Archives: FAQs

Do I have to apply for the Child Tax Benefit and Universal Child Care Benefit?

Yes. You can apply by completing this form and mailing it to the appropriate CRA centre as noted on the instructions on the form.  

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?

I have taken money out of my RRSP under Home Buyer’s Plan (HBP) and the Lifelong Learning Plan (LLP) and I will be leaving Canada. What are the tax consequences?

If you emigrate from Canada (i.e. become non-resident of Canada for tax purposes), then the outstanding balance on your HBP or your LLP will be included in your taxable income for the year in which you leave Canada. To avoid this income inclusion, you must pay back the outstanding balance within 60 days from the … Continue reading I have taken money out of my RRSP under Home Buyer’s Plan (HBP) and the Lifelong Learning Plan (LLP) and I will be leaving Canada. What are the tax consequences?

What happens to my TFSA if I depart Canada and become a non-resident?

If you are becoming a non-resident of Canada, you do not have to close your Tax Free Savings Account (TFSA). Even after becoming a non-resident, you will not be taxed in Canada on any withdrawals from the account or any earnings within the account for the amounts contributed as a resident. Note that you cannot … Continue reading What happens to my TFSA if I depart Canada and become a non-resident?

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?

What is the GST/HST of a new residential rental property (NRRP) rebate?

If you paid GST/HST on the purchase of a new residential rental property or substantially renovated residential rental property, you may qualify for the GST/HST NRRP rebate. If your property meets the definition of a qualifying residential unit, this rebate will allow you to receive all or a portion of the GST/HST paid on the … Continue reading What is the GST/HST of a new residential rental property (NRRP) rebate?

If I rent out part of my home while still living in it, are there any tax consequences?

If while living in your home (referred to as a principal residence) you rent out a part of it, there will be tax consequences. For tax purposes, when a principal residence is turned into a rental property, a change-in-use for tax purposes has occurred. A change-in-use means that the house will be considered to have … Continue reading If I rent out part of my home while still living in it, are there any tax consequences?

Why does the CRA review/pre-assess individual tax returns and what do they usually look for?

The CRA will request further documentation, as part of their review, of some credits/deductions claimed on your personal tax return. This usually only applies to those returns that have been filed electronically. Some of the credits/deductions that draw some scrutiny from the CRA are items like medical expenses, donations, moving expenses, eligible dependant credit, child … Continue reading Why does the CRA review/pre-assess individual tax returns and what do they usually look for?

As a non-resident of Canada, how do I recover the withholding tax I paid on Canadian rents received?

Non-residents of Canada are subject to 25% withholding tax of the gross rents they receive on Canadian rental properties. By electing under Section 216 of the Canadian Income Tax Act, you only have to pay income tax on your net Canadian rental income, instead of on the gross amount. On the Section 216 tax return, … Continue reading As a non-resident of Canada, how do I recover the withholding tax I paid on Canadian rents received?

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  

Can I deduct the life insurance premiums I pay on my tax return?

Life insurance premiums are usually not deductible for tax purposes. However, some exceptions do exist such as if the beneficiary is a registered charity or if the insured is requested by the bank to buy life insurance as collateral for obtaining a loan. The good news from a tax perspective is that the death benefits … Continue reading Can I deduct the life insurance premiums I pay on my tax return?

What is pension income splitting?

Pension income splitting can be used to allocate up to 50% of eligible pension income to your spouse or common-law partner, effectively splitting income with the lower income spouse. Only eligible pension income qualifies for pension income splitting. Eligible pension income includes: Life annuity payments from a pension fund (i.e.: life income funds and locked-in … Continue reading What is pension income splitting?

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?
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