Answers Archive

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

Capital Gains

Hi Lavie, if the property sells for $400,000, then the gain will be $25,000. Since you are flipping this property, the entire $25,000 gain will be taxable to you and included in your income in the year of sale. Note: interest charges, property taxes, and utilities cannot be added to the cost of the property.

Best way to buy home from Relative for incorporated truck driver

Hi, your father-in law shouldn’t sell you the apartment for $100,000 less than market value, if this an investment property (e.g. rental property). This is because you are understating the true cost amount of the property, and so you will have a huge capital gain when you eventually sell the property.

electing to keep rental property as principal residence (subsection 45(2) of the Income Tax Act)

Hi Ahmed, if you are a factual resident of Canada, then you are eligible to elect under subsection 45(2) of the income tax act. If you are a factual resident and a co-owner of a Canadian property, while the other co-owner is a non-resident, you can elect to treaty your share of the property as … Continue reading

Principal residence

Hi Smith, once you have separated and transferred your matrimonial home to your ex-wife, you can immediately purchase a principal residence. There is no waiting period.

Deemed disposition of Inherited Foreign Property

Hi Sam, for Canadian tax purposes, the cost basis for your mother-in-law of the property in Hungary is equal to the market value of the property on the date of inheritance (i.e. 1983). When your mother in-law passed away, all of her assets would be deemed to be disposed (i.e. sold for tax purposes) at … Continue reading

is there even advantage to starting a resp with cdn/us dual citizenship as residents of canada since the irs taxes on gains as per form 3520?

Hi, there is no advantage. Income from a RESP and TFSA is taxable in the US if you are a US citizen.

Eligible expenses to reduce capital gain on US vacation property

Hi Karen, selling costs can be deducted to reduce the capital gain realized upon the sale. Selling costs include: – commissions paid to a realtor – legal fees paid to a lawyer – repair expenses incurred to make the property ready for sale – land transfer fees (sometimes called stamp taxes)

Income tax for non residents

Hi, you will not have to file a Canadian tax return for the 2018 tax year, since you were in Canada for only 15 days. Non-residents (including Canadian PR card holders and Canadian citizens) can visit Canada for up to 182 days in any 12 month period without being treated as a resident of Canada … Continue reading

Working in UK

If she doesn’t know if she will stay permanently in the UK, then she should continue to file Canadian tax returns as a resident of Canada. As a resident of Canada, she will be taxable on her worldwide income and pay Canadian income tax. To avoid double taxation, she can claim a foreign tax credit … Continue reading

Box 39 – security Option Deduction – paragraph 110(1)(d) of the Income Tax Act

Hi Paul, RSUs are not the same as employee stock options. When RSUs vest, the vested amount is included in your income (T4) and subject to payroll tax. They are not eligible for the 110(1)(d) deduction.

Tax planning for inheriting a realestate corporation

Hi Dave, I’m assuming that the real estate is located in Canada and that the corporation that owns it is a Canadian Controlled Private Corporation. To reduce estate taxes payable upon the death of the current shareholders, consider implementing an estate freeze now. By doing so, the value of the existing shareholders’ shares will be … Continue reading

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