Archives: FAQs

What is a death benefit?

A death benefit is an amount paid to a deceased individual for his/her employment service. Taxes are generally not required to be paid on the first $10,000 of the benefit amount received. Any amount in excess of the $10,000 has to be reported for tax purposes. A letter must be attached with the return in … Continue reading What is a death benefit?

What are the different methods of calculating tax installments?

The tax instalments can be calculated in 3 ways. Please see below for the different methods as indicated by the CRA. No Calculation Option: Instalments payments are based on taxes owing in last year and 2nd last year. This alternative is best if taxes owing are fairly consistent from year to year. Prior-year option: Tax … Continue reading What are the different methods of calculating tax installments?

I moved from the UK to Canada for school. Can I deduct moving expenses?

According to the CRA, if the taxpayer changes residences and begins full-time attendance at a post-secondary institution (whether or not in Canada), eligible moving expenses (from old residence to new) may be deducted if the move results in you living at least 40 KMs closer to the institution. Also, at least one of the residences … Continue reading I moved from the UK to Canada for school. Can I deduct moving expenses?

My partner and I are engaged in a small business together. Do we have to file a Partnership Return?

The CRA recently changed its administrative policy on who needs to file a Partnership return in order to alleviate the filing responsibility for small partnerships. If you do not meet the criteria #5 of Filing T5013 Partnership Information Return; then your filing responsibility will consist of reporting your % of Partnership income/expense on form T2125 … Continue reading My partner and I are engaged in a small business together. Do we have to file a Partnership Return?

Can an independent contractor with $0 in sales still claim business expenses?

Yes, even though you may not have earned income, expenses you incurred for business purposes can be claimed. Please keep source documents for such expenses handy, in case the CRA asks to see them. You must consider that one of the conditions for expenses to be legitimate is if they are ‘income-earning’ (i.e. incurred to … Continue reading Can an independent contractor with $0 in sales still claim business expenses?

I don’t have enough money to pay my income tax bill. What should I do?

The CRA waits 90 days after the Notice of Assessment after which they will begin the process of trying to collect the unpaid tax bill from you (generally, they will first attempt to contact you via phone). To avoid unpleasantness, you should contact the CRA at 1-888-863-8657 to arrange a payment schedule which works for … Continue reading I don’t have enough money to pay my income tax bill. What should I do?

Is it possible to convert the debt owed to me by a corporation into shares of the same corporation?

Yes. Section 51 of the Income Tax Act provides lenders with the opportunity to exchange debt owed to them by a company for newly-issued shares of that same entity without being considered to have disposed of the debt, hence preventing occurrence of any capital gain or loss. Not all of the liability held by the … Continue reading Is it possible to convert the debt owed to me by a corporation into shares of the same corporation?

My company is incorporated in a province other than Ontario, but will be carrying on business in Ontario. Do I need an extra-provincial license?

If your company is incorporated in a province other than Ontario, but is carrying on business in Ontario, you don’t require an extra provincial license to operate in Ontario. However, your legal counsel or professional accountant will need to do the following: File an Initial Return/Notice of Change with the Ontario Companies Branch within 60 … Continue reading My company is incorporated in a province other than Ontario, but will be carrying on business in Ontario. Do I need an extra-provincial license?

My Canadian corporation conducts business in multiple provinces. How does this affect my company’s corporate taxes?

When your company’s T2 Corporate Tax Return is filed by your professional accountant, Schedule 5 must be completed and included with the filing. Schedule 5 allocates the company’s taxable income to each province in which it’s earned. While the federal tax rate of 11% remains constant, the provincial rate tax rate will vary based on … Continue reading My Canadian corporation conducts business in multiple provinces. How does this affect my company’s corporate taxes?

I received payment for products sold and services provided in the previous year. When do I include the payment in income?

By default, businesses follow the accrual basis of accounting. This means that you report income in the period in which you provided the service / sold the goods. Therefore, in this example, you would report the income in December 2013. Similarly, if you receive a bill for an expense that you incurred in December 2012 … Continue reading I received payment for products sold and services provided in the previous year. When do I include the payment in income?

I am trying to mail my return to the CRA. Will the CRA consider the date of receipt to be the date that I mail the return or the date that it arrives at the CRA centre?

The CRA will consider the date that the return is sent as the date of receipt. That means, as long as you send your personal tax return by April 30, the CRA will not impose late filing penalty. You should keep the mailing receipt as proof of the filing date.  

As a corporation doing business in Quebec for the first time, what do I need to know or do to get the necessary information to file a Quebec tax return?

The corporation must be registered in Quebec’s enterprise register by obtaining a number from Revenu Quebec for income tax purposes. This number enables one to file the income tax return that all corporations carrying on a business in Québec are required to file. Complete the form LM-1-V, “Application for Registration to obtain Quebec ID”, or … Continue reading As a corporation doing business in Quebec for the first time, what do I need to know or do to get the necessary information to file a Quebec tax return?

Can I claim my dependent’s disability amount?

The disability tax credit (DTC) is offered in order to lessen the tax burden for individuals who are physically or mentally impaired. The DTC can be applied for by completing Form T2201, Disability Tax Credit Certificate. If a taxpayer does not claim all or part of the disability amount on his or her tax return … Continue reading Can I claim my dependent’s disability amount?

I am required to file a trust return for the year. When is the return due?

You have to file the T3 return and pay any balance owing no later than 90 days after the trust’s tax year-end. If you do not have all the tax slips required to complete the return by the due date, you should estimate the income. If, after you receive the slips, you find that the … Continue reading I am required to file a trust return for the year. When is the return due?

Is there ever a circumstance where the CRA can refuse to issue my refund?

Yes, one such circumstance where the CRA can refuse to issue your refund is when the taxable income for a tax year is reported after 3 years of the reporting period. For example, if the tax return for the 2008 year is filed on September 2013, the CRA can refuse to issue that refund because … Continue reading Is there ever a circumstance where the CRA can refuse to issue my refund?
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