Archives: FAQs

I am a non-resident contractor providing services in Canada. My client is withholding 15% of my fee as withholding tax. How can I recover them?

If you believe that your actual tax liability will be less than 15% due to a tax treaty between your country and Canada or for other reasons, you may apply for the Regulation 105 Waiver in order to have the withholding tax reduced to a lower amount or even to zero. The CRA generally recommends … Continue reading I am a non-resident contractor providing services in Canada. My client is withholding 15% of my fee as withholding tax. How can I recover them?

If I am a non-resident working in Canada, can I apply non-refundable credits to lower my taxes in Canada?

Generally speaking, non-residents of Canada are not eligible to deduct non-refundable credits from their Canadian tax payable. However, if your income earned in Canada is 90% or more of your total worldwide income earned in the year, then you will be entitled to the same tax credits as residents of Canada are. This test takes … Continue reading If I am a non-resident working in Canada, can I apply non-refundable credits to lower my taxes in Canada?

How long should I keep my income tax records?

Generally speaking, you should keep your supporting documents for 7 years.

What are the tax consequences for non-residents of Canada who become residents of Canada during the year?

Question: I am a non-resident of Canada living and working in Canada. However, I became resident of Canada half way through the year (eg. My family moved to Canada, I sold my principal residence in foreign country and bought a primary residence in Canada, etc). What are my tax implications? Answer: You will be responsible … Continue reading What are the tax consequences for non-residents of Canada who become residents of Canada during the year?

Do I have to pay capital gains tax if I turn my house into a rental property?

When you change your home from your primary residence into a rental property, your home is deemed to be sold at its fair market value at the date of the change. The capital gain is equal to the excess of the fair market value of your home at the date of the conversion over the … Continue reading Do I have to pay capital gains tax if I turn my house into a rental property?

I’m planning to incorporate a business as a non-resident of Canada. Can I be a non-resident director and still incorporate?

Each province in Canada has their own residency requirements for directors of a corporation. If you don’t meet these requirements in a particular province of Canada, you cannot incorporate in that province. Note that a corporation requires a minimum of one (1) director. The list below outlines each province’s requirements for directors: Ontario: Majority of … Continue reading I’m planning to incorporate a business as a non-resident of Canada. Can I be a non-resident director and still incorporate?

What are the tax implications for a Canadian business that earns income in the U.S.?

As a Canadian business that is deriving income from sales that occurred in the US you will be required by the IRS to report this income on one of the following tax returns, depending on your organizational structure: • 1040-NR  • Form 1120-F• Form1065 The IRS has the right to levy income tax on business income … Continue reading What are the tax implications for a Canadian business that earns income in the U.S.?

What are the benefits/disadvantages of structuring a farm business as a sole proprietorship or a corporation? How is HST dealt with for the sale of the business?

Corporation vs. Sole Proprietorship Choose corporation because: ability to control timing and amount of taxable income by being able to choose dividends/salary whenever there is a personal need. As a sole proprietorship, everything earned through the business would be taxed at the personal rate. lower corporate tax rate of about 15% federal and provincial combined (if you become a … Continue reading What are the benefits/disadvantages of structuring a farm business as a sole proprietorship or a corporation? How is HST dealt with for the sale of the business?

How do I know if I have to charge GST/HST to my clients?

Generally, GST/HST registrants must collect GST/HST from customers for goods sold or services provided in Canada. However, GST/HST does not apply to items that are zero-rated supplies or exempt supplies. Read more on how to determine if the goods & services you are providing are GST/HST exempted.

How do I make income tax payments to the CRA for my business?

If you have to make an installment payments or pay the remaining balance of your Corporation’s income tax, you can do so as follows: Option 1 – Electronically The following banks will accept corporate income tax payments electronically: Scotiabank RBC Royal Bank TD Canada Trust If you have an account with any of the above … Continue reading How do I make income tax payments to the CRA for my business?

I need a medicine professional corporation setup, what should I be aware of?

A professional corporation (PC) is not like a standard corporation. A PC’s business activities are limited to that of the profession, e.g. practice of medicine. The most common professions authorized to register professional corporations’ are accountants, lawyers, dentists and doctors. A medicine professional corporation must be in compliance with the College of Physicians’ and Surgeons’ … Continue reading I need a medicine professional corporation setup, what should I be aware of?

If I have a rental property in the U.S., what do I need to attach with my US tax returns to ensure the IRS accepts the figures reported?

When submitting your tax return to the IRS, you must ensure that all figures that you claim as an expense have the proper documentation submitted with them. Additionally the receipts and invoices you submit along with your tax return must prove: The expense is reasonably considered to be an ordinary expense given the nature of … Continue reading If I have a rental property in the U.S., what do I need to attach with my US tax returns to ensure the IRS accepts the figures reported?

How can I split my company’s business profits with my children?

Question:

What tax deductions can Americans working for a Canadian company in Canada claim?

Question: I’m an American considering work for a Canadian company in Canada. I understand taxes will be payable to Canada, both Federal and State. My residence and family will stay in the US. Can I deduct from gross income the following: Rent Food

Do I have to include a car allowance that I receive from my employer in my income?

An automobile allowance paid by an employer to his employee is taxable to the employee, unless it is based on actual kilometers driven by the employee. For example, a flat monthly car allowance of $500 would be a taxable benefit to the employee, and should be included in the employee’s T4 slip. For an employer … Continue reading Do I have to include a car allowance that I receive from my employer in my income?
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