Archives: FAQs

I will be emigrating from Canada to the US, what are the tax consequences of my emigration?

If you are departing from Canada permanently, you will be required to pay taxes on any capital gains that arise from the deemed disposition of your non-personal assets. This means that all assets excluding those listed at the end of this FAQ are deemed to be disposed at their fair market value on the date … Continue reading I will be emigrating from Canada to the US, what are the tax consequences of my emigration?

I have a non-resident corporation. Do I also need to open a HST account and why?

In Canada, it is required for a corporation to register a GST/HST account if you anticipate your sales to be more than $30,000 CAD. GST/HST is a sales tax that Canadian consumers must pay at the time of purchase on most products and services.  As a corporation, it is your responsibility to collect GST/HST from … Continue reading I have a non-resident corporation. Do I also need to open a HST account and why?

Are premiums paid for Keyman Insurance tax deductible?

Yes, in limited situations. What is Keyman Insurance? It is an insurance policy taken out by a business to cover any loss of revenue arising from the death or disability of a key member (eg. Partner, employee, etc). Keyman insurance premiums are tax deductible for a business only if one of the following criteria are … Continue reading Are premiums paid for Keyman Insurance tax deductible?

Are all of my donations eligible for a tax credit (for individuals) or tax deduction (for corporations)?

No, only donations to registered charitable organizations (with the CRA) are eligible for a tax credit for individuals or for a tax deduction for corporations. Before you make a donation, ask the organization if they can provide you with an official donation slip for tax purposes.

What are some of the common mistakes investors make with TFSAs?

Mistake #1 You withdraw money from and make a contribution to your TFSA in the same year without regard to your TFSA Limit. For example, assume that you always contribute the maximum annual amount of $5,500 to your TFSA and you have no contribution room carried-forward from a previous year. If you contribute $5,500 to … Continue reading What are some of the common mistakes investors make with TFSAs?

Are my child/spousal support payments tax deductible?

Child support payments are NOT tax deductible in Canada. In contrast, spousal support payments are tax deductible as long as the taxpayer can provide proof of spousal support payments. The proof can be a separation and/or divorce agreement clearly stipulating the spousal support payment (i.e. if the taxpayer is providing both the child and spousal … Continue reading Are my child/spousal support payments tax deductible?

What’s the difference between a non-capital loss and net-capital loss?

Non-capital losses generally include losses from a business or employment. These losses can be applied to reduce all sources of income in the current tax year, the previous 3 years and the next 20 years. Net-Capital losses are losses incurred from the sale of capital property (e.g. shares, mutual funds, land, buildings, tangible assets). These … Continue reading What’s the difference between a non-capital loss and net-capital loss?

Can I get any tax relief for a bad loan that I made?

Question: I made a loan to a friend to help start up their business. However, his business was not successful and he will not be able to pay back the loan. Is there any tax relief for this bad debt? Answer:If the company the loan was provided to qualified as a Small Business Corporation, you … Continue reading Can I get any tax relief for a bad loan that I made?

If I am employed by a US company but perform work both in Canada and the US, should I just receive a W-2?

Assume that you are a Canadian resident and you perform work for a US based company in Canada and the US. The following will occur: The US employer must allocate your total employment income between Canada and the US, based on the number of days worked in each country. This means that you will be … Continue reading If I am employed by a US company but perform work both in Canada and the US, should I just receive a W-2?

Do university students have to file income tax return?

Absolutely. As a student, you must file a return if any of the following situation is applicable to you: you have to pay taxes for the year you have not repaid all amounts withdrawn from your RRSP under the Lifelong Learning Plan You have to contribute to the Canada Pension Plan (CPP) You received Working … Continue reading Do university students have to file income tax return?

What is the Canada-United States Income Tax Convention and how does it affect me?

The convention is a tax treaty between Canada and the United States that “overrides” certain areas of the tax acts to offer protection against double taxation.  If you are a US resident and earn income in Canada, or if you are a Canadian resident and earn income in the US, then the treaty can provide … Continue reading What is the Canada-United States Income Tax Convention and how does it affect me?

I’m a non-resident of Canada. Can I use a Canadian P.O. BOX as the registered head office for my Canadian corporation?

Most provinces will not permit the formation of corporations, which use a P.O. BOX for their head office address.  A Canadian physical address is required.

I’m a non-resident of Canada. Can I still incorporate a company in Canada?

Yes you can. Forming and registering a corporation in Canada requires a registered head office in Canada. Also, most Canadian provinces require that the corporate directors be residents of Canada. However there are a few provinces such as British Columbia (BC), which allow non-residents of Canada to be directors of Canadian corporations. If a Canadian … Continue reading I’m a non-resident of Canada. Can I still incorporate a company in Canada?

Which US states allow the formation of LLLPs for US real estate investments?

Question: I’m a Canadian citizen and resident. My Canadian accountant told me to purchase US real estate through an LLP or LLLP. Which states allow for LLPs vs LLLPs to be setup? Answer: Unlike LLPs which can be formed in any state, only certain states offer the option for the creation of an LLLP. These … Continue reading Which US states allow the formation of LLLPs for US real estate investments?

What’s the difference between an LLP and LLLP with respect to US real estate purchases?

Question: I live in Canada and I’m a US real estate investor. I want to set up a limited partnership in the US for real estate I own but I have no idea what the difference between an LLP and an LLLP is. Answer: In an LLP (limited liability partnership), the partners assume the management … Continue reading What’s the difference between an LLP and LLLP with respect to US real estate purchases?
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