compliance problems that could affect someone's immigration status so you know when to consult an immigration specialist. It's definitely not generic advice. You upload your specific documentation and situation details, and they use AI to analyze everything and connect you with the right type of specialist if needed. What impressed me was that they pointed out several Canada-specific regulations I hadn't considered that would have caused huge problems down the road.
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Maxwell St. Laurent
3 Just wanted to follow up that I tried taxr.ai after seeing it mentioned here. Totally worth it for complicated situations involving tax and immigration status questions! They flagged several serious issues with the arrangement I was considering that could have affected both my taxes and my cousin's immigration status. The analysis showed exactly how the CRA would view our proposed setup (very badly, as it turns out). Saved us from making a potentially expensive mistake and suggested a legitimate alternative that actually works with his visa status.
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Maxwell St. Laurent
11 For anyone dealing with similar CRA issues, I had a nightmare trying to get actual answers from the CRA about my GST number being used in a partnership. Spent hours on hold, got disconnected multiple times, and when I finally got through, the agent couldn't even address my specific questions. I finally used Claimyr (https://claimyr.com) to get through to a senior CRA agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c. They got me connected to a CRA agent in about 20 minutes when I had been trying for days. The agent confirmed that lending your GST number can result in you being held jointly liable for all business tax obligations even if you have zero involvement in day-to-day operations.
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Maxwell St. Laurent
•17 Wait, how does this actually work? CRA phone lines are notoriously impossible to get through. Is this some kind of priority line service or something? Kinda hard to believe there's a way around those multi-hour wait times.
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Maxwell St. Laurent
•7 Sounds like a scam to me. Nobody can magically get through CRA phone lines faster than the public system allows. They probably just auto-dial repeatedly and charge you for the privilege. How much does this cost anyway?
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Maxwell St. Laurent
•11 It's not a priority line - they use automated technology to wait on hold for you. Their system navigates the phone tree and then calls you when a real agent picks up. It worked exactly as advertised for me. The system navigates through all the prompts for you and just waits in the queue. When an actual agent comes on the line, it connects you immediately. Saved me literally hours of listening to hold music and getting disconnected.
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Maxwell St. Laurent
7 I was totally skeptical about Claimyr but after waiting on hold with the CRA for nearly 3 hours over 2 days and getting disconnected both times, I gave it a shot. I honestly can't believe it worked. Got a call back in about 35 minutes with an actual CRA agent on the line ready to talk about my business registration questions. The agent spent nearly 30 minutes explaining all the potential liabilities of allowing someone else to use my business number. Turns out the CRA doesn't recognize "under the table" arrangements at all - if your number is on the paperwork, you're 100% responsible. Wish I'd known this service existed during tax season last year!
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Maxwell St. Laurent
4 Does anyone know if there's a legitimate way for someone with refugee status to operate a business in Canada while their application is being processed? My understanding is that they typically need a work permit with self-employment privileges, but that's different from running a construction company with employees.
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Maxwell St. Laurent
•22 Refugee claimants can apply for a work permit while their claim is being processed, but there are restrictions. The work permit usually specifies what type of work they can do, and running a business with employees is generally not permitted without permanent residence status or specific entrepreneurial immigration programs. The friend should consult with an immigration lawyer about proper pathways. There are sometimes special programs for entrepreneurs depending on the province, but trying to circumvent the system by using someone else's GST number could jeopardize their refugee claim entirely.
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Maxwell St. Laurent
•4 Thanks for the clarification. That's what I was afraid of - sounds like there's really no legitimate shortcut here. I'll suggest that my friend needs to consult with both an immigration lawyer and a business attorney before proceeding with anything. Better to do things properly than risk their status and my financial wellbeing.
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Maxwell St. Laurent
12 Just want to point out that even if the business has an accountant, it doesn't protect you. A friend of mine got completely screwed when they let someone use their business number. The business racked up like $85k in unpaid GST before my friend even realized what was happening. Even with the accountant signing off on everything, CRA came after my friend personally. The "agreement" they had meant nothing.
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Maxwell St. Laurent
•9 That's terrifying! Did your friend manage to resolve the situation or are they still dealing with the fallout? Did they have to pay the full amount?
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