Answers Archive

Re: Managing Personal Investment Portfolio?

Hello, The choice of reporting method has important tax consequences. Profits as capital gains are only 50% taxable, but as business income they are 100% taxable. If you incur losses, however, the losses are only deductible against capital gains. Business losses are fully deductible against other sources of income. Business profits are also subject to … Continue reading

Do I have to worry about taxes in India if I live in Canada?

That is not the case, her rental income is taxable in both India and Canada. However, there is more to it. The way it works, as per the treaty between Canada and India (see: article 6), income from property such as an apartment will be taxed in the country where it is located, first. Canada … Continue reading

Re: How do savings plans help me defer my tax payments?

Hello, Without knowing your friend’s situation personally, it’s somewhat difficult to recommend a savings plan that will work best. In most cases, however, tax deferral makes sense. Basically, the way deferral works is this. If your friend puts some of their money away now and agree not to touch it, then they pay tax on … Continue reading

Re: What to do with my RRSP now that I’m turning 71

Hello, When you turn 71, you are required to convert your RRSP’s to another form of retirement income before the end of the year. Collapsing your RRSP’s would normally result in a large tax bill, so most seniors choose to convert their funds in to an RRSP annuity or a Registered Retirement Income Fund (RRIF). … Continue reading

What does it mean to “declare my income?” Do I need a record of every dollar that went into my accounts?

Declaring your income means to give the government a record of what money you’ve made over the last tax year on your personal tax return. Essentially, they are looking for you to provide them with a breakdown of the types of income you made including income from employment, business, investments and taxable government benefits (like … Continue reading

Filing my U.S. income tax from abroad?

The new streamlined procedure is for U.S. citizens that are not currently living in the country. It was created as a way to help those citizens who are deemed to be at a low compliance risk avoid being hassled by the IRS (Internal Revenue Service) with penalties and follow-up actions. Those using the new streamlined … Continue reading

Re: Filing as Separated?

Hello, if you have separated from your common-law spouse, there is no issue filing as separated. If you are still considered common-law for tax purposes, you need to claim your status correctly. Then, you need to notify the CRA of your status. Even though you are both common-law, each of you still file your own … Continue reading

Re: Newcomer to Canada

Hello, and welcome to Canada! First of all, Canada is regulated by the Canada Revenue Agency, called the CRA. The deadline for filing personal taxes is April 30. If you do not owe any taxes, there are no penalties for late filing. If you do owe tax, the penalty is 5% plus 1% interest per … Continue reading

Re: Making Money in the US/Canada

Hello, If you have provided a product or service to a customer in the U.S., all you have to do is convert the money you received into Canadian funds. The CRA recommends that you use the Bank of Canada’s exchange rate that was in effect on the date you received the income. In terms of … Continue reading

Re: A question on dependents

Hello and thank you very much for your question. There are two primary tax credits your friend may be interested in. The first one is the dependent tax credit. Your friend appears to meet the criteria for this credit, as she is single and supports her parents who live in her home. Her parents also … Continue reading

Re: How much can I deduct for a home office?

Hello and thank you for your question. To be considered a home office, your work space must meet one or both of the following conditions. It must be your primary place of business. According to the CRA, this means the place where you do most of your business. It is used exclusively for earning income … Continue reading

Re: How much can I deduct for my vehicle?

The first thing you need to ask yourself is, “how much of the time will my vehicle be used for my business?” You calculate this by determining how much of your kilometers driven are used to earn income. Let’s assume your car is used 100% of the time for earning income. Because your automobile was … Continue reading

Re: Principal Residence and Capital Gains Tax

Moving into your rental property is a bad idea from a tax perspective. As soon as you move in, your rental property will be deemed to be disposed of at it’s fair market value. This will trigger a capital gain. The appreciation in your rental property after you move in will not be subject to … Continue reading

Re: Can I claim depreciation on my computer as an expense deduction?

If the computer is used more than 50% for business purposes, then the full amount can be recorded as a company asset. Depreciation at a rate of 55% is claimed annually on the full cost of the computer.

Re: What portion of my home office can I deduct as an expense on my personal tax return?

The deductible portion of home office expenses is equal to the size of the home office relative to the size of the home. This percentage is pro-rated for the number of hours used for business purposes. You have indicated that your home office space is 10% of the total home area. However, this percentage would … Continue reading

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