Archive for Canada

Canada Law: Family Members As Part-Time Workers

Blair Dwyer, Tax Advisor, Canada, TaxConnections

This continues consideration of the revised proposals on income splitting through a family corporation.  The government released these revisions on December 13, 2017.  If passed into law in their current form, the proposals will apply as of the start of 2018.

The revised proposals contain an exemption for an over-age-17 family member who is actively engaged on a “regular, continuous and substantial basis” in the activities of the family business corporation. Read more

Correcting Tax Mistakes After Fairmont and Jean Coutu

I was very glad to be a panelist for the Canadian Tax Foundation’s conference on the Supreme Court of Canada’s decisions in Fairmont and Jean Coutu.

During the discussion the panelists were asked about the ways taxpayers may correct tax mistakes after these two decisions of the Supreme Court. Read more

2017 Federal Budget Bill #2 Receives Royal Assent

This bill implements certain measures announced in the 2017 federal budget. Bill C-63 also includes catch-up measures previously included in September 16, 2016 draft legislation, measures related to the principal residence exemption, and some specified cooperative income measures. Bill C-63 also contains some GST/HST measures related to pension plans and drop shipments, and other indirect tax measures that were previously released in draft legislation on September 8, 2017 (see TaxNewsFlash-Canada No. 2017-50). Read more

How Does Part XIII of Income Tax Affect Non-Resident Corporations?

Grant Gilmour, Tax Advisor

Part XIII income tax is a tax withheld by a payer when they pay a non-resident. Not all income is subject to this tax. Generally passive income is subject to Part XIII tax.


The most common types of Canadian income subject to Part XIII tax are:

1. Pensions

2. Annuities

3. Management fees

4. Interest

Read more

Canada Revenue Agency – Important Dates for 2018

Grant Gilmour, Tax Advisor

Canada Revenue Agency (CRA) has a number of dates and deadlines of importance to corporations. Failure to comply with these deadlines may raise a red flag with CRA, which in turn may trigger an audit.

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Petty Cash Management: A Good Practice System

Grant Gilmour, Tax Advisor

Petty cash is a float that gets replenished monthly and is a convenient way to reimburse staff for company purchases or to cover minor expenses. Petty cash is considered a current asset on the balance sheet.

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Small Business Tax Rule Changes & Risk Assessment Tools for Canadians in 2018

Grant Gilmour, Tax Advisor

The proposed small business tax rule changes are expected to be in place January 1, 2018 and will impact incorporated small businesses in Canada. These laws will hit those splitting income in families and saving assets inside corporations. To help our clients assess their exposure we have developed a Risk Assessment Tool (RAT). We hope you find the name amusing.

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Declaration of Tax Residence for Entities in Canada

Grant Gilmour, Tax Advisor

In December 2016, an additional section was added to the Income Tax Act (ITA) that requires Canadian financial institutions to collect certain information about your company. The information is not automatically sent to the Canada Revenue Agency (CRA); however, if the financial institution determines the information needs to be reported to the CRA they will. CRA will then determine if the information needs to be sent to the foreign government related to the company’s residence or the company’s controlling person’s residence. Exchanging information is a new international standard of tax cooperation.

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US Tax Reform Bill Appears To Confiscate 12% of Retained Earnings of Certain Canadian Controlled Private Corporations

John Richardson, Tax Advisor

Kudos to Max Reed for his quick analysis on how the proposed U.S. Tax Reform bill may affect Canadian citizens/residents who also hold U.S. citizenship.

Reed’s analysis, which has been widely discussed at the Isaac Brock Society includes provisions that are very damaging to those who are the owners of Canadian Controlled Private Corporations (noting they are also under assault from Messrs. Trudeau and Morneau). The damaging provisions are both prospective and retrospective.

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Converting Surplus Income Proposed Tax Changes (Canada)


The Canadian government is proposing tax changes to prevent private corporations from converting surplus income to a lower-taxed capital gain and stripping it from the corporation. This targets larger private corporations.

The Canadian tax system is built on the concept of tax integration. Based on the view of principles of fairness and neutrality, tax integration aims to ensure that an individual is indifferent between earning income through a corporation or directly as the after tax results should be the same.

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The Canada-U.S. Tax Treaty Does Not Protect From Tax Liability

Dewees 1: The Canada-U.S. tax treaty does NOT protect Canadians from U.S. tax liability but does mean that Canada will NOT assist the U.S. in collection!

There are certainly benefits to being a Canadian citizens. Perhaps Canadian citizenship is the most important line of defense against the confiscation that is OVDP. Read more

Canadian Tax FAQs – What Is A Trust Audit?

What is a Trust Audit?

Some professionals such as Real Estate Agents and Lawyers keep trust accounts (funds held on behalf of their clients). There are special accounting rules for these trust accounts and a Trust Audit is designed to ensure compliance with these accounting rules. Read more

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