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Archive for Claudia Ku, CPA, CA, MBA

Regulation 105 Withholding Tax For Services In Canada

Regulation 105 Withholding Tax for Services Rendered by Non-Resident

Do you engage foreign individual or company (collectively referred to as “non-resident person”) as independent contractor to provide services in Canada?  Are you the non-resident person providing independent contractor services in Canada?  If you answer yes to either question, do you know that payments made in respect of services rendered in Canada by non-residents are subject to Regulation 105 withholding at a rate of 15%?  There is an additional 9% withholding if the services are rendered in the province of Quebec by non-residents.  These withholding requirements simply act to ensure that non-resident recipients of the service payments pay any Canadian income tax duly owing. Read more

Immigrant Tax Planning | Permanent Resident vs. Tax Resident

Canadian Immigrants – Do You Have to Pay Canadian Taxes on Your Worldwide Income?

Immigrants to Canada are given a permanent resident status so as to have the legal right to live, work or study anywhere in Canada. Immigrants need to meet Canadian residency requirements in order to keep their permanent resident status.  There is a misnomer that immigrants in fulfilling their Canadian residency requirements as permanent residents of Canada should also be residents of Canada for tax purposes.  As explained below, the permanent resident requirements are different from the tax resident requirements.  Thus, in reality, it is possible for permanent residents not to become tax residents of Canada while maintaining their legal status as permanent residents in Canada. Read more

Salary or Dividend – Compensation Strategy For Incorporated Business Owners

Are you an incorporated business owner wondering whether you should pay yourself salary or dividend?

It is not a simple straight forward question and there is no one-size-fit-all answer to it.  Due to the introduction of eligible and non-eligible dividends and the changes of the gross-up and dividend tax credits in the past few years, the simple rules of thumb that used to work in the past do not apply any more.  You should consider the following five factors based on your own specific circumstances to tailor-made your own salary-dividend strategy.

Annual Spending

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Capital Gains Exemption – What You Need to Know

Tax Saving of Claiming Capital Gains Exemption

A Canadian business owner who carries on an active business through a corporation may be eligible for an $800,000 lifetime capital gains exemption (indexed for inflation after 2014) on the sale of his/her corporation shares or on the deemed disposition of his/her corporation shares immediately before his/her passing. For a Canadian business owner in the top marginal tax bracket, the claim of the $800,000 lifetime capital gains exemption will result in a tax saving ranging from $156,000 to $200,000, depending on the province in which the business owner is a resident.

How to Qualify for the Capital Gains Exemption

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Canadians With US Rental Property – What Are The Cross-Border Tax Implications?

Canadians earning income from US rental property can be fraught with unexpected tax problems, which could severely hurt their after-tax return on investment. It is important to consult a cross-border tax professional before the purchase to understand all the US and Canadian tax implications of owning US rental property and to make the best decision for their situation on the right structure to own and finance the purchase of US rental property.

This is the first of a series of articles on the cross-border tax considerations of investing in US rental property. If you are planning to purchase US rental property, you need to have some basic understanding of the following US and Canadian tax law before you can make a sound decision on how you should own and finance the purchase of US rental property. Read more