FAQs Archive

What’s the tax payable by non-residents on the sale of Canadian real estate?

If real estate is sold by a non-resident, 25% of the gross sale proceeds is obligated to be withheld by the purchaser and remitted to the Canada Revenue Agency (CRA). The withholding tax amount can be reduced if the vendor acquires a Certificate of Compliance from CRA on time. By filing the form, the withholding … Continue reading

I have very low or no income, do I need to file a tax return?

If you are older than 18 years of age, you should file a tax return in order to apply for and receive certain government payments such as GST and Ontario Sales Tax refunds, Canada Child Tax Benefit and Guaranteed Income Supplement for seniors. You can also accumulate RRSP contribution room based on your earned income, … Continue reading

Can I deduct research expenses relating to starting a new business?

Where a taxpayer is carrying on a business and incurs expenditures on research to determine whether to expand his/her business, to determine the desirability of developing a new product or line of products, to develop a more efficient manufacturing process, to improve administrative procedures These expenses would be considered current operating expenditures and are deductible … Continue reading

Do I need to keep a logbook to claim motor vehicle expenses on my return? What should I include in the book?

Only motor vehicle expenses incurred during business use is eligible for deduction. The CRA considers travel between home and the principal place of business to be personal use. In order to substantiate your motor vehicle claims, you should keep a detailed logbook to track the business/personal use of the vehicle. The Income Tax Act does … Continue reading

I am filing a 1040 USA tax return, do I have to report my Canadian RRSP, TFSA account? If so, how?

You must disclose your TFSA account on your FBAR, known as Report of Foreign Bank and Financial Accounts if the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported. If your TFSA is held through a trust – you have to complete Form 3520A and … Continue reading

Can I add a shareholder to my corporation at any point in time?

A common mistake many business owners make is that they add shareholders (often family members) to their company for no money at all or very little money (e.g. $100). Now you wouldn’t add me to your corporation for nothing! The CRA takes a similar view. Fair market value must be paid by all individuals that … Continue reading

Can my company declare a bonus to reduce taxes?

If your corporation has surplus profits for the year, then consider accruing a bonus payable to you or your family members. The bonus does not have to be paid at the end of the year, but simply recorded as a liability. Your corporation will receive a tax deduction for the amount of the bonus accrued. … Continue reading

What’s the tax advantage of using a Health Welfare Trust?

If you’re self-employed, and do not have dental or medical benefits, then a Health Welfare Trust (HWT) can save you a lot in taxes. Here’s how it works: Your corporation pays a specified amount (e.g. $5,000) to an Insurance Company that administers the HWT for your company Your corporation will receive a tax deduction for … Continue reading

Can I claim motor vehicle expenses towards rental property income?

1. If you own at one rental property you can deduct reasonable motor vehicle expenses if you meet all the following conditions: you receive income from only one rental property that is in the general area where you live; you personally do part, or all, of the necessary repairs and maintenance on the property; and … Continue reading

How much can I deduct for past service contributions to a RPP while not a contributor prior to 1990?

Under the employee contribution rules for past service contributions while not a contributor on and after 1991 for service prior to 1990, a maximum of $3,500 may be deducted per year for contributions that were made for years of service prior to 1990. The overall limit is $3,500 times the number of years of pre-1990 … Continue reading

What happens when U.S. Partnership Returns are filed late?

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What is the GST/HST Quick Method and who can use it?

The GST/HST Quick Method is a simplified type of accounting available to small businesses for calculating their net sales tax for GST/HST purposes. The major benefit of choosing this method is reduced paperwork and easier calculation. This option is available for small businesses with annual revenue of less than $400,000 (restrictions may apply). How it … Continue reading

I am selling a rental property that I owned, how will my capital gain being calculated?

Your capital gain will be calculated based on the difference between the adjusted cost base and the selling price. Note that only 50% of the gain is taxable. Normally, the adjusted cost base of the property is the original purchase price plus other costs incurred to make the acquisition, such costs are brokerage fees, installation … Continue reading

When is the deadline for remitting HST collected and filing the HST return to the CRA for a sole proprietorship?

If you have a corporation that has an annual reporting period, you would have to remit any amount owing no later than three months after the year end which is also your filing deadline. An exception applies for individuals – sole proprietors. If you have a December 31st fiscal year-end, your payment is due April … Continue reading

What are the conditions to open a TFSA (Tax-Free Savings Account)?

Three conditions must be met: You must be an individual who is over the age of 18 You must have a Canadian social insurance number You must be a resident of Canada

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