Answers Archive

Incorporating an online business

The best way is to hire a professional – either an accountant or a lawyer so that they can incorporate the company properly. Consider incorporating a federal company in Canada, so that you can secure your company name all across Canada and not just in a particular province.

Sole Proprietor Realtor turn Into Incorporate?

Based on what you have said, you should consider incorporating your business. You should first confirm with your regulatory body if commissions can be paid to a corporation owned by a real estate agent. By incorporation, your business can take advantage of the low corporate tax rate for small businesses in Canada.

Declaring Personal Property Outside Canada

Thank you for your question. In my opinion, vacant land is not personal use property. Personal use property includes a cottage, vacation property, or second residence. You must report the cost amount of the vacant land on form T1135. The cost amount is equal to the fair market value of the land (as determined by … Continue reading

US Child tax credit and foreign taxes claimed on the canadian return

Great question. I have taken the net US tax liability (after tax credits) and claimed the net amount as a foreign tax credit. In your case, this is $6,000. I am not saying that your accountant is wrong, but this is the approach that I have followed.

How to value the Fair market value of a CCPC share

You should hire a Chartered Business Valuator to determine the value of the business. As a general rule of thumb, the value of a business is 3 to 5 times its EBITA (Earnings Before Interest Taxes & Amortization).

Registered for GST Number, for import export number. But Sales less than 30,000 per year. Should i collect GST from Customer?

You are not required to register for a GST/HST number and you are not required to charge GST/HST to customers because your sales are less than $30,000.

Preparing income tax return for a person who moved from the US to Canada

My responses are as follows: 1. Do not claim a tax deduction on line 256. The income is not tax exempt. Any income earned by your clients outside of Canada prior to coming to Canada is not taxable in Canada. In particular, US income earned by your clients prior to coming to Canada should not … Continue reading

Can a Corporation do two things with 1 business?

A corporation can conduct multiple businesses. You do not need to open a separate corporation for each business. However, to minimize risk, I suggest that you purchase real estate in a separate corporation. That way, if one corporation fails or is sued, it won’t impact the other corporation.

Incorporated but still operating as sole-proprietor

Yes, this is the correct approach because you continued to operate as a sole proprietor until March 2019.

Filing 2018 1040NR for US Rental Property

If you are filing a US 1040-NR (non-resident alien tax return), you cannot claim exemptions nor the standard deduction.

How to claim money lent to your own corporation in canada, ontario

Do not report shareholder loans made by you to your corporation on your personal tax return. In your example, the corporation owes you $500. This is not income, but is a shareholder loan payable. When the company has available cash, it can pay you back the remaining balance ($500) tax-free. Note that shareholder loans should … Continue reading

What is the best way to invest in u.s. Real Estate (Rental Property) As a Canadian?

The best way to invest in the US, where you are a Canadian and your partner is an American, is by forming a US Limited Partnership (US LP). The US LP will purchase the property. You and your partner will be ‘limited partners’ collectively owning 99% of the partnership. There will be one General Partner, … Continue reading

Partnership Incorporation in US with US and Canadian Partner

Thank you for your question. I am assuming that you are carrying on an active business in Canada with your American partner. If this is the case, then you and your American partner should form a Canadian Corporation to do business in Canada. I further suggest that you own a majority of the voting shares … Continue reading

Can i take Depreciation Cost since the Time of Conversion Personal to Rental?

If you converted your primary residence into a rental property, then the cost basis of your property is equal to the fair market value of the property at the time of conversion. Subtract the land value from the total value at the time of conversion to arrive at the value of the building. The building … Continue reading

Incorporate a business

If you continued to collect payments and invoice customers from your sole proprietorship, then you can record the income on your personal tax return. You can fill out and file form GS44 to claim an exemption from collecting HST on the sale of your business assets to your new corporation. I’m assuming that your vehicle … Continue reading

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