Answers Archive

How to become non residenr after already being gone from Canada

If you are residing in and paying tax in China, then you can rely on the tax-treaty between China and Canada. According to the tax-treaty, you are a resident of the country where your permanent home is located. A permanent home can either be rented by you or owned by you. If you have a … Continue reading

Independent Contracting in Nova Scotia, Canada

Consider incorporating a Canadian company to bill your clients. Canadian controlled private corporations pay a low rate of corporate income tax (approximately 13% on the first $500,000 of taxable business profits). Furthermore, Canadian corporations can claim various tax deductions for business expenses. Finally, pay yourself a salary or a dividend from your corporation so that … Continue reading

Do ETF’s require PFIC reporting?

Yes, Canadian ETFs are subject to PFIC reporting.

Tax on returing Resident and on Spouse Earnings, who is still non resident

Thank you for your questions. My answers are as follows: 1. You can claim the personal tax credit for the 3 months that you are a tax resident of Canada. This credit will be prorated by the number of days that you are a resident of Canada divided by 365 days. 2. You will need … Continue reading

Tax on Spouse income who is not in Canada

Now that you have permanently relocated to Canada, you are a tax resident of Canada. This means that your global income will be subject to Canadian income tax, starting from the date that you permanently moved to Canada. Since your wife is linked to you, she will also be subject to Canadian income tax on … Continue reading

resign and relocate or go on a global secondment – which option is better for declaring non-residency

Thank you for your question. If you have a guaranteed job when you return to Canada and you continue to receive benefits from a Canadian employer while you are away, the CRA could argue that you did not intend to permanently leave Canada and as such you are a resident of Canada. As a resident … Continue reading

Canadian source income, non-tax resident

According to the Canada-US tax treaty, business profits are sourced to the country where there is a permanent establishment (fixed place of business, PE). A PE excludes a warehouse used for the storage and distribution of goods. It appears that your PE will be in the US, once you move, where you are physically working … Continue reading

Errors in small business tax filing, large sum in retained earnings

Loans made by a corporation to a shareholder are taxable in the year that the loan is received by the shareholder. This means that you would have to go back and amend your personal tax return for each year to report the loan received in that year as ‘income’. This will trigger a lot of … Continue reading

how do i report an assignment sale of a US real estate contract on a US tax return

The answer depends on whether you made the sale through a US partnership, S-corporation, C-corporation, LLC or in your name. If you made the sale personally (i.e. in your name) then record the sales and expenses on Schedule C of your US personal tax return.

Canadians with US Investment accounts

Your clients should avoid investing in Canadian mutual funds as they could be double-taxed because of the way the IRS treats foreign mutual funds. They should limit their investment to shares of Canadian companies and bonds. Furthermore, your clients will not have to file a Canadian tax return to report capital gains, interest, or dividends … Continue reading

How do I report a GIC asset in the schedule 100.?

Record the bond at its purchase amount on Schedule 100. If the interest is paid annually, record the interest income on Schedule 125. However, if the interest is only paid at maturity of the bond, then add the interest income to the purchase amount of the bond (reported on Schedule 100) and the interest income … Continue reading

can loan Payments be claimed as an asset

Loan repayments should be recorded as a reduction of the loan balance. The loan balance as of the year-end is reported on Schedule 100, and not the individual loan repayments made.

What happens to retained earnings in CCPA when all owners emigrate from Canada to USA?

If the IT consultant becomes a non-resident of Canada for tax purposes, then he will have to pay capital gains tax on the value of his shares (less the cost basis) in the capital stock of the CCPC. The value of the shares is equal to the value of the company. For an IT consultant … Continue reading

Paying a Non-Resident Director of a cCPC

Since your friend is a non-resident shareholder of a Canadian corporation, an NR4 slip should be prepared annually to report the dividends paid to him and the taxes deducted. The default withholding tax rate is 25%. The lower rate of 15% applies (pursuant to the tax treaty between Indian and Canada) if the dividends are … Continue reading

Re: Gift as in http://madanca.com/learn/canadiantaxforum/gift-deed-transfer-from-parents-account-in-india-to-canada-2/

You should have a gift letter prepared, and signed by both parties – the giver and the recipient. The date of the gift and the amount of the gift should be clearly indicated in the letter. I suggest having a Notary Public notarize the gift letter. This letter should be kept on the file, and … Continue reading

Archives: Answers