Using a US Trust to own an N-registered plane in Canada

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cykf_local
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Using a US Trust to own an N-registered plane in Canada

#1 Post by cykf_local » Sat Sep 23, 2017 6:01 am

I'm very close to buying/importing a US aircraft into Canada.

I'm a Canadian, and it will be hangered/flown mostly out of Canada. The broker brought up the option of keeping the plane N-registered and instead of buying through a Canadian corp, using a US trust. A little research shows this is both possible and relatively common.

This has a significant advantage for the particular specialty aircraft I am considering. If I bring to Canada and register with C- registration, the N number is lost. Down the road, the market for selling this specific aircraft it in Canada is virtually nil, so with near certainty, the US owner would have to repaint the plane to put on a new N-number. Not insurmountable, but keeping the A/C N-registered makes a lot of sense if I'm confident the plane will one day be back in the US.

I know some of the pros and cons - I need a US license, a 2 year BFR with a US instructor, and all US regs must be followed.

What else? Anyone have any experience with doing this? What should I know?

Thanks in advance,
-k
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Re: Using a US Trust to own an N-registered plane in Canada

#2 Post by photofly » Sat Sep 23, 2017 6:12 am

Lots of people do it, and the lawyers will love taking the management fees off you to file all the corporation and trust paperwork each year, but it’s still illegal under CAR 202.42(1). If TC caches you they can slap you with a $25k fine.

If it was remotely legal, everyone would do it - why do you think we don’t?

You haven’t done your research very well, either: you don’t need a US airman certificate to pilot an N-reg aircraft in Canada; a Canadian licence is just fine.
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Re: Using a US Trust to own an N-registered plane in Canada

#3 Post by cykf_local » Sat Sep 23, 2017 6:21 am

Appreciate the response, and yes, I understand. Seems as though action is highly uncommon:

http://www.yyzlaw.com/2012/06/25/non-ci ... -trusts-2/

But of course this is from a law firm.

Any _other_ pros or cons?

Thanks in advance,
-k
photofly wrote:Lots of people do it, and the lawyers will love taking the management fees off you to file all the corporation and trust paperwork each year, but it’s still illegal under CAR 202.42(1). If TC caches you they can slap you with a $25k fine. And it’s easy to prove - they just have to look at the aircraft journey log.

You haven’t done your research very well, either: you don’t need a US airman certificate to pilot an N-reg aircraft in Canada; a Canadian licence is just fine.
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Re: Using a US Trust to own an N-registered plane in Canada

#4 Post by cykf_local » Sat Sep 23, 2017 6:25 am

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Re: Using a US Trust to own an N-registered plane in Canada

#5 Post by cykf_local » Sat Sep 23, 2017 6:32 am

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Re: Using a US Trust to own an N-registered plane in Canada

#6 Post by skybluetrek » Sat Sep 23, 2017 9:22 am

The info.(including their fees) on the website of this UK company doing trust agreements may be of interest to you.

http://www.southernaircraft.co.uk/Home
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Re: Using a US Trust to own an N-registered plane in Canada

#7 Post by digits_ » Sat Sep 23, 2017 2:05 pm

photofly wrote:Lots of people do it, and the lawyers will love taking the management fees off you to file all the corporation and trust paperwork each year, but it’s still illegal under CAR 202.42(1). If TC caches you they can slap you with a $25k fine.

If it was remotely legal, everyone would do it - why do you think we don’t?

You haven’t done your research very well, either: you don’t need a US airman certificate to pilot an N-reg aircraft in Canada; a Canadian licence is just fine.

202.42 (1) Subject to section 203.03, no person shall operate in Canada an aircraft that is registered in a foreign state that has been present in Canada for a total of 90 days or more in the immediately preceding twelve-month period unless

(a) the foreign state is a contracting state;

(b) the operator of the aircraft is

(i) the foreign state,

(ii) an individual who is not a Canadian citizen or a permanent resident but is a citizen or subject of the foreign state, or

(iii) an entity that is incorporated or otherwise formed under the laws of the foreign state; and

(c) if the operator of the aircraft is an entity described in subparagraph (b)(iii), the aircraft is operated in Canada

(i) in accordance with an air operator certificate, or

(ii) in any operation other than an operation that would require a private operator certificate if the aircraft were registered in Canada.

Why can't you use 202.42 (1) B iii and 202.42 (1) C ii ? Why would that be illegal?

A N-regged C172 owned by a US corporation is used in an operation without an AOC. Doesn't that tick all the boxes?
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Re: Using a US Trust to own an N-registered plane in Canada

#8 Post by RVR6000 » Sat Sep 23, 2017 2:31 pm

Saw Larry Tanenbaum’s G5 departing YYZ the other day. Had all the MLSE team logos on the tail, with an N-registration ending with LT. Classy.

If he’s doing it pretty sure it’s legit if set-up correctly.
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Re: Using a US Trust to own an N-registered plane in Canada

#9 Post by x15 » Sat Sep 23, 2017 2:33 pm

It is legit if done correctly. Operating part 91 is easy. Will take a little extra work.

CRA will come looking for their taxes though. So be prepared to pay HST.
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Re: Using a US Trust to own an N-registered plane in Canada

#10 Post by photofly » Sat Sep 23, 2017 3:16 pm

Go ahead - explain how it’s legal.

