Answers Archive

Capital Gain Tax on property

Hi Ken, I assume that you did not transfer title of the property to your mom after you moved out. Also, I am going to assume that you and your mom own 50% of the property each. However, you should prepare a written agreement signed by both you and your mom to document the % … Continue reading

Sale of primary residence

Hi Craig, When your girlfriend changed the use of her property from her primary residence to a rental property, there was a ‘deemed sale’ at that time. As a result, the appreciation of the property from the date of purchase to the date of the ‘deemed sale’ becomes a taxable capital gain. However, since she … Continue reading

unbalanced Trail Balance

Hi, it’s very difficult for me to answer this question without examining the books of account first. Sorry that I couldn’t be of more help.

i want to pay myself in my business with T4, how can i do it?

Hi George, Your company must first obtain a Payroll Account Number from the CRA. They can issue this over the phone by calling 1-800-959-5525. Next, you must calculate the payroll taxes to be deducted from your paycheck and the amount of payroll taxes to be remitted by your company to the CRA. To do this, … Continue reading

Reporting UCC

Hi, it depends on how the asset was acquired. If you paid for it on behalf of the corporation, then you should record the amount paid to the shareholder loan account.

Incorporate to do uber

Hi, you can incorporate a company in Canada, and the corporation can lease a vehicle to be used by you as an Uber driver. If your income (after expenses) is below $75,000, then I recommend that you operate as a sole proprietor. This is because, in my experience, corporate tax savings really start when the … Continue reading

Canadian Corporation with opportunity to work in US

Hi, Your Canadian corporation will need a US EIN, and will also need to provide your American client with form W8-BEN-E to avoid a 30% US withholding tax on payments received by your Canadian corporation. I can prepare both for a fee of $300 CAD (one time) + disbursements and taxes. In addition, your Canadian … Continue reading

cap gain on principal residence

Hi RA, if you tear-down your home and build a new one, then the principal residence exemption will not be applicable for the old home. This is because you never sold the old home and so there is no gain.

Property Flipping company Structure?

Hi Vik, It makes sense to flip houses through a Canadian corporation, which I will refer to as OPCO. This is because OPCO pays a low rate of income tax on profits derived from flips – 13.5%. You could also setup a holding corporation (HOLDCO). This will provide for creditor protection of the cash savings … Continue reading

Recording undercoated capital cost

Hi Ali, Record the following entry for depreciation: Debit Depreciation Expense – $100 Credit Accumulated Amortization – $100 Depreciation expense is reported on the income statement. Accumulated amortization account is reported on the balance sheet as reduction of the capital cost of the asset ($500). The balance sheet presentation should be as follows: – Capital … Continue reading

Beginning real estate investing in US and Canada

Hi Ken, The recommended structure for Canadians to own US real estate is a Limited Partnership. The Limited Partnership will own the property, collect the rents, and pay for expenses. There are two types of partners in a Limited Partnership setup: 1. Limited Partners – These are individual Canadian investors. The limited partners collectively own … Continue reading

Incorporating a start-up company

Hi, incorporate the companies separately, so you have the option of selling one business without having to sell the other. In addition, you may be eligible to claim the lifetime capital gains exemption of $860,000 / shareholder, which allows for tax-free profit of up to $860,000 on the sale of the corporation’s shares. Dividends are … Continue reading

Indian citizen with Canadian PR and taxes

Since you and your children live in Canada, and since you are all PR card holders, your husband will be liable for tax in Canada on his worldwide income. He can claim a foreign tax credit on his Canadian tax return for the Indian taxes paid.

Large cash gift from overseas

Hi Kim, you will not have to pay Canadian income tax on the gift received. Gifts are non-taxable to the recipient in Canada. A gift letter needs to be prepared and notarized by a lawyer. The gift letter should contain these facts: 1. Name of giver 2. Name of recipient 3. Amount of gift 4. … Continue reading

Impact of converting USD to CAD

Hi, if the interest that you are earning on your cash savings is less than the interest that you are paying on your mortgage, then use your cash savings to pay off your mortgage. Any foreign exchange gain realized upon conversion of the USD into CAD will be taxable to you in the US. To … Continue reading

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