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Archive for Corporate

Canadian FAQ #199 – Rental Income

How do I ensure my rental income is active business income? Why would this be a good idea?

Facts:

Rental income falls under the definition of aggregate investment income in the Canada Income Tax Act. That means that it is not classified as active business income and does not qualify for the small business tax rate, resulting in higher tax rates on most rental income. Read more

Canadian FAQ #198 – Dividends vs Salary for 2016

Grant Gilmour

Is it better to take a dividend or salary for 2016?

Facts:

Owners and shareholders of a corporation have a choice to pay themselves either dividends or salary as part of their remuneration package.

The tax system in Canada is designed so that it should not matter how an individual earns their income as they should experience the same level of tax. However, the new changes to 2016 as part of the federal budget have increased the cost of dividends to the taxpayer.

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Common And Costly Bookkeeping Mistakes

Grant Gilmour

Tax Question

 

What are common and costly mistakes made in corporate bookkeeping during the year and how can these be avoided?

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Start-up And Organization Costs

John Stancil

When starting a business, the owners are likely to incur two classes of costs that are not normally encountered in the ongoing operations of the business and should not be included as operating expenses. These are start-up expenditures and organization costs. Each of these are specifically defined and receive special tax treatment.

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Companies Looking to Acquire: Sales Tax Worries

Monika Miles

A couple of weeks ago we took a look at what controllers and CFOs need to think about prior to their company being acquired. But what if you are looking to acquire another business?

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The Tax Implications Between New Vehicles—Class 10 And Class 10.1 Assets

Grant Gilmour

Any vehicle with a purchase cost of over $30,000 can be classed as a luxury vehicle (a 10.1 asset). This classification restricts the amount of depreciation that can be deducted from income which reduces your corporate expenses and increases your corporate tax. It also limits the amount of Goods and Service Tax (GST) that can be recovered. The determining factor is whether the vehicle is a passenger vehicle or a motor vehicle by Canada Revenue Agency’s definitions.

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Companies Looking To Be Acquired: Why Worry About Sales Tax?

Monika Miles

Although it may not seem like sales tax has much to do with mergers and acquisitions, the truth is, many deals have fallen apart because of multistate sales tax issues. Controllers and CFOs who have seen the process first-hand know how messy the acquisition process can be – particularly if the target company’s multistate tax issues (especially sales taxes) haven’t been addressed.

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Figuring Out The Best Corporate Year End Date

Grant Gilmour

The year end date is important as it identifies the end of a corporation’s business year and can have an impact on tax planning. It has to be determined for a corporation’s first tax filing and is typically the last day of a month.

So what year end date should you choose?

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Calculating Multi-Jurisdictional Income Tax In Canadian Provinces

Grant Gilmour

If your company is a Canadian taxpayer, Canadian corporate tax is calculated by allocating taxable income between the provinces in which your company has a permanent establishment presence.

Discussion:

 

The company is considered to have a permanent establishment presence in any Canadian province where any of the following conditions are met:

  • A fixed place of business such as an office, branch, warehouse, workshop or factory in the province.
  • An agent or an employee present in the province.
  • The company owns land in the province.
  • There is substantial use of machinery or equipment by the company in the province.

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Tax Court Rejects Proposed IRS $1.36 Billion Tax Assessment

Ron Marini

The Tax Court rejected the IRS proposed transfer pricing method of re-allocating income between a U.S. parent corporation and its foreign subsidiary. Also, it ruled against the Service’s attempt to collect $1.36 billion in tax deficiencies, finding that the assessment did not reflect the economic realities of manufacturing these medical devices in a case involving Medtronic’s intellectual property licenses necessary to produce and sell high-risk, heavily regulated implantable technology.

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Tax Departments Managed Across Multiple Locations

Regardless of how your tax team is organized, managing a tax organization across multiple locations is always a challenge. Even the most savvy management executives seek to find innovative ways to make people feel more connected. Whether you have a corporate tax team of 200 spread across 50 countries, or a corporate tax team of 10 spread across  3 countries; you must always strive to be creative to be effective. Years ago, everyone in the tax department was expected to be working in the same location; and now things have progressed to managing geographically dispersed teams. Read more

Internships A to Z

College and high school students are frequently utilized by businesses and non-profit organizations as interns. These arrangements can be beneficial to the organization as the organization may get the services and insights from the intern, even though the organization receives no immediate tangible benefit. The intern may benefit by obtaining valuable on-the-job training, an entree into a permanent job, college credit, and maybe a few dollars in earnings. Internships vary greatly. They may be paid or unpaid; for college credit or not for credit; highly structured as in a college program, or an independent arrangement with less structure. Read more

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