The only way under the CARs is if you operate under a Canadian POC, or in an operation that would require a POC. That means a medium turbine or bigger, and approved operating procedures. Obviously that’s how the G5 does it. But a small piston? No.
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Re: Using a US Trust to own an N-registered plane in Canada

#11 Post by photofly » Sat Sep 23, 2017 3:19 pm

digits_ wrote: Why can't you use 202.42 (1) B iii and 202.42 (1) C ii ? Why would that be illegal?

A N-regged C172 owned by a US corporation is used in an operation without an AOC. Doesn't that tick all the boxes?
No. A 172 used for those purposes doesn’t qualify to fly under a POC. (It’s not needed for that aircraft and TC won’t issue one.)
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Re: Using a US Trust to own an N-registered plane in Canada

#12 Post by digits_ » Sat Sep 23, 2017 4:17 pm

photofly wrote:
digits_ wrote: Why can't you use 202.42 (1) B iii and 202.42 (1) C ii ? Why would that be illegal?

A N-regged C172 owned by a US corporation is used in an operation without an AOC. Doesn't that tick all the boxes?
No. A 172 used for those purposes doesn’t qualify to fly under a POC. (It’s not needed for that aircraft and TC won’t issue one.)
Exactly, so that satisfies:
(ii) in any operation other than an operation that would require a private operator certificate if the aircraft were registered in Canada.
A C172 does not require a POC in Canada, which means it is used in an operation OTHER THAN one that does require it.

So having a C172 registerd in the US means that:
(b) the operator of the aircraft is
(iii) an entity that is incorporated or otherwise formed under the laws of the foreign state; and

(c) if the operator of the aircraft is an entity described in subparagraph (b)(iii), the aircraft is operated in Canada

(ii) in any operation other than an operation that would require a private operator certificate if the aircraft were registered in Canada.
Which rule would our N-registered C172 violate?


The whole operation might be illegal, I am not an expert in that at all, but based on your CAR reference I'm not sure why.
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Re: Using a US Trust to own an N-registered plane in Canada

#13 Post by photofly » Sat Sep 23, 2017 4:47 pm

You are correct; there’s some stuff online about CARAC discussion to liberalize the operating in Canada by foreign entities (in 2002) and I was misreading the regulation.

So I guess it’s not illegal.

Remains to see if the cost of the paperwork outweighs the cost of repainting the tail number...
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Re: Using a US Trust to own an N-registered plane in Canada

#14 Post by confusedalot » Sat Sep 23, 2017 5:44 pm

photofly wrote:Lots of people do it, and the lawyers will love taking the management fees off you to file all the corporation and trust paperwork each year, but it’s still illegal under CAR 202.42(1). If TC caches you they can slap you with a $25k fine.

If it was remotely legal, everyone would do it - why do you think we don’t?

You haven’t done your research very well, either: you don’t need a US airman certificate to pilot an N-reg aircraft in Canada; a Canadian licence is just fine.
In a previous life, we were operating N registered aircraft in canada for a rather large corporation that happens to make engines.

Are you saying that we all had US airmen certificates for absolutely no reason? That was 10 years ago.

Can't comment on the US trust fund thing though, do not know how they set up their affairs.
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Re: Using a US Trust to own an N-registered plane in Canada

#15 Post by photofly » Sat Sep 23, 2017 6:22 pm

401.04 No person shall act as a flight crew member or exercise the privileges of a flight crew licence in Canada in an aircraft registered in a contracting state other than Canada, unless the person holds, and can produce while so acting or while exercising such privileges,

(a) a flight crew permit or licence issued under this Subpart;
or

(b) a flight crew licence, or a document equivalent to a foreign licence validation certificate, that is issued under the laws of the contracting state.
You can fly any nationality of aircraft in Canada with a Canadian licence.

So you’d need the US certificate to fly an N-reg in the US or internationally, but not within Canada. Unless I’m misreading that reg too :/
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Re: Using a US Trust to own an N-registered plane in Canada

#16 Post by peterdillon » Sat Sep 23, 2017 8:05 pm

Thats right an American can't fly a Canadian registered plane in Canada nor can a Canadian fly a US registered plane in the US unless they have a license from that country.
This is probably to avoid foreign persons renting a plane to do bad things. When you get your US license you have to go to an interview in person with the FAA. While they don't say that its to see if your a possible security risk.
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Re: Using a US Trust to own an N-registered plane in Canada

#17 Post by cykf_local » Sun Sep 24, 2017 5:08 am

Yes, this entire approach is predicated upon getting a US license unless never leaving Canada is an option.
peterdillon wrote:Thats right an American can't fly a Canadian registered plane in Canada nor can a Canadian fly a US registered plane in the US unless they have a license from that country.
This is probably to avoid foreign persons renting a plane to do bad things. When you get your US license you have to go to an interview in person with the FAA. While they don't say that its to see if your a possible security risk.
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Re: Using a US Trust to own an N-registered plane in Canada

#18 Post by peterdillon » Sun Sep 24, 2017 6:14 am

You need and AI rated mechanic out of the US to do the annual inspection on a US registered plane as Canadian facilities can do maintenance legally but not annual inspections.
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