Archives: FAQs

How does the government grant affect my SR & ED claim?

If you receive a grant from a federal, provincial or other government body that is assistance for a SR & ED expense, the grant will reduce the claimable SR & ED expense amounts on the tax return. This can, in effect, increase your tax payable.  

What happens to my IRA & 401K if I temporarily relocate to Canada?

I am a US citizen who is being relocated to work in Canada temporarily by my employer. Can I continue to contribute to my employer sponsored IRA/401(k) and will Canada allow me to claim a tax deduction for contributions I make to my US retirement plan? Yes, as long as you were a US resident … Continue reading What happens to my IRA & 401K if I temporarily relocate to Canada?

How do I add or remove a director, or change information about existing directors?

The Ministry of Government Services needs to be informed always, of any changes made to the directors of a corporation. This includes appointing or removing a director or even changing information about an existing director. Your professional accountant or legal counsel will need to file an Initial Return/ Notice of Change form for your corporation … Continue reading How do I add or remove a director, or change information about existing directors?

When a rental property is converted into a principal residence, are there any tax implications?

When there is change in use of real estate (ex. from income-producing to personal-use), a deemed disposition occurs at fair market value (FMV). This can result in a capital gain (i.e. FMV less Adjusted Cost Base). However, in certain situations, an election under subsection 45(3) can be made to defer the capital gain by reporting … Continue reading When a rental property is converted into a principal residence, are there any tax implications?

Am I required to pay tax on the Canada Child Tax Benefit received?

The Canada Child Tax benefit, which is provided in order to support those eligible with expenses of rearing children below the age of eighteen, is non-taxable. This means no tax is required to be paid on receipt of this benefit.  

Who is eligible to receive the Canada Child Tax Benefit?

According to the CRA, in order for an individual to be qualified to receive the Canada Child Tax Benefit, all the criteria listed below must be met: Child has to be below eighteen years of age; Individual has to reside with the child , be the primary caretaker of the child, and be a Canadian … Continue reading Who is eligible to receive the Canada Child Tax Benefit?

How to add or remove a director in small business corporation?

When an Ontario corporation wants to remove a director from the board or add a new director to the board, Form 1 called Notice of Change by an Ontario Corporation needs to be filed with the Ministry of Government Services. It is important that Form 1 be filed within 15 days of the change. Furthermore, … Continue reading How to add or remove a director in small business corporation?

I’m a non-resident owning rental property in Canada. I’m confused between the NR4 slip, and NR6 form.

By filling form NR6 with the CRA, your agent/tenant will only withhold 25% of the net amount of your monthly rent, versus 25% of the gross amount of your monthly rent. The NR6 form should be filed at the end of the year for the following year. For example, if your tenant pays you $3,000 … Continue reading I’m a non-resident owning rental property in Canada. I’m confused between the NR4 slip, and NR6 form.

I am a Canadian resident and I received dividends and interest income from the U.S. Do I have to file a U.S. tax return?

No, first of all, dividend from the U.S. is subject to 15% withholding tax whereas interest income from the U.S. is not subject to any withholding tax as per the Canada – U.S. tax treaty. Both sources of income will not create a U.S. tax filing liability to Canadians as long as the proper amount … Continue reading I am a Canadian resident and I received dividends and interest income from the U.S. Do I have to file a U.S. tax return?

Do I become a non-resident as soon as I relocate to a foreign country?

No. Your residency status and whether you have to pay Canadian tax on worldwide income is determined by assessing the strength of residential ties to Canada. In order to be considered a non-resident for tax purposes, you must sever primary ties to Canada: Sell or rent your home in Canada Spouse must move from Canada … Continue reading Do I become a non-resident as soon as I relocate to a foreign country?

What is the departure tax return?

Canadians leaving Canada need to complete their final personal tax return by April 30th of the year following their departure. Any departure tax would be reported on this tax return. Canada imposes a departure tax on individuals who cease to be a tax resident in Canada. When an individual leaves Canada, he is deemed to … Continue reading What is the departure tax return?

What are my tax obligations if I am a non-resident holding rental property?

If you earn rental income from Canadian real property, you must file a Section 216 return. As a non-resident, a representative in Canada (i.e.: your tenant or property manager) will have to withhold 25% of the gross rental income paid to you and remit this amount to the CRA. The CRA will subsequently issue an … Continue reading What are my tax obligations if I am a non-resident holding rental property?

Can I claim the spousal/common-law partner amount?

You can only claim it if you were supporting your partner during the year and if the partner’s net income for the year is below $11,038 (2013). If you are also claiming the family caregiver amount, then the partner’s net income has to be below $13,078 (2013). If you and your partner ended your relationship … Continue reading Can I claim the spousal/common-law partner amount?

If I purchase a rental property, and I’ve never owned a primary residence, can I utilize the First time Home Buyers Plan?

Unfortunately the answer is No. One of the conditions to qualify for the First Time Home Buyers Plan is that you intend to occupy the home as your principal residence no later than one year after buying, or building it. Since your intention of buying the property is to generate rental income, you do not … Continue reading If I purchase a rental property, and I’ve never owned a primary residence, can I utilize the First time Home Buyers Plan?

In the event of a divorce, which spouse gets to claim the eligible dependent credit?

You can claim this credit if you lived with your child (under 18 years of age) in a home that you owned or rented. You cannot claim this amount for a person who was only visiting you. Further, you must have supported your child and you must not have a spouse or common-law partner. For … Continue reading In the event of a divorce, which spouse gets to claim the eligible dependent credit?
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