Answers Archive

Re: I pay very little income tax – what should I do?

Hello Unless you expect your income to stay small, I would not suggest putting it in your RRSP. You want to put money into your RRSP when you’re income is higher than your lifetime average and take it out when it’s lower. At very low incomes, using an RRSP can hurt you in retirement. Withdrawals … Continue reading

Re: Trustee Fees

Hello, there are no list of rules that talks about deductibility of fees paid to the trustees. Generally speaking, trustee fees are deductible if the fees would normally be deductible in the calculation of the investment income. Trustee fees paid to the investment advisor are reported on schedule 8 of the trust return and are … Continue reading

Re: Use of Trust Property

Hello, the payment of the tuition is a taxable benefit because the trust is paying for what would otherwise be a personal cost of your children. The rental property is held to earn income and is not personal use property so the value of the free rent is a taxable benefit in the hands of … Continue reading

Re: Filing a T3 for my wife’s estate?

Hi, you will not need to file a T3 for the estate. You can simply pick up the assets from the estate directly. You then report any income you receive from the property on your own returns.

Re: Managing Multiple Trusts

Hi, because the trusts were created by the same settlor, they must share the $40,000 annual alternative minimum tax basic exemption. Since you sister’s trust has a substantial AMT add back, you can bring this up to your trustees. They will more than likely allocate the full $40,000 to this trust.

Re: Inheritance into GIC’s?

Hello. As I see it, there are three options that might fit you. If you still want accessibility with the money and a decent interest rate, you should look into the Investment Savings Account TD Canada Trust offers. It’s 1.25% guaranteed and does not lock you into a term like regular GICs. It also provides … Continue reading

Re: What can I claim against rental income?

Hello, You can deduct maintenance costs can against rental income. Be aware of the difference between maintenance and improvement: maintenance is replacing carpet with carpet, development is replacing carpet with hardwood and is not deductible. Mortgage interest, if you have a mortgage, is another large expense that landlords have. If you are renting what used … Continue reading

Re: What should I do with my husband’s corporate bonds?

Hello, instead of claiming the income from the bonds each year and having it be taxed at top marginal rates, you should get your trustees to retain the income and have it taxed in the trust at graduated rates. You can then ask for capital distribution that will provide you with any additional cash you … Continue reading

Re: Selling a house with a family trust

The trust can attribute the principle residence exemption for your brother from 2006 to 2009 because he lived there as his primary residence. Likewise, the trust can designate the principle residence exemption for 2009 and onwards for you, so long as the house was your primary residence. The total principle residence exemption for you and … Continue reading

Re: How to handle a clause in my father’s will?

Under the rule in Saunders vs. Vautier, you may terminate a trust that goes against the wishes of the settlor or trustee. For this rule to apply, all the beneficiaries of the trust must agree and have the capabilities (i.e., be mentally competent and are 18 and over). The interests of the beneficiaries must also … Continue reading

Re: Creating a trust to help allocate University funds

Hi, it sounds like you want to set up an income-splitting trust. In this type of trust, you need to identify your non-minor children as the income beneficiaries and your husband as the capital beneficiary. When preparing the income tax return for this trust, it is important to identify the income and capital beneficiaries and … Continue reading

Re: Should I withdraw from my RRSP, or use an LLP?

Hello There are many variables, some of which you cannot know right now (e.g., will you get a government job with a pension and not need RRSP room?).If you are young, it is usually more tax efficient to us the LLP. If you take out the money as income, you lose that contribution room permanently. … Continue reading

Re: Buying a home?

Hello How you should invest depends on a few factors. The first is your timeline. You do mention five years, but how solid is this deadline? The next is your market, and how badly you want a house. If you are in Vancouver, you may choose to rent instead of buying, this would push timeline … Continue reading

Re: Receiving commission in Canada from the USA

The short answer to your question is as follows: 1) Please prepare a T4A slip for each independent contractor. This is similar to the 1099 slip in the US for independent contractors. One copy of the slip is also provided to the CRA (Canada Revenue Agency) along with a summary report. 2) You should keep … Continue reading

TFSA plus a savings account?

I would recommend that you max out your TFSA at $31,000 before you start to contribute to your savings account. You should use your TFSA to save for long term investments (retirement), your savings account for medium term investments (car, vacation) and your chequing account for everyday purchases. Also, make sure you never carry over … Continue reading

Archives: Answers