Answers Archive

Re: How do I track the adjusted cost balance?

You can track the ACB on a spreadsheet. When determining the ACB of shares traded on the stock market, use the weighted average cost method (WAC). The WAC is equal to the total purchase price dividend by the number of shares on hand.

Re: What should I do if the expenses indicated on my T776 are disallowed by the CRA but shouldn’t be?

Hi John, You should file a Notice of Objection. According to Section 18(1)(a) of the income tax act, an expense is deductible if it was incurred for earning income from a business or property.

Re: How to claim tax deduction for counter tops purchased for rental property?

Hi Izack, Thanks for your question. Counter tops that you purchased for $2,700 to replace the old ones in your rental property should be reported on Areas A and C of form T776, Statement of Real Estate Rentals. The counter tops are a capital addition to the building, CCA Class 1.

Re: Can I use the same HST# from my sole proprietorship when I incorporate my business?

Hi George, Yes, you will need a new HST number for your corporation.

Re: How to prepare a balance sheet with a 100 common shares

Hello Melissa, It’s very likely that CRA will re characterize the management fees your client received as employment income. This is because your client is acting in the capacity of an employee as opposed to an independent company providing management services to a variety of clients. With respect to the T2 Return, report the common … Continue reading

Re: RRSP Withdrawal

Hi Christina, You are not liable for the income tax resulting from a RRSP withdrawal he made.

Re: Deducting Tax

Hi Jessica, It’s very likely that CRA will re characterize the management fees you received as employment income. This is because you are acting in the capacity of an employee as opposed to an independent company providing management services to a variety of clients.

Re: Tax Implications for Canadians Giving Inheritance to Non Residents of Canada

Hi Anna, For Canadian tax purposes, there are no tax implications for a Canadian giving an inheritance to a non resident of Canada.

Re: Tax implications for a Canadian Citizen returning home from the U.S.

I am a dual Canadian/US citizen living in Canada, have always lived in Canada, and have never owned property in the United States. I have commuted back and forth to the US for work for the last 15 years and have filed tax returns in both countries. Soon I will retire in Canada and never … Continue reading

Re: How to reduce capital gains from sale of rental property from rental expenses

You have to fill out form T776, Statement of Real Estate Rentals. Report the expenses incurred on this form. Be careful to distinguish between repairs and improvements. A repair is a deductible expense, while an improvement is added to the cost of the building and is depreciated. A repair does not generally increase the value … Continue reading

Re: How to take out Dividends from your Corporation on a Tax Free Basis?

Hi Julianne, In the province of Ontario, the maximum tax-free amount for dividends paid by a Canadian Controlled Private Corporate to a resident of Ontario is $35,000 (used to be $40,000), providing that the person receiving the dividends has no other source of income in the year. Please check your articles of incorporation to make … Continue reading

Re: Can I hold an investment account as a non-resident?

Most financial institutions and stock brokerages do not permit non residents to open up trading accounts in Canada for the purpose of buying and selling marketable securities.

Re: How can life insurance save tax for a corporation?

Hi Leslie, You are correct that corporate life insurance premiums are not tax deductible. However, when life insurance is required as collateral for a bank loan then the premiums paid are tax deductible. Having your corporation pay for life insurance premiums instead of you means that you do not have to use your personal after-tax … Continue reading

Re: How to Report Bonus Payments and Do I need to Pay CPP and EI

Hi Rasa, The entire amount of $10,000 (total compensation) should be reported on box 14 of your T4 slip. CPP and EI premiums will be applied the entire amount of $10,000.

Re: Do I have to Pay CPP and or EI?

Thanks for your question. You will have to issue a T4 slip and obtain a Payroll Number from the CRA. Payroll taxes must be remitted to the CRA by the 15th of the following month. Income taxes, CPP and EI premiums must be deducted from your mother-in-law’s gross monthly salary. Thanks,

Archives: Answers