Answers Archive

Is it possible for a U.S. S-Corp to avoid paying Canadian and provincial taxes on income from a Canadian client (consulting) and instead opt to pay U.S. corporate taxes?

It depends on several factors: – Where are the services performed? Canada or the US? – If the services are performed in Canada, how many days are you or your employees physically present in Canada? – What are the total revenues of your company for the year? – If the revenue from the Canadian contract … Continue reading

Reporting Claimed Gst and Hst on expenses

Record the following transactions in this order: 1) Debit Cash $100 and Credit GST/HST Payable for $100 (to record HST collected on sales) 2) Debit GST/HST Payable for $150 and Credit Cash for $150 (to record HST paid on business purchases) 3) Debit Cash for $50 and Credit GST/HST Payable for $50 (to record GST/HST … Continue reading

GST/ QST/ HST Paid on Purchases Account

When GST/HST is collected, the GST/HST liability account is credited. Likewise, when input tax credits are claimed (for GST/HST paid on business expenditures), the GST/HST account is debited. The same applies to QST collected and paid.

When to pay gST/PST/HST on services provided extra Provincially by a BC Corporation?

Charge Newfoundland HST because that’s where your customer’s billing address is. File a single GST/HST return and report the sales for the period, GST/HST collected, and GST/HST paid on business purchases.

45(2) election confirmation

The CRA will send a Notice of Assessment for the tax return for which the 45(2) election relates. However, I have not received a letter from the CRA unless the election is denied.

Business Tax Benefits of Providing Housing to Key Employees

Thank you for your question. Employer-provided housing is a taxable benefit to employees. Payroll taxes will need to be deducted from the benefit in the same manner as salary paid to an employee. The taxable benefit is tax deductible for the employer. So I don’t see a tax advantage.

india rental income

Report the income and expenses (in Canadian dollars) in respect of your Indian rental property on form T776. Claim a foreign tax credit for the Indian taxes paid on form T2209.

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.

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