Archive for Canada

Plugging The “Pipeline” Raises The Spectre Of Double Taxation

In a recent blog post I looked at a number of impacts that may be experienced by Canadian business owners should recent tax proposals become law. Many of these are more germane to long-term tax planning, however, one of them may have very immediate consequences. In the case where a business owner passes away or has recently passed away, the estate and executors will likely face immediate issues—and the potential for double taxation. Read more

What You Need To Know About Renouncing U.S. Citizenship

The U.S. citizenship comes with all the arduous requirements and liabilities, hence why more people than ever started to question whether the benefits outweigh the costs. Thought of renouncing a U.S. citizenship may pass through your mind if you are already a dual citizen, have no ties with the U.S. and don’t want to carry the U.S. tax burden anymore. Some people fall into the category of “Accidental Americans” and they have never even considered themselves being Americans, so it’s the only way to free themselves from the IRS and stop playing their tax game. Read more

Renegotiating NAFTA: Are We There Yet?

Canadians could be forgiven for experiencing at least some NAFTA fatigue. The talks that began back in August have moved along in fits and starts — with little to show in tangible outcomes. Meanwhile, U.S. President Donald Trump has threatened to abandon NAFTA, yet negotiations-watchers have struggled to read his true intentions. Read more

Canada Law: Family Members As Part-Time Workers

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?

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

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Canada Revenue Agency – Important Dates for 2018

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

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

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

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

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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