Category: Personal Tax

What is a death benefit?

A death benefit is an amount paid to a deceased individual for his/her employment service. Taxes are generally not required to be paid on the first $10,000 of the benefit amount received. Any amount in excess of the $10,000 has to be reported for tax purposes. A letter must be attached with the return in … Continue reading What is a death benefit?

I moved from the UK to Canada for school. Can I deduct moving expenses?

According to the CRA, if the taxpayer changes residences and begins full-time attendance at a post-secondary institution (whether or not in Canada), eligible moving expenses (from old residence to new) may be deducted if the move results in you living at least 40 KMs closer to the institution. Also, at least one of the residences … Continue reading I moved from the UK to Canada for school. Can I deduct moving expenses?

My partner and I are engaged in a small business together. Do we have to file a Partnership Return?

The CRA recently changed its administrative policy on who needs to file a Partnership return in order to alleviate the filing responsibility for small partnerships. If you do not meet the criteria #5 of Filing T5013 Partnership Information Return; then your filing responsibility will consist of reporting your % of Partnership income/expense on form T2125 … Continue reading My partner and I are engaged in a small business together. Do we have to file a Partnership Return?

I don’t have enough money to pay my income tax bill. What should I do?

The CRA waits 90 days after the Notice of Assessment after which they will begin the process of trying to collect the unpaid tax bill from you (generally, they will first attempt to contact you via phone). To avoid unpleasantness, you should contact the CRA at 1-888-863-8657 to arrange a payment schedule which works for … Continue reading I don’t have enough money to pay my income tax bill. What should I do?

Can I claim my dependent’s disability amount?

The disability tax credit (DTC) is offered in order to lessen the tax burden for individuals who are physically or mentally impaired. The DTC can be applied for by completing Form T2201, Disability Tax Credit Certificate. If a taxpayer does not claim all or part of the disability amount on his or her tax return … Continue reading Can I claim my dependent’s disability amount?

As a GST/HST registrant, when am I required to start collecting HST on sales?

You are required to collect HST when your taxable sales (over the last 4 quarters) exceeds the $30,000 threshold. As a voluntary registrant, you need to collect HST on sales starting on the earlier of: the effective registration date listed on your GST/HST account application, the day of the supply (sale) that made go over … Continue reading As a GST/HST registrant, when am I required to start collecting HST on sales?

I have a family trust owning assets and I’ve heard of something called the 21 Year rule. What does that mean?

After 21 years of the family trust’s formation, the trust is deemed to have disposed of and reacquired certain types of property at their fair market value. This can give rise to a capital gain since most property increases in value over time. The 21 year rule for Trusts and its impact on you, should … Continue reading I have a family trust owning assets and I’ve heard of something called the 21 Year rule. What does that mean?

As an owner of a corporation, can I not simply pay my child a salary/dividend to avoid paying high taxes on it myself?

Paying children (minors – children under the age of 18) a salary and/or dividend is a useful strategy when income splitting. If you would like to pay a salary to the child, the amount paid must be reasonable. “Reasonableness” is determined based on what the typical/normal pay would be to anyone performing a similar duty. … Continue reading As an owner of a corporation, can I not simply pay my child a salary/dividend to avoid paying high taxes on it myself?

How far back can the CRA audit an individual or business?

The CRA reserves the right to audit your prior year tax filings going back six years. Hence, you should keep receipts and documentation supporting your claims up to six years.  

Can you explain how I can withdraw the over-contributed RRSP amounts from the financial institution?

If you over contribute in your RRSP (even beyond the $2,000 allowed) you run the risk of being penalized 1% of the over contribution per month. So when you realize you do not want to leave it in the RRSP and be penalized, you try and withdraw it from the financial institution. However, the institution … Continue reading Can you explain how I can withdraw the over-contributed RRSP amounts from the financial institution?

I am considering taking out a loan to invest through my RRSP/TFSA/RESP. Will the interest on the loan be tax deductible?

No, although interest on loan borrowed to invest through non-registered accounts are tax deductible (normally up to the amount of investment income), interest on loans borrowed to invest through such registered savings plans are not tax deductible.  

If I perform a service in one province for a client located in another province, how do I determine which GST/HST rate to charge?

The sales tax rate to charge on a service provided depends on the place of supply for that service. For a service, the place of supply is the usually the location of the recipient. The location of the recipient is usually determined by their address. The general rules are subject to change based on specific … Continue reading If I perform a service in one province for a client located in another province, how do I determine which GST/HST rate to charge?

If I cannot find my tax slips, what can I do?

If you’ve lost/misplaced/or never got your tax slips such as a T4, T4A, T5, T4RSP, etc, you can call the CRA and have them mailed/faxed over to you. You can call the CRA at 1-800-959-8281 to submit a request with a representative.  

When do tax implications occur for owning precious metals, such as gold and silver?

Tax consequences for gold/silver arise only upon sale or deemed disposition. Once sold, the income may be business income or capital gain depending on the facts. IT- 459 discusses the factors that indicate whether a transaction is a capital or income transaction. For instance, if an individual buys and sells gold regularly, then it will be … Continue reading When do tax implications occur for owning precious metals, such as gold and silver?

I have a non-resident spouse, can I claim a spousal amount tax credit?

According to the CRA, in order for an individual to claim the spousal tax credit for a non-resident spouse, it is necessary that such non-resident person be supported by the individual. The question of support is determined on the facts of each case. In determining if the non-resident spouse is supported by the individual, the … Continue reading I have a non-resident spouse, can I claim a spousal amount tax credit?
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