Answers Archive

Becoming non-resident of Canada

Thank you for your questions. My answers are below: 1) You will not pay capital gains tax on the sale of your primary residence so long as you live in your primary residence for all of the years that you own it. 2) Yes, I can prepare a departure tax return with the CRA for … Continue reading

Canadian Temporary Resident wanting to register an LLC for ecommerce business

Consider forming a US LLC to sell goods and services to American customers, after you leave Canada and become a non-resident of Canada for tax purposes. A Canadian tax resident will be double taxed if he/she does business in the US through a US LLC. For non-Canadians, LLCs are a good choice of business structure … Continue reading

Foriegn Employment income tax when received or earned (by non resident)

Individual taxpayers must report employment income in the year that the income is received. In theory, you can ask your employer to defer the payments of income made to you in order to minimize your personal income and tax for a particular year.

T2 Prior adjustments to payables in GIFI 3720?

No, you should not do that. It could trigger a tax audit. The right procedure is to amend the prior year’s corporate tax return with the correct information.

Incorporation of Canadian Entity at Ontario

Generally speaking, the US-Canada tax double taxation treaty is more favorable than the Indian-Canada double taxation treaty.

Canadian Citizen and Resident/US Expat Investing Stocks and Options

Since you are a US Green Card Holder, you have to report all income and gains from Canadian investments to the IRS, and pay US income/capital gains tax. However, you will receive a foreign tax credit on your US return for the Canadian taxes paid.

Can my brother in law living in a newly purchased condo (preconstruction) allow me to avoid paying HST

Either you, your spouse, common-law partner, or dependent child must live in the condo in order for you to avoid paying back the HST rebate on closing.

US C Corp with Canadian Holding company

If you are a Canadian resident and want to conduct an active business in the US, then the best structure is as follows: – A Canadian corporation (parent company) owning a US Corporation (subsidiary company) – You will be a shareholder of the Canadian corporation and the US corporation will carry-on the active business in … Continue reading

is HST profit from Quick Method taxable?

‘Profit’ made from utilizing the Quick Method Election is not taxable.

What is gifi cide in schedule 125 for phsp

Use GIFI code 8620, Employee Benefits, to record premiums paid to a Health Spending Account for an employee.

Provincial tax deduction

I recommend that you use CRA’s online payroll calculator. Here is the link: https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/payroll-deductions-online-calculator.html

Non-resident with Canadian source income?

I don’t believe that the workplace in Canada constitutes a permanent establishment for your business because you have no control over the workplace. However, the answer to ‘country of taxation’ depends on whether you are operating your business through a corporation or as a sole proprietor (i.e. not incorporated). If your business is incorporated in … Continue reading

How to include a shareholder loan amount in your personal income

So long as the company has sufficient retained earnings, clear the shareholder account through the ‘cash dividends’ account. Record the following entry: (a) Debit Cash Dividends (equity), and (b) Credit Shareholder Receivable (asset).

Canadian US NON Rental property owners

No, you do not need to apply for an ITIN in this case. Please keep track of your days spent in the US to see if you meet the Substantial Presence Test (SPT). If this test is met, then you will be treated as a US tax resident. To get out of US tax residency, … Continue reading

Interest deduction on Existing Rental Property

There aren’t any specific forms to fill out in order to trace the use of the funds received from the 1st mortgage. Should the CRA conduct an audit, provide them with bank statements that show how the funds were used.

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