Category: Business & Corporate Tax

As a corporation, when do I have to issue a T4 slip to my employees?

You must issue a T4 slip to your employees if any of the following remuneration was paid: salary, wages, tips, bonus, vacation pay, employment commission taxable benefit or allowances retiring allowance deductions you withheld during the year pension adjustment (PA) amounts for employees who accrued a benefit for the year under your RPP (registered pension … Continue reading As a corporation, when do I have to issue a T4 slip to my employees?

As a Canadian, do I have to file a US tax return for online sales made to the US?

Question: I operate an online business in Canada, as a sole proprietor, which sells goods in the US. What are my US tax filing obligations? Answer: As a Non-Resident alien earning self employment income in the US, you are required to file a US non-resident personal tax return, 1040NR. You must also file Schedule C … Continue reading As a Canadian, do I have to file a US tax return for online sales made to the US?

I have Stock options. What are the tax implications?

This topic can get complex. Therefore, it is highly advised to consult a tax professional. There are three possible scenarios with respect to stock options for tax purposes: On the grant date the exercise price is less than the market value of the shares (i.e. in the money). At exercise date, the difference between the … Continue reading I have Stock options. What are the tax implications?

I just sold a rental property that was held within a corporation. What are the tax implications?

When rental property is held within a corporation, the capital gains rules are slightly different. Similar to an individual holding a property, only 50% of the capital gain is taxable. The taxable portion of the capital gain is taxed at a corporate tax rate of approximately 46%. When dividends are paid by the corporation to … Continue reading I just sold a rental property that was held within a corporation. What are the tax implications?

I have a non-resident corporation. Do I also need to open a HST account and why?

In Canada, it is required for a corporation to register a GST/HST account if you anticipate your sales to be more than $30,000 CAD. GST/HST is a sales tax that Canadian consumers must pay at the time of purchase on most products and services.  As a corporation, it is your responsibility to collect GST/HST from … Continue reading I have a non-resident corporation. Do I also need to open a HST account and why?

Are premiums paid for Keyman Insurance tax deductible?

Yes, in limited situations. What is Keyman Insurance? It is an insurance policy taken out by a business to cover any loss of revenue arising from the death or disability of a key member (eg. Partner, employee, etc). Keyman insurance premiums are tax deductible for a business only if one of the following criteria are … Continue reading Are premiums paid for Keyman Insurance tax deductible?

Are all of my donations eligible for a tax credit (for individuals) or tax deduction (for corporations)?

No, only donations to registered charitable organizations (with the CRA) are eligible for a tax credit for individuals or for a tax deduction for corporations. Before you make a donation, ask the organization if they can provide you with an official donation slip for tax purposes.

What’s the difference between a non-capital loss and net-capital loss?

Non-capital losses generally include losses from a business or employment. These losses can be applied to reduce all sources of income in the current tax year, the previous 3 years and the next 20 years. Net-Capital losses are losses incurred from the sale of capital property (e.g. shares, mutual funds, land, buildings, tangible assets). These … Continue reading What’s the difference between a non-capital loss and net-capital loss?

I’m a non-resident of Canada. Can I use a Canadian P.O. BOX as the registered head office for my Canadian corporation?

Most provinces will not permit the formation of corporations, which use a P.O. BOX for their head office address.  A Canadian physical address is required.

I’m a non-resident of Canada. Can I still incorporate a company in Canada?

Yes you can. Forming and registering a corporation in Canada requires a registered head office in Canada. Also, most Canadian provinces require that the corporate directors be residents of Canada. However there are a few provinces such as British Columbia (BC), which allow non-residents of Canada to be directors of Canadian corporations. If a Canadian … Continue reading I’m a non-resident of Canada. Can I still incorporate a company in Canada?

How are capital gains determined?

My business has capital assets, including office furniture, equipment and vehicles. I sold these assets during the year and my accountant told me that I have a capital gain. What does this mean? Selling assets can trigger a capital gain or capital loss based on the selling prices minus the original cost. If the selling … Continue reading How are capital gains determined?

What do the terms recapture of Capital Cost Allowance (CCA) and Terminal Loss mean?

Question: My company sold capital assets (including a building, furniture and equipment). I see the terms “Recapture” and “Terminal Loss” on my corporate tax return, what do these mean? Answer: When you purchase capital assets (e.g. vehicles, buildings, furniture, computers, equipment), the Canada Revenue Agency (CRA) applies specific depreciation (CCA) rates. The rates are a … Continue reading What do the terms recapture of Capital Cost Allowance (CCA) and Terminal Loss mean?

Is clothing purchased for business use tax deductible?

Many professions are required to purchase expensive clothing such as business suits, ties shirts etc. The CRA has a strict guideline on determining if business clothing can be tax deductible. You can deduct the cost of work clothes if the following two conditions are met: You must wear them as a condition of your employment … Continue reading Is clothing purchased for business use tax deductible?

What is the criteria for a small business in Canada?

According to Industry Canada, a small business is one that has 5 to 100 employees. For CRA purposes in order to meet the small business deduction (SBD) and be eligible for the lower tax rate of 15.5% (combined Federal + Ontario),  the business must meet the Canadian-controlled private corporation (CCPC) criteria and have active business income up … Continue reading What is the criteria for a small business in Canada?

What is the ‘small business deduction’?

The small business deduction is a reduction in corporate taxes for Canadian Controlled Private Corporation, known as CCPC. The small business deduction is provided as an annual tax credit that is calculated as 17% of the least of the corporation’s: Active business income for the year taxable income for the year business limit ($500,000)
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