Archives: FAQs

What rate of tax does a “Testamentary Trust” pay?

Testamentary trusts pay tax according to the progressive Canadian income tax rates applicable to individuals. In other words, a testamentary trust pays tax at individual tax rates. Note: A testamentary trust is formed automatically upon the death of an individual in Canada. In some circumstances, it can be more tax-advantageous to allow income to be … Continue reading What rate of tax does a “Testamentary Trust” pay?

Do I have to make payments on sales tax?

If on your last year’s HST return, you had a balance owing of $3,000 or more, you would have to make equal quarterly installment payments starting next fiscal year. Find below a sample installment schedule if your HST reporting period has a calendar year end. Fiscal quarters Installment due dates January 1 – March 31, … Continue reading Do I have to make payments on sales tax?

Do investors who receive form 1099 or form 1042 from the U.S. have to file a U.S. tax return?

No, as long as the proper withholding taxes were held on your dividends and interest income. For dividends it is 15% and for interest, it is 0%.    

How do I amend my HST return?

If you’ve made an error in your HST filing, you will need to correct your HST return. You can do so by writing a letter to the CRA stating the corrections and the line numbers that needs to be corrected. Please note that you should not refile an HST return.  

I will make instalment payments for the current year based on the estimated taxes payable. What if, during the course of the year, my net income increases dramatically (the taxes payable will increase too). What are the tax implications?

Installment payments should be made based on the expected taxes owing. If the taxes owing are larger than what you expected them to be, and you were paying installments based on the expected amount, then you will be charged with installment interest (and if the interest is more than $1,000, penalties can be charged as … Continue reading I will make instalment payments for the current year based on the estimated taxes payable. What if, during the course of the year, my net income increases dramatically (the taxes payable will increase too). What are the tax implications?

How do I get a Social Insurance Number, which is required to be reported on tax returns?

To obtain a social insurance number, you have to apply in-person by visiting a Service Canada centre. You can find the address of the nearest centre to your location on the CRA website. To apply, you must take with you original proof-of-identity documents. These documents must prove your identity and status in Canada. For instance, … Continue reading How do I get a Social Insurance Number, which is required to be reported on tax returns?

Does HST have to be collected/paid on acupuncture treatment?

HST does not have to be charged/paid if the acupuncture treatment is performed by a qualified medical practitioner.  

As a US citizen, is there any benefits of holding a TFSA/RESP?

No. For US tax purposes, these accounts are not recognized as tax free accounts. That means that any income earned within these accounts will be taxed when you file your US tax return. Furthermore, some TFSA and all RESP accounts are considered foreign trusts for US tax purposes. This causes additional tax reporting burden on … Continue reading As a US citizen, is there any benefits of holding a TFSA/RESP?

What is the benefit of contributing to a spousal RRSP?

Contributing to a spousal RRSP is advantageous if you and your spouse/common-law partner have different income levels. This is because the spousal RRSP contributions allow spouses to split income more equally at retirement. The spouse who expects to have higher income at the time retirement should be the one to contribute to the spousal RRSP. … Continue reading What is the benefit of contributing to a spousal RRSP?

I am a non-resident earning rental income in Canada. Do I need to file an NR4 slip and summary with the CRA?

As a non-resident, you will be subject to withholding tax on your rental income. The NR4 must be filed by the withholding agent to report gross rental income and taxes withheld by the last day March. If you did not have a withholding agent, you do not have to file an NR4. Instead, you will … Continue reading I am a non-resident earning rental income in Canada. Do I need to file an NR4 slip and summary with the CRA?

Can rent paid by a student for residence be claimed on the personal tax return?

No, the rental expense cannot be claimed as either a tax deduction or a tax credit. However, the student may be eligible for the Ontario Energy and Property Tax Credit if applicable criteria are met. This benefit is generally paid to low-to-moderate-income individuals of at least 18 years of age for paying rent or property … Continue reading Can rent paid by a student for residence be claimed on the personal tax return?

Are board and lodging considered a taxable benefit for employees?

Board and lodging provided to employees at unreasonably low rates are taxable benefits. In other words, if the employee paid less than fair market value (FMV) for board and lodging, the employer will need to include the T4, the FMV of the cost less the amount the employee actually paid.  

I rent out a residential property. What are some tax implications, with regards to sales tax?

Rental income is a GST/HST exempt supply. This means that you cannot charge GST/HST on rent. Furthermore, you may incur expenses in the course of renting out your property on which you may have paid GST/HST, such as management fee, supplies, etc. Normally, you can claim this GST/HST paid on expenses as Input Tax Credits … Continue reading I rent out a residential property. What are some tax implications, with regards to sales tax?

I incurred meals expense that were reimbursed by my client. Is this expense 50% deductible to me or 100%?

If you received reimbursement for meals expense that you incurred, the meals expense will be fully deductible to you. However, you will also have to report the reimbursement that you received as income. In effective, the income will cancel out the expense.  

Do I have to file a NR4 return with the CRA even if I did not remit any non-resident withholding taxes to the CRA?

Yes. If you earned gross income of $50 or more during the year, a NR4 slip has to be filed regardless of whether non-resident withholding taxes were remitted or not. If gross income of less than $50 was earned in the year and taxes were remitted to CRA, a NR4 return also has to be … Continue reading Do I have to file a NR4 return with the CRA even if I did not remit any non-resident withholding taxes to the CRA?
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