Aircraft 'shell' company

claude

Folk,

I am close to purchasing a Piper Arrow aircraft (In Canada) and wanted anyone's thoughts on the best way to own it?

First to be clear, the aircraft is primarily for pleasure... I am not going to pretend that I can use it for business, and risk falling foul of any Canadian tax laws!

Next, the aircraft will not be a partnership, i.e. I will be the only owner.

I have been told that it is best to place the aircraft in a 'shell company', i.e. start a new Canadian company, and it purchases the aircraft from the current owner. This company gets no HST/GST (Canadian sales taxes) benefits, makes no profits, but does give an 'arms length' liability advantage as I own the company, notthe aircraft. There is one added advantage, namely when I sell the aircraft (now why would I do that!), the next purchaser, buys my company shares rather the aircraft, and therefore pays no sales taxes of their own.

Does anyone have any experience with this 'ownership structure', especially in Canada? Is it worth the paperwork / hassle, versus owning the aircraft as an individual, and just buying more personal liability insurance on the aircraft?

Thoughts?

CSkup

Claude:
Your questions would best be answered by a CPA. However, my nephew had a dismal time since he put his plane into his business. The business depreciated the plane. Now if he sold the plane he had to recapture the depreciation. My suggestion is to consult with a CPA.
I'm not sure if a Paper Corporation would insulate you from liability. Liability would probably attach to the Pilot and plane owner. If you're the principal pilot, I fail to see how that will insulate you from liability. Good Luck Chuck

JoeB

The structure you outline would not help a bit in the US. Here you will always be liable for any damages you cause while you're the pilot regardless of who owns the airplane. Since you're the sole pilot you'll never get away from that liability, hence never be in a situation to take advantage of your corporate shield as owner.

You need to check with a Canadian attorney on this - in addition to the accountant.

claude

Thanks for the responses... excellent website, and some smart and helpful subscribers.

flyguydon

Regardless of what you do, the best thing to be sure of is a great insurance package. Aircraft insurance is relatively inexpensive so don't be shy on getting the right limits. BTW, I have always simply put them in my name.