Category: Business & Corporate Tax

What are the different variations in which I can claim the vehicle expenses if I have a corporation?

Either you, or your corporation can claim the vehicle expenses directly or indirectly, depending on which name the vehicle is registered under. If the vehicle is under the corporation, the corporation can claim the vehicle expenses, including fuel, maintenance, repairs, insurance, interest, etc. If the vehicle is under your name, and you are employed by … Continue reading What are the different variations in which I can claim the vehicle expenses if I have a corporation?

How do I add or remove a director, or change information about existing directors?

The Ministry of Government Services needs to be informed always, of any changes made to the directors of a corporation. This includes appointing or removing a director or even changing information about an existing director. Your professional accountant or legal counsel will need to file an Initial Return/ Notice of Change form for your corporation … Continue reading How do I add or remove a director, or change information about existing directors?

How to add or remove a director in small business corporation?

When an Ontario corporation wants to remove a director from the board or add a new director to the board, Form 1 called Notice of Change by an Ontario Corporation needs to be filed with the Ministry of Government Services. It is important that Form 1 be filed within 15 days of the change. Furthermore, … Continue reading How to add or remove a director in small business corporation?

How is Investment Income treated for tax purposes for Canadian Corporations?

Investment income earned by Canadian Controlled Private Corporations (“CCPC’s”) includes rent received (Canadian and foreign), interest, royalties, dividends, and taxable capital gains. CCPC’s pay income tax at a rate of 48% on investment income.This is significantly higher than the tax rate of 15.5% levied on business profits.

My bank won’t approve a mortgage to my corporation for the purchase of an investment property. Can I use a bare trust?

Bare trusts are often used in financing transactions. Real estate investors prefer to purchase properties in the name of their corporation for tax reasons. Therefore, consider using a bare trust if your bank won’t loan money to your corporation, but is willing to provide you with a personal mortgage for the purchase of an investment … Continue reading My bank won’t approve a mortgage to my corporation for the purchase of an investment property. Can I use a bare trust?

Can I add my spouse to my corporation, as a shareholder, for income splitting purposes?

Yes, you can add your spouse to your corporation, either as a preferred shareholder or common shareholder. Both types of shares, if structured properly, will allow you and your spouse to split the profits of the corporation through payment of dividends to each of you. A key difference between a common shareholder and preferred shareholder … Continue reading Can I add my spouse to my corporation, as a shareholder, for income splitting purposes?

Does my company have to pay Employment Insurance Premiums (EI) for my spouse, if he/she works for my company?

The CRA’s general guideline is that if you hire a family member, EI premiums are not payable to the CRA. However, if the duties being performed by your family member and their working conditions are the same as if he/she was working for a third party employer (unrelated person), then the CRA will require you … Continue reading Does my company have to pay Employment Insurance Premiums (EI) for my spouse, if he/she works for my company?

My spouse joined me on a business trip and my employer paid for both of our travel costs. Is my spouse’s portion a taxable benefit to me?

The Canada Revenue Agency’s general position toward business trips for spouses of employees is that there is no taxable benefit to the employee if the spouse was, in fact, engaged primarily in business activities on behalf of the employer during the trip. On the other hand, if your spouse was engaged in primarily personal activities … Continue reading My spouse joined me on a business trip and my employer paid for both of our travel costs. Is my spouse’s portion a taxable benefit to me?

If I own multiple corporations in Canada, what are some ways I can move funds around?

For example, assume that you own 100% of the shares of a holding corporation (i.e. parent company) and your holding corporation in turn owns 100% of another active corporation (i.e. subsidiary company). In this context, how can the parent and subsidiary companies transfer money between each other? The subsidiary can: Pay a tax-free dividend to … Continue reading If I own multiple corporations in Canada, what are some ways I can move funds around?

As a small business owner, should I take salary or dividends?

Each option has advantages and drawbacks. It is important to evaluate your particular financial goals before knowing which option is more favorable. The biggest advantage of paying a salary (and bonuses) is that you can deduct this as a business expense, reducing your corporation’s taxable income. However, paying a salary will require your corporation to … Continue reading As a small business owner, should I take salary or dividends?

Are personal meals expenses incurred while travelling on business fully deductible?

Meal expenses are not fully deductible even when incurred during business travel. 50% of the lesser of the following two amounts can be claimed for meal expenses: Amount spent Amount that is reasonable in the situation  

What are common expenses that are not deductible for tax purposes for corporations?

Corporations should be careful in their accounting for expenses that may not be deductible for tax purposes. It would be wise to set up separate accounts for such types of expense. Below, are a few examples of non-deductible expenses: A corporation may incur legal fees in the normal course of their operation, but some legal … Continue reading What are common expenses that are not deductible for tax purposes for corporations?

As a small business owner planning on doing my own personal taxes, which tax software would you recommend?

Each individual’s tax needs are unique but the following tax preparation software will be able to effectively service the needs of most individuals: TurboTax This is a user-friendly Canadian tax software that makes preparing your taxes easy. It walks you through the tax preparation and filing process by asking easy-to-understand questions. Further, it offers tax … Continue reading As a small business owner planning on doing my own personal taxes, which tax software would you recommend?

I’m starting a new business and have come across something called a “shelf corporation”. What is a shelf corporation?

A ‘shelf corporation’ is an incorporated entity that either: Never carried on a business and never owned any assets; Carried on a business and owned assets in the past, but is now inactive without any assets. Shelf corporations that carried on a business in the past for a number of years, and have a good … Continue reading I’m starting a new business and have come across something called a “shelf corporation”. What is a shelf corporation?

What is the longest fiscal year that a corporation can have?

The maximum fiscal period can be 53 weeks or 371 days.  
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