Archive for Canada

British Colombia’s Property Transfer Tax Act Is Not As Simple As It Might Seem

British Colombia’s Property Transfer Tax Act (“PTTA”) currently taxes only registered transfers of realty. In other words, it essentially taxes transfers of legal ownership, but not transfers of beneficial ownership. Numerous BC governments have for years considered expanding the scope of the PTT to include transfers of beneficial ownership – without substantive action.

Recently, however, there has been word of possibly significant realty-related tax changes to be proposed in the upcoming provincial budget, which will be released tomorrow. An expansion of the PTT is not unthinkable, given that current Premier John Horgan put forth a bill himself in 2016 seeking to tax the disposition of a beneficial interest in land. Read More

Written by | Posted in British Colombia • Canada • Property Tax • TaxConnections

Real Estate Expenses During Pre-Acquisition

Grant Gilmour, Tax Advisor, Tax Blog, Vancouver, Canada, TaxConnections

There are various real estate expenditures that are deductible to the corporation and others that are capitalized or allocated to inventory. In this FAQ, we will discuss the real estate expenses that are deductible during the pre-acquisition phase as an operating expense to the corporation in the fiscal year that expenditures were incurred.

There are many “soft” costs in real estate such as representation costs, site investigation costs and financing expenses.

Representation costs are eligible for a deduction for amounts paid in the year. Examples of these costs are rezoning applications, project planning and preliminary design costs. Read More

Written by | Posted in Canada • International • Real Estate

Passive Investment Income Proposed Tax Changes

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.

Currently corporate tax rates are lower than personal tax rates; however, when after tax profits earned in a corporation flow out to an individual the net result is comparable to the net result had the individual earned it directly. The difference occurs when a corporation’s after tax profits are saved inside the corporation as a passive investment to be flowed out to the individual at a later date. Read More

Written by | Posted in Canada • Tax Changes

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

Written by | Posted in Canada • Citizenship • United States

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

Written by | Posted in Canada • NAFTA

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

Written by | Posted in Canada

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

Written by | Posted in Budget • Canada • Federal

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.

Discussion:

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

1. Pensions

2. Annuities

3. Management fees

4. Interest

Read More

Written by | Posted in Canada

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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Written by | Posted in Canada • Corporate • Small Business

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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Written by | Posted in Canada • International

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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Written by | Posted in Canada • Small Business • Tax Changes

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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Written by | Posted in Canada • International
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