Answers Archive

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

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.

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