Answers Archive

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,

Re: Is my Social Security number in Canada my Foreign Tax identifying number?

Hi Raul, Foreign Tax Identifying Number refers to your Canadian Social Insurance Number. Note that you must disclose your real name on form W8-BEN.

Re: Can I claim the GST I paid on my my business vehicle?

Yes, you can claim an input tax credit for the GST/HST paid on your vehicle purchase.

Re: Tax Implications of Transferring Client List from Sole Proprietorship to Incorporation

Hi Carol, Whether you close the sole proprietorship or transfer clients to a newly created corporation, there will be a deemed sale of the sole proprietorship’s assets. As a result of the deemed sale, any assets that have gone up in value will be subject to capital gains tax. Your biggest asset is likely your … Continue reading

Re: Incorporating a sole proprietorship

Hi Rhonda, Your husband should continue to operate as a sole proprietor and not incorporate. Incorporating is beneficial from a tax perspective only if your husband has the financial ability to keep some of the profits inside the corporation’s bank account as savings. This way, he will defer paying personal taxes on the cash savings … Continue reading

Re: Withholding Tax on RRSP Withdrawal

Hi Yohan, The withholding tax rate on RRSPs withdrawals made by non residents of Canada is 25%. Splitting the withdrawals between two years will not make a difference.

Re: Working in USA with J1 status

Sorry, I also want to see I have no current property or family in Canada.

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