Archives: FAQs

Is an individual required to file a tax return in the year of their death?

Yes, an individual must report any income they earned from January 1st until the deceased date. This return is known as the “final return”. If any income is earned after the date of death, T3 Trust Income Tax and Information Return must be filed. The deadline for the final return is 30th April of the … Continue reading Is an individual required to file a tax return in the year of their death?

I have filed my personal tax return. When can I expect a refund?

Assuming that a taxpayer has requested for his/her refund to be directly deposited to their bank account: If the return is paper filed: It will take approximately 3 – 6 weeks after the return is filed. If the return is electronically filed: It will take approximately 2 weeks after the return is filed. If the … Continue reading I have filed my personal tax return. When can I expect a refund?

How is Investment Income treated for tax purposes for Canadian Corporations?

Investment income earned by Canadian Controlled Private Corporations (“CCPC’s”) includes rent received (Canadian and foreign), interest, royalties, dividends, and taxable capital gains. CCPC’s pay income tax at a rate of 48% on investment income.This is significantly higher than the tax rate of 15.5% levied on business profits.

If I am a non-resident of Canada, and I sell Canadian real estate, what is the procedure for filing tax returns, and paying taxes?

As a non-resident individual who sells a property in Canada, the purchaser of your property will be required to withhold 25% of the proceeds (selling price) at the time of sale ‘disposition’ (which will be given back to you). This is to give non-residents an incentive to pay tax on the capital gain/recapture that may … Continue reading If I am a non-resident of Canada, and I sell Canadian real estate, what is the procedure for filing tax returns, and paying taxes?

When are U.S. Personal Tax Returns due?

US personal tax returns are due on April 15 of the following taxation year. However, if you live and work outside the US on a normal basis, the deadline is automatically extended to June 15. Furthermore, any taxpayer may request additional time to file by filing this form to the IRS by their due date. … Continue reading When are U.S. Personal Tax Returns due?

In a shared custody situation, who gets to claim CCTB for the child?

In a shared custody situation, you will receive monthly CCTB (Canada Child Tax Benefit) payments equal to 50% (or actual portion of time spent with child) of the amount you would have received if the child resided with you on a full-time basis. The parent currently claiming the CCTB will have to send a letter … Continue reading In a shared custody situation, who gets to claim CCTB for the child?

I have prepaid for a medical procedure that is not scheduled until next year. Can I still claim the medical expense for the prepayment this year?

Yes, medical expenses are claimed in the year in which the payment was made and not when the actual procedure happens. So for example, you paid for your January 2014 operation in December 2013, you will be able to claim the medical expense on your 2013 tax return.

I’m renting out the basement of my home, and collecting rent. Should I report this on my tax return?

Definitely, yes. As per the Income Tax Act this is considered taxable income, and should be reported on your personal tax return each year. In an audit, should the Canada Revenue Agency (“CRA”) request to see your personal bank statements, the monthly rent deposits will raise a red flag, if the rental income is not … Continue reading I’m renting out the basement of my home, and collecting rent. Should I report this on my tax return?

Can I opt out of making CPP contributions?

Unfortunately, it is not possible to opt out of making CPP contributions, unless you are within the age bracket of 65 to 70. In that case, you have a choice to pay or stop paying CPP contributions. Form CPT30, Election to Stop Contributing to the Canada Pension Plan or Revocation of a Prior Election, must … Continue reading Can I opt out of making CPP contributions?

Should I contribute to RRSP or TFSA?

RRSPs allow you to build wealth by deferring gains and income (and taxes) on investments until the funds are withdrawn or your RRSP is closed (age 72). This means you will save taxes when you contribute to your RRSP, but you will pay taxes at withdrawal. Ideally, funds contributed to RRSPs should not be touched … Continue reading Should I contribute to RRSP or TFSA?

My bank won’t approve a mortgage to my corporation for the purchase of an investment property. Can I use a bare trust?

Bare trusts are often used in financing transactions. Real estate investors prefer to purchase properties in the name of their corporation for tax reasons. Therefore, consider using a bare trust if your bank won’t loan money to your corporation, but is willing to provide you with a personal mortgage for the purchase of an investment … Continue reading My bank won’t approve a mortgage to my corporation for the purchase of an investment property. Can I use a bare trust?

What is the minimum tax carryover?

If alternative minimum tax was paid by you in any of the past seven tax years (ex. 2006-2012), and no minimum tax is required to be paid for the 2013 tax year, you will be eligible to claim credits in 2013 for all the minimum tax paid between 2006-2012 in order to reduce your taxes. … Continue reading What is the minimum tax carryover?

Can I add my spouse to my corporation, as a shareholder, for income splitting purposes?

Yes, you can add your spouse to your corporation, either as a preferred shareholder or common shareholder. Both types of shares, if structured properly, will allow you and your spouse to split the profits of the corporation through payment of dividends to each of you. A key difference between a common shareholder and preferred shareholder … Continue reading Can I add my spouse to my corporation, as a shareholder, for income splitting purposes?

On the Personal Income Tax Return, why does it ask me if I own a foreign property with a cost of more than $100,000 CDN during the year?

As a Canadian resident, the CRA requires you to file a information form T1135. If you hold or have held a specified foreign property with a cost of more than $100,000 at any time during the tax year. Completing this form does not generate additional Canadian tax liability but failure to file the form in time … Continue reading On the Personal Income Tax Return, why does it ask me if I own a foreign property with a cost of more than $100,000 CDN during the year?

If my total income from all sources (including EI benefits for maternity) is high, am I required to repay some of the EI I received?

Generally, when your personal tax return is filed, if you received regular benefits and your net income is greater than $59,250, you may be required to pay 30% of either the total regular benefits received in the year or the excess amount of net income over $59,250, whichever is less. However, the EI repayments do … Continue reading If my total income from all sources (including EI benefits for maternity) is high, am I required to repay some of the EI I received?
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