Answers Archive

Small business (CCPC) shareholder restructuring/shares transfer

If your elderly parents meet the requirements, then yes, your elderly parents can claim the lifetime capital gains exemption. Consider purchasing their shares now, in order to trigger a gain, which can be offset with the exemption. In addition, creating a trust where your children are beneficiaries is very helpful to reduce estate taxes payable … Continue reading

HST Paid on Account receivable for 2019. Do I need to deduct the amont from q1 – 2020 for HST payment?

HST is payable on accounts receivable in the 4th quarter. However, you do not have to pay HST again when the accounts receivable is collected. Do not subtract Q4 HST paid on accounts receivable from Q1 in the subsequent year.

principal residence exemption

If you have not claimed CCA, and there is no structural change when the basement was built, then you can claim the principal residence exemption on the entire gain on the sale of your primary residence, assuming that you lived in the property for all of the years you owned it. If there’s an audit, … Continue reading

Can I pay my spouse a salary for 2020?

It’s too late to pay a salary to your spouse. Salary payments cannot be back-dated. If you are the sole owner, you will have to pay tax on the income earned, even though you are one household.

Any issues With using personal savings to buy real estate under Company name?

You can use your personal savings to purchase US real estate under the name of the company, assuming that the company will be on title to the property. The CRA doesn’t have an issue with this arrangement.

non Resident canadian gift to resident canadian kid

You do not have to pay tax on the gift received.

On which fiscal year do we expense vaction paid due on year-end bonus?

They are accrued and deducted in the previous fiscal period.

Should I take cash out of business ban account and incorporate another business and buy an investment rental?

Follow these steps: 1. Incorporate a company to purchase real estate (e.g. Real Estate Inc.) 2. Make a tax-free loan (e.g. $150,000) from your existing operating corporation to Real Estate Inc. 3. Charge 1% interest on the loan to be paid by December 31 of each year 4. Real Estate Inc. will use the loan … Continue reading

How much is foreign Tax Credit for house sold in India

The foreign tax credit will be the lesser of (a) the taxes paid in India on the capital gain and (b) the taxes payable in Canada on the capital gain. The highest capital gains tax rate in Canada is 27% (approximately), so you should receive a foreign tax credit of 20%, leaving a balance owing … Continue reading

Buying Real estate through partnership

From a tax perspective, it is possible for work permit holders living in Canada and PR card-holders to invest in Canadian real estate. Before purchasing, make sure that all individuals qualify for a mortgage. It’s best for the two investors to enter into a joint venture agreement. Note: In Ontario, the foreign buyer’s tax (15% … Continue reading

Transfer Money From Parents Account In India To My account in Canada

Yes, your parents should prepare a gift letter specifying the following information: (a) name of the giver, (b) name of the recipient, (c) date of gift, (d) amount of gift. The gift letter should be notarized in India. You do not have to pay tax in Canada on cash gifts received.

Non-Eligible Dividend ( Property Dividend)

You will pay personal income tax on the taxable amount of the non-eligible dividend received. The actual amount (before gross-up) will be equal to the fair market value on the date the land is received by you (i.e. when the title is transferred from the company to you). Once the title has been transferred, you … Continue reading

3 Tier Real Estate Structure

For Canadian tax purposes, the 3 tier structure works well. Make sure that the properties are profitable and generating positive cash flow before implementing the 3 tier structure. For US tax purposes, a US Limited Partnership will reduce your liability and help you avoid double taxation.

What conditions have to be met for a Canadian Corporation deduct chaitable donations?

Generally speaking, a corporation can claim a deduction for charitable donations made up to 75% of its net income for the year. The donation must be made in the year to a registered charity and the corporation should receive a donation receipt specifying the name of the organization, the date the donation was made, the … Continue reading

eligible dividends as investment income in t2

The actual amount of eligible dividends received by the corporation in respect of its investments in marketable securities should be entered on Schedule 3 of the T2 return. When preparing Schedule 3, make sure that you specify that the dividends received are tax-deductible, under Section 112, and paid by a non-connected corporation. Your corporation will … Continue reading

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