Answers Archive

Re: Canadian Inheritance Tax?

Hi, there are no taxes charged on either Canadian or foreign inheritance. Any applicable tax would have to be paid by you. The only time your daughter would have to pay for tax would be if the money gains any interest AFTER she receives it.

Re: Deductions for training

Hi Linda, unfortunately you will not be allowed to deduct these costs. In your situation, your training would fall under capital expenses. This means your training results in a lasting benefit to you

Re: Stuck with two houses, should I cash in RRSP?

Hello Victor, if you cash out your RRSP now you will not have enough contribution room to reinvest the 95K. You will also have to pay a lot of tax if you withdraw from the RRSP. I would suggest going to your mortgage lender to see how much you need to cover the costs and … Continue reading

Re: Do I charge my customers HST on material?

As an electrical contractor, you must charge your customer HST on both materials and labour. If the customer is in Ontario, you charge HST of 13 per cent. If the customer is in another province, you change the HST rate of that province. Or you charge the GST rate of 5 per cent if the … Continue reading

Re: Can we borrow or use some of our daughter’s RESP for travel academy?

Hey Harold! Unfortunately, your daughter has to be enrolled in a post-secondary program to qualify to use the RESP. It does sound like a great opportunity for her though, with learning far beyond the “schooling” itself. You can take the principal out of the RESP at any time without tax consequences, but be careful. If … Continue reading

Re: Handling my late husband’s TFSA

Hi, the earnings that are gained in the account after the account holder’s death will be taxable. The earnings that accrued before the death would remain tax exempt. However, if your husband named you as a successor to the account, you will be able to maintain the tax-free status of the earnings in the account. … Continue reading

Re: Incorporating my business

Hello, yes, it may be too early to incorporate your business. There are two key benefits for when you do incorporate your business: the first is limited liability for shareholders and the second is opportunities for tax deferral. If you incorporate your business too early, you may not even benefit in those two categories. Depending … Continue reading

Re: Accrual vs Cash accounting methods

Hi Sofie, in most cases, you will need to use the accrual method of accounting to report your business income. With this method you have to report your income in the fiscal period that you earn it. You also have to deduct expenses in the fiscal period you incur them, whether you paid them in … Continue reading

Re: Tax status

Hi Lakshmi, No. Your husband will not be liable for Canadian tax simply due to your newly established Canadian residency. However, I would ensure that you be careful not to implicate him on anything in Canada. For example, if you are to purchase a home in Canada, he shouldn’t be on title. If you are … Continue reading

Re: Is UN income taxable in Canada?

The income derived from the United Nations is not taxable in Canada. However, you must report it on your annual tax return on Line 104. Then, the UN income will be deducted on line 256.

Re: Optimization of tax situation for 34 year old male?

Hello, If you are putting $300 per month against your student debt, it will take a long time to get it paid off. If you add an extra $4,500 a year against it, it will take about four years to get it done. If you suspend or significantly lower your debt repayment, the interest costs … Continue reading

Re: Investing and banking for non-residents?

Hello, As a non-resident, you can contribute to your RRSP to the extent that you have room available. However, since you are not earning any Canadian income, the RRSP contribution cannot be deducted on your tax return. You are not allowed to contribute to a TFSA. If you do, you’ll face 1% penalties on the … Continue reading

Re: Canadians with an RRSP moving to USA

Hi Rudy, the first thing you should do is to leave the RRSP intact. There will be a significant tax hit if you decide to close your RRSP before leaving the country. If you withdraw all of the funds in the RRSP, it will be fully taxable in the year that you leave. The second … Continue reading

Re: Canadian business with a branch in the UK

Hello Hugh, Canada offers foreign tax credits that you can claim on your corporate tax return. You must calculate foreign tax credits for business and non-business (ex. Interest, dividends) income separately. The foreign tax credit is the lower of the Canadian tax rate and UK tax rate. The Canadian income tax rate is 15.5% on … Continue reading

Re: Do I have to pay capital gains?

Hello When you converted your home from a rental property to your primary residence in 2008, there would have been a deemed sale. This sale would have occurred at the market value of the house at the time of conversion. This presents a problem because you never reported the deemed sale on your personal tax … Continue reading

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