Answers Archive

how to report cash withdraw from corporation makes no profit

Hi Ali, if you lent money to your company, and your company is repaying you for the amount it borrowed from you, then the repayment (i.e. cash withdrawal) does not need to be reported on your personal tax return and is not taxable. On the corporate tax return, report the cash-withdrawal as a reduction to … Continue reading

Canadian PR, US Alien resident, w/ Bank Accounts in Canada.

Hi, no, you don’t need to file a Canadian tax return since you only temporarily stayed in Canada, and then left. When you permanently move to Canada, you will become a tax resident of Canada at that time.

Division of rental income for tenants in Common

Hi Lauren, The % of the house expenses that can be deducted is equal to the size of the rented area divided by the total size of the home. Each of the three owners will report 1/3 of the rents collected and the deductible expenses.

Unlmtd common shares & how to declare %share distribution?

Hi, you haven’t made a mistake. The articles of incorporation do not specify who the shareholders are. You will need to prepare a corporate minute book, including share register, share transfer ledger, and share certificates. In addition, a directors resolution should be prepared for approval of the company to issue shares to the shareholders.

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

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

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

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.

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