Tag: business and corporate tax

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?

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.

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?

Does my company have to pay Employment Insurance Premiums (EI) for my spouse, if he/she works for my company?

The CRA’s general guideline is that if you hire a family member, EI premiums are not payable to the CRA. However, if the duties being performed by your family member and their working conditions are the same as if he/she was working for a third party employer (unrelated person), then the CRA will require you … Continue reading Does my company have to pay Employment Insurance Premiums (EI) for my spouse, if he/she works for my company?

My spouse joined me on a business trip and my employer paid for both of our travel costs. Is my spouse’s portion a taxable benefit to me?

The Canada Revenue Agency’s general position toward business trips for spouses of employees is that there is no taxable benefit to the employee if the spouse was, in fact, engaged primarily in business activities on behalf of the employer during the trip. On the other hand, if your spouse was engaged in primarily personal activities … Continue reading My spouse joined me on a business trip and my employer paid for both of our travel costs. Is my spouse’s portion a taxable benefit to me?

If I own multiple corporations in Canada, what are some ways I can move funds around?

For example, assume that you own 100% of the shares of a holding corporation (i.e. parent company) and your holding corporation in turn owns 100% of another active corporation (i.e. subsidiary company). In this context, how can the parent and subsidiary companies transfer money between each other? The subsidiary can: Pay a tax-free dividend to … Continue reading If I own multiple corporations in Canada, what are some ways I can move funds around?

As a small business owner, should I take salary or dividends?

Each option has advantages and drawbacks. It is important to evaluate your particular financial goals before knowing which option is more favorable. The biggest advantage of paying a salary (and bonuses) is that you can deduct this as a business expense, reducing your corporation’s taxable income. However, paying a salary will require your corporation to … Continue reading As a small business owner, should I take salary or dividends?

Are personal meals expenses incurred while travelling on business fully deductible?

Meal expenses are not fully deductible even when incurred during business travel. 50% of the lesser of the following two amounts can be claimed for meal expenses: Amount spent Amount that is reasonable in the situation  

What are common expenses that are not deductible for tax purposes for corporations?

Corporations should be careful in their accounting for expenses that may not be deductible for tax purposes. It would be wise to set up separate accounts for such types of expense. Below, are a few examples of non-deductible expenses: A corporation may incur legal fees in the normal course of their operation, but some legal … Continue reading What are common expenses that are not deductible for tax purposes for corporations?

What options do I have, for tax purposes, for inducement payments I receive on leaseholds?

There are two options available: first, you can reduce the un-depreciated capital cost (UCC) of the leaseholds by the amount of the inducement. For example, if the leasehold is $50,000, and you received an inducement payment of $10,000, you can choose to include the leaseholds at a UCC of $40,000. On the other hand, you … Continue reading What options do I have, for tax purposes, for inducement payments I receive on leaseholds?

As a small business owner planning on doing my own personal taxes, which tax software would you recommend?

Each individual’s tax needs are unique but the following tax preparation software will be able to effectively service the needs of most individuals: TurboTax This is a user-friendly Canadian tax software that makes preparing your taxes easy. It walks you through the tax preparation and filing process by asking easy-to-understand questions. Further, it offers tax … Continue reading As a small business owner planning on doing my own personal taxes, which tax software would you recommend?

I’m starting a new business and have come across something called a “shelf corporation”. What is a shelf corporation?

A ‘shelf corporation’ is an incorporated entity that either: Never carried on a business and never owned any assets; Carried on a business and owned assets in the past, but is now inactive without any assets. Shelf corporations that carried on a business in the past for a number of years, and have a good … Continue reading I’m starting a new business and have come across something called a “shelf corporation”. What is a shelf corporation?

What is the longest fiscal year that a corporation can have?

The maximum fiscal period can be 53 weeks or 371 days.  

If GST was not collected on taxable products/services at the time of sale, what options do suppliers/purchasers have?

Section 224 of the Excise Tax Act authorizes suppliers to initiate legal action against a recipient for the recovery of unpaid tax if they account for the tax payable and disclose the tax payable (on the invoice) for the supply. In the event that the original invoice does not indicate the purchase is tax-extra (tax … Continue reading If GST was not collected on taxable products/services at the time of sale, what options do suppliers/purchasers have?

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?

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