Answers Archive

TN worker working in US for possibly three years. Tax help?

Hi David, Before the issue with the GST/HST payments, I believe that it is important for you to establish whether you are a Canadian resident or non-resident for tax purposes. Usually, if you leave temporarily, you will still be considered resident of Canada and you will have to file Canadian tax return to report your … Continue reading

How much tax on Self Employment Income?

Hello Cassandra, You should set aside $3,700 for income taxes and $2,500 for CPP premiums payable on self employment earnings. Hope this helps, Madan Team

Ex-spouse Income Information

Hello Kiran, You are required by the CRA to provide the net income of your ex-spouse to calculate the spousal amount on line 303 of your return. If no amount is entered, the return cannot be electronically filed. Thanks, Allan

What are the tax implications with respect to a dividend paid by a Canadian corporation to a US parent company?

Assuming that the ULC filed an election to be treated as a normal corporation as opposed to a flow-through entity, the dividends paid by the ULC to US Co. will be eligible for the treaty reduced withholding tax of 5% of gross dividends.The foreign dividends received by the US Co. will be eligible for a … Continue reading

CCA on Rental Property?

Hello, Claiming CCA makes sense if your marginal tax rate today is likely the same or higher as it will be when you sell. This is because the CCA claimed (which is a tax deduction) today will be greater than the income inclusion (known as recapture) when the property is sold. A recapture of the … Continue reading

How do I find out the result of my appeal?

I’ve heard normally it can take about 6-12 months after you file an appeal for your case to be reviewed by an appeals officer. You can meet with the Appeals Officer and try to convince him or her of the correctness of your position, or you can make your case in writing. The procedure is … Continue reading

Can my corporation deduct property taxes for my house?

Hello Daniel! You can charge-back 10% of your property taxes to your corporation, since your home office is 10% of the total area of your home. Record a journal entry that debits Home Office Expenses and credits Due To Shareholder. Thanks and hope this helped, Allan

Reducing Work Hours With the Least Amount of Impact on Pay

Hi Melissa, in Canada, we have a graduated tax rate system, which means the more you make, the higher tax you pay. However, you will never be worse-off if your wage / salary for the year increases, because the highest marginal tax rate does not exceed 49%. For you to be out-of-the-money because of a … Continue reading

Applying for losses from prior year on T1

Hello Priti, Thanks for your questions. You can apply non-capital losses from prior year(s) to any source of income in the current year. This will reduce the current year’s taxable income. You do not have to wait until you receive the notice of assessment for the current year. To apply a non-capital loss from a … Continue reading

Concerned about becoming a victim of real estate fraud

You have good reason to be concerned about fraud, it’s a serious issue especially when it comes to protecting your businesses regardless of whether it’s in real estate or not. You’re also right, the more you expand a business the more you have to manage which can become overwhelming at times. The best advice I … Continue reading

Can I claim medical expenses if Self-employed as a business expense instead of personal deduction?

You cannot claim medical expenses (such as dental) and fitness expenses as tax deductible business expenses. You can claim personal tax credits for these amounts on your personal tax return.

Deducting real estate agent commission when filing taxes

Hi Andrew, Thank you, If the home in Canada was your primary residence prior to selling it, then you cannot deduct commission fees paid in respect of the sale.

Paying E.I on Salary owned by Shareholder

Hi Joseph, EI premiums are not payable on salary earned by a sole shareholder of his company. So it doesn’t make a difference if you pay yourself a director’s fee or a salary.

How to Enter Prior Year GIFI on T2 Return

Hello David, Unless this is your first corporate tax filing, you must enter the prior year’s financial information on GIFI schedules 100 and 125. All CRA approved T2 Preparation Software should have this feature. Thanks, Allan Madan

Sending US residents to work at a US employer based in Canada- do we only withhold Canadian taxes for those who are in Canada?

Hi Emily, No, that is not correct. Canadian payroll taxes must be deducted, unless you obtain a waiver from the Canada Revenue Agency (for employees less than $10,000). We can help you with this. Also, your US employees must file a nonresident personal tax return with the CRA.

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