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Answer

Declare loss in Personal tax due to Loss in Business

Hi Gus, you can claim a capital loss for the unpaid balance of the shareholder loan owing to you, if the company cannot repay you. To do so, attach an election form [50(1)] with your personal tax return for the tax year during which the debt became bad.

Tax return for corporate passive income

Hi Cristian, thank you for your positive feedback. I will do my best to prepare a tutorial on how to complete the tax forms for passive investment income. You should complete Schedule 3 (dividends) and Schedule 7 (all investment income) as part of the corporate tax return preparation process. Note that capital gains are reported … Continue reading Tax return for corporate passive income

Change in use election for proncipal residence

Hi, the subsection 45(2) election must be filed with your personal tax return for the tax year during which you changed the use of your property from a principal residence to a rental property. The CRA has said that they will not retroactively accept this election (i.e. if it is filed late) because doing so … Continue reading Change in use election for proncipal residence

dividende or salary

Hi, pay yourself a dividend to avoid the headache of payroll taxes and to avoid paying Canada Pension Plan premiums. The tax free amount is $35,000 / year, providing that you have no other source of personal income.

T2 CCA how to record Proceeds of dispositions assets

Hi Ron, Before a terminal loss can be claimed and a CCA class ‘closed’, all of the assets in that class have to be disposed / sold / thrown away – nothing can be left in that class. In the case of the furniture, assuming nothing is left, recapture of CCA for $5,000 should be … Continue reading T2 CCA how to record Proceeds of dispositions assets

Do i need to file a final (Departure) tax return as a non-resident?

If you filed a non-resident tax return with the CRA, because you are protected by a tax-treaty with Canada, then you do not have to file a departure tax return.

missed interest payment on Prescribed rate loan

Hi Bill, the payment has to be made by January 30, or else the income attribution rules will apply for the year. If the cheque for the interest payment is dated on January 30, this is considered as ‘paid’. But you cannot back-date a cheque.

Withdraw cash from hold co

Hi Michael, it depends on the amount of the dividends you received. The taxable amount (as per the T5 slip) of the dividends received must be included in your personal income.

Any tax deduction for a Stock grand like there is for a Stock Option ?

A tax deduction is not available for stock grants. Stock grants are added to your income (T4) when they are fully vested.

Dividend paid by Opco to Holdco

For accounting purposes, the holdco should record the dividends received as income. When the corporate tax return is prepared, a deduction can be claimed on the T2 return for the dividend received.

Deemed non-resident Canadian

Hi Mohan, pursuant to the Canada-Indian tax treaty, it’s very unlikely that you will be treated as a non-resident of Canada, and a resident of India. This is because you have a home in Canada, a spouse in Canada, and children in Canada. Therefore, you will not be a deemed non-resident of Canada.

Best way to deduct home office expense with corporation

Hi John, you can charge back a portion of your home rent to your corporation. The allowable portion is determined by calculating the % that your home office space is of the total size of your home. For example, assume that your office space is 200 square feet, and your home is 2,000 square feet … Continue reading Best way to deduct home office expense with corporation

Capital Gain

Hi Mohan, have your parents prepare a gift letter stating that they are gifting the property to you. The value of the gift should also be specified on the letter, which is equal to the market value at the time the gift is made. An appraiser can give you an estimate of market value.

Do I Need To Get All My Savings With Me In Cash Upon First Landing Or is there any other way to get my savings to Canada? Can I Do A Bank To Bank Transfer From My Home Country once I have Landed In Canada and opened a Canadian bank account? I Have Proof Of Income To Show For all My Savings.

Hi Punjani. send a wire transfer from your home country bank to your Canadian bank once you come to Canada. This transfer will not be taxable, if the amount transferred represents your savings from your home country that you made before you came to Canada.

Capital Gain

Hi Mohan, thank you for your question. When a gift of property is made, the proceeds of disposition are deemed to be equal to the market value of the property at the time of the gift. In your example, the proceeds of disposition would be $200,000, resulting in a capital gain of $195,000 (i.e. $200,000 … Continue reading Capital Gain

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