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SCMP Reporter

WHILE Asian markets will remain lucrative investments this year, diversifying funds in other regions is prudent.

  Investors moving residence from Hong Kong to Canada do not have to put all their eggs in one basket and have a wide choice of investment options.

  Those emigrating who wanted to minimise loss risk and reap benefits of five-year tax havens would be wise to set up a trust, said Jeffrey Halpern, managing director of Royal Bank of Canada Trust Company.

  Placing assets and funds in different markets to secure wealth was as important as investing for growth, he said.

  The Royal Bank of Canada, which is 125 years old, has offices in 22 countries and offers a range of investment locations for asset safety and management.

  Choosing the right office or region to place assets could be difficult as each jurisdiction had distinct laws and some were better for asset protection, while other jurisdictions offered tax breaks, Mr Halpern said.

  'As more Asians become wealthy, more are looking to increase wealth and protect money from taxes, government intervention and [the onset of] 1997,' he said.

  'We have a wide stable of offices and experts in many jurisdictions who can help investors choose the right place to set up a trust.

  'Some areas are better for asset protection, some for tax planning, some for estate planning.

  'It is the Royal Bank of Canada's expert advice and choice of locations that provide clients with a better level of service compared to competitors.'   The bank has branches in Jersey, Guernsey and other Channel Islands, Geneva, Bahamas, Cayman Islands, Bermuda, Barbados, Isle of Man, London and Canada.

  In the Far East, the bank has private banking facilities in Hong Kong, Taipei and Singapore and corporate facilities in Tokyo, Beijing, Shanghai and Korea.

  The Channel Islands had been a tax safe haven for hundreds of years and were good domiciles for people moving abroad wanting to avoid excess taxes, he said.

  An offshore trust provided a legal tax-reduction opportunity for Hong Kong people moving to Canada who faced paying taxes over 40 per cent. The Channel Islands were ideal places for those moving to Canada or Britain to place assets in offshore trust accounts.

  'The tax system in Canada and [Britain] allowed capital from an offshore trust to enter the country tax free,' Mr Halpern said.

 'In Canada, the tax holiday for new immigrants is five years, which is long enough as many return to Asia before that expires.

  'Canada's February budget did not change the offshore trust opportunity for new immigrants and it is still considered a legal tax planning technique for immigrants.'   However, investors who had emigrated and planned to return to the territory should ensure assets were protected from excess taxes.

  What to do with an offshore trust at the end of the five-year tax holiday depended on whether any beneficiaries were being left behind in Canada.

  Investors returning to the territory who were leaving children in Canada could keep trusts open to reap non-tax benefits.

  'If assets are transferred back into an Asian bank, they are subjected to the local laws and tax rules and are accessible by the Government,' Mr Halpern said.

  'Many Hong Kong people may find it advantageous to keep the trust alive, or restructure it so it offers other protective advantages.'   Royal Bank of Canada often advised beneficiaries staying in Canada to renounce interests in trusts so assets held offshore would be out of the Canadian tax system.



Diversification advisable option