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Archive for Canada

Canadian FAQ #205 – Cash on a Balance Sheet

Grant Gilmour

Tax Question:

What is Cash on a Balance Sheet?

Facts:

The Cash category appears under Current Assets on a Balance Sheet. Most companies have bank accounts which they use to keep a record of their deposits and payments. Cash generally includes all bank accounts and petty cash.

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Canada Pension Plan (And Other “Foreign Social Security”), The “Net Worth” Test, Form 8854 And Form 8938

John Richardson

Q. How does the inability of the state of Rhode Island to pay its employee pensions help us understand the “net worth” of a U.S. citizen wanting to renounce U.S. citizenship?

A. The answer (like most wisdom in the modern world) is explained in the following tweet.

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The “Exit Tax”: Dual US/Canada Citizen From Birth, No Canada Citizenship Today = No Exemption To US “Exit Tax”

John Richardson

Relinquishing US citizenship: South African Apartheid, the Accidental Taxpayer and the exit tax

The above references a “guest post” written by Dominic Ferszt of Cape Town South Africa. The post demonstrates how the “dual citizen from birth” exemption to the S. 877A “Exit Tax” relies on the citizenship laws of other nations. In some cases those laws of other nations are arbitrary and unjust. If these laws were U.S. laws, they might violate the equal protection and/or due process guarantees found in the United States constitution. For example, Mr. Ferszt describes how the “dual citizenship exemption” to the “Ext Tax” is dependent on South African “Apartheid Laws”. He describes a situation where a “black” U.S. citizen from birth is denied the benefits of the dual citizen exemption to the Exit Tax, which are available to a “white” dual citizen from birth. (During the “Apartheid Era” Blacks were not entitled to South African citizenship.)

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Canadian FAQ #204 – Balance Sheet Series

Grant Gilmour

Tax Question:

What are the most common groupings of Asset and Liabilities on a Balance Sheet?

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International FAQ #24 – Registering for a GST Account

Tax Question:

What is a Canadian federal goods and services tax (GST) account and do I need to register for one?

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Increase In Rate Of Withholding Of Tax On Dispositions Of US Real Property Interests

Larry Stolberg

On December 18th, President Obama signed H.R. 2029, using the tax (the “Protecting Americans from Tax Hikes Act of 2015”) and spending bills (Consolidated Appropriations Act, 2016) to fund the government for its 2016 fiscal year.

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Canadian FAQ #203 – Lunch & Learn Program

Grant Gilmour

Tax Question:

What is the cost of asking tax questions? How can I avoid huge fees when I have a “simple” or “quick” question?

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Canadian FAQ #202 – Difference Between PST & GST

Grant Gilmour

Tax Question:

How does PST work and how is it different from GST?

Facts:

PST (Provincial Sales Tax) is a provincially-levied retail sales tax that is generally applied to goods or services acquired for personal use in British Columbia, unless there is a specific exemption.

GST (Goods and Services Tax) is a federally-levied value added consumption tax that is applied to the supply of most of the goods and services purchased in Canada.

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Canadians Selling U.S. Real Estate

Larry Stolberg

As you may be aware of there is a federal tax withholding requirement on the sale of U.S. real estate by non-U.S. persons. This does not exempt the vendor from filing a U.S. tax return to report the sale and paying any tax payable or requesting a refund for excess federal tax withholding.

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Small Business Inter-Corporate Dividends

Larry Stolberg

Revisions to Section 55 of the Income Tax Act (“ITA”) may prevent the tax-free payment of inter-corporate dividends within a related corporate group.

With the exception of Part IV tax where applicable, the related party exemption per S55(3)(a) will no longer be available to allow cash dividends say paid from Opco to Holdco unless there is safe income in the payor corporation at the time of the dividend payment.

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Canadian FAQ #201 – Types of Losses

Grant Gilmour

Tax Question:

Can I apply corporate losses against profits?

Facts:

When a corporation incurs a loss it can carry that loss back three years or forward a set number of years depending on the type of loss.

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Extended Filing Requirements For IRS Form 5472

On May 23, 2016, Internal Revenue Bulletin 2016-21 was released which proposes amendments to the regulations governing IRC 6038A.

The regulations are proposed to be applicable for taxable years ending on or after the date that is 12 months after the date these regulations are published as final regulations in the Federal Register.

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