Answers Archive

Money Saving Strategies for First Time Home Buyers and Owners

You first need to determine the total size (square feet) of the home and then the size of the area that you are renting. For example, assume that the total size of the home is 3,000 square feet and you are renting out the main floor, which is 1,000 square feet large. Therefore, you can … Continue reading

Re: Can I work remotely while I am visiting the States -while I am Canadian with a Canadian Job?

Hi Mike, Do not stay in the US for 183 days or longer; otherwise you will become a resident of the US for tax purposes as per the ‘substantial presence test.’ If you are working in the US you are liable for US taxes. This means that you have to file a US return (1040NR) … Continue reading

Re: Taxes on Crowdfunding if I am a Non-resident and the income is from U.S companies (using a Canadian bank)

Hi Pam, Great question. Generally speaking, business profits are attributable to the permanent establishment (i.e. fixed place of business) from which they are derived. If your PE is located in Japan, then the proceeds received from a kick-starter campaign should be sourced to and taxable in Japan pursuant to the Canada-Japan tax treaty.

Re: Are there any advantages of filing with my wife, and are there any income splitting options to help balance?

Hi Max, You can take advantage of the family tax cut, which allows you to split income with your wife, yielding a maximum tax savings of $2,000. If you wish to claim this and If your wife is preparing her return separately, a copy of her return will be required before she files, so that … Continue reading

Re: Can I write of car expenses in my personal tax as a carpenter? My incorporated company pays me my salary as dividends.

Car expenses are only deductible from salary and not dividends. Consider having your corporation pay a taxable car allowance to you, which will be reported on a T4 slip issued to you. Then deduct the work related portion of your car expenses on form T777, Statement of Employment Expenses. This form is part of your … Continue reading

Re: Does my Canadian company with real estate properties in the U.S- No physical presence in Canada, need an EIN number and file tax in the US?

Your Canadian corporation must file a US corporate tax return (1120-F) and pay US income taxes (federal + state) on the profits earned from its US properties. To reduce / prevent double taxation, your Canadian corporation can claim a foreign tax credit for the American corporate taxes paid. Your Canadian corporation must obtain an EIN, … Continue reading

Re: Alberta Resident Selling Real Estate in BC – If i claim capital gains for structural water damage, will this be a loss?

Hi Annie, The structural improvements that you paid for (i.e your share) should be added to the cost of the property. By doing so, the capital gain realized on sale will be reduced. Since you live in Alberta, you must include the capital gain on your Albertan tax return. You do not need to pay … Continue reading

Re: When calculating capital gains for Canadian taxes, is the realtor’s fee tax deductible?

Hi Laura, The realtors fee is a selling expense that reduces the sales proceeds. This in turn reduces the capital gain.

Re: Renovations improvements in Area C referring line 9927 – do i use this to adjust the cost base for property when sold?

Thanks for your question on the tax consequences of making capital improvements to a property. Generally speaking, improvements result in a long lasting benefit to a property. If you restore a property to its original condition, then there certainly is a long lasting benefit. In terms of dollars spent, repairs are usually small in amount … Continue reading

Re: Should I claim the extra interest paid to end my mortgage as rental expense or as a capital expense?

Hi Karen, Thanks for your question. The extra interest your paid appears to be an early prepayment penalty for closing the mortgage before the end of the term. Prepayment penalties are deductible from rental income.

Re: How to cash out of holding company and put cash towards a new company?

Hi Mike, Follow these steps to access your existing corporate cash to startup a new company. 1. Incorporate a new company in Canada 2. Make a tax free loan from your current corporation to your new one 3. Interest on the loan should be equal to the CRA’s prescribed rate (i.e. 1% per year. 4. … Continue reading

Re: How to reduce property taxes for Canadian real estate while being a US citizen or should I sell?

Hi Pamela, Hope you’re doing well. Selling or transferring the property to a relative in Canada will not help you avoid the 25% withholding tax on the sales price. That’s because the CRA will deem the sales price to be equal to the market value of the property if it is sold to a relative. … Continue reading

Re: Quick Method of HST Collection – Multiple Provinces

Hi Liam, If more than 90% of your sales are made in Ontario, then apply the remittance rate for Ontario (8.8%). Otherwise, separate the sales made between Ontario and Alberta, and apply the remittance rate applicable in each province.

Re: Do I need a withholding certificate for selling a Canadian home to a US citizen that will use property as a rental?

You won’t be eligible for a withholding certificate since the buyer is not occupying the property for his personal use. As you are a non resident alien then 10% of the sales proceeds will be held back by the title company and remitted to the IRS. You can recover this tax by filing a US … Continue reading

Re: How to claim tax on payment as an independent contractor

Hi Max, Here’s what I suggest that you do and DO NOT do: 1. Do not incorporate a company because this is a one-off contract and you will not realize the full benefits from incorporating 2. Call the CRA at 1-800-959-5525 and obtain a Business Number 3. Open up a business bank account to deposit … Continue reading

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