business and corporate tax Archives

As a corporation, when do I have to issue a T4 slip to my employees?

You must issue a T4 slip to your employees if any of the following remuneration was paid: salary, wages, tips, bonus, vacation pay, employment commission taxable benefit or allowances retiring allowance deductions you withheld during the year pension adjustment (PA) amounts for employees who accrued a benefit for the year under your RPP (registered pension … Continue reading

As a Canadian, do I have to file a US tax return for online sales made to the US?

Question: I operate an online business in Canada, as a sole proprietor, which sells goods in the US. What are my US tax filing obligations? Answer: As a Non-Resident alien earning self employment income in the US, you are required to file a US non-resident personal tax return, 1040NR. You must also file Schedule C … Continue reading

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

IT Contractors and Consultants Taxes Personal Business Rules Watch Video

Are you an IT contractor or a consultant working on a contract basis?

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.

Is clothing purchased for business use tax deductible?

Many professions are required to purchase expensive clothing such as business suits, ties shirts etc. The CRA has a strict guideline on determining if business clothing can be tax deductible. You can deduct the cost of work clothes if the following two conditions are met: You must wear them as a condition of your employment … Continue reading

What is the criteria for a small business in Canada?

According to Industry Canada, a small business is one that has 5 to 100 employees. For CRA purposes in order to meet the small business deduction (SBD) and be eligible for the lower tax rate of 15.5% (combined Federal + Ontario), the business must meet the Canadian-controlled private corporation (CCPC) criteria and have active business income up … Continue reading

What is the ‘small business deduction’?

The small business deduction is a reduction in corporate taxes for Canadian Controlled Private Corporation, known as CCPC. The small business deduction is provided as an annual tax credit that is calculated as 17% of the least of the corporation’s: Active business income for the year taxable income for the year business limit ($500,000)

Can I purchase a company that has a history of losses to offset the profits of my company?

Question: I am thinking of acquiring a loss-generating business and planning on using its loss to offset the profits that my company is generating, can I do this? Answer: In certain cases, you can. However, you need to be aware of the “acquisition of control rules”. This prevents a profitable corporation from acquiring a corporation … Continue reading

What amount can I charge to my company in terms of per diem travel expenses?

The CRA looks at what is deemed reasonable in terms of travel expenses. If the travel allowance is reasonable, then you don’t have to include it in your personal income. If it is not reasonable, then it is an income inclusion and you will need to pay tax on it. In terms of what is … Continue reading

Do I have to pay tax on a merger between two Canadian companies?

Question: I would like to merge my business with a Canadian company that operates in the same field as me. Is there any way to avoid paying tax on the merger? Answer: The Income Tax Act allows for a tax free merger if the following conditions are met: Both corporations are Canadian Controlled Private Corporations … Continue reading

What are the tax consequences of changing from a sole proprietorship to a corporation?

Question: I am currently operating as a sole proprietor, but I see the benefits of incorporating my business and wish to do so. However, I have several assets that have appreciated in value (including goodwill) since I began. Is there any way I can transfer these assets tax-free to my corporation? Answer: When you transfer … Continue reading

Small Business Accounting Tips to Help You Save Watch Video

In this interview excerpt we will be looking at how small business owners

How do I report income earned from an online business such as Google adSense?

Question: I recently moved to Canada but I have web hosting that was created outside of Canada that is generating Google adSense earnings for me. How do I report this income on my Canadian tax return? Answer: You would report it as ‘business income’ on your Canadian income tax return. As you are reporting the … Continue reading

I have a corporation and would like to pay out premiums for critical illness insurance, what are the tax implications?

When a corporation pays premiums for critical illness insurance it’s a non-deductible expense and is classified as a taxable benefit to the employee/shareholder. However, if a qualifying health and welfare trust is in place, then its deductible to the corporation and is not a taxable benefit to the employee/shareholder.

Tag: business and corporate tax