The taxation of corporate income from the rental of storage facilities appear to be a common business under regular review just like the motel/hotel and rental management business.
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The T1134 and T1135 are a sample of Canadian foreign information returns such as the U.S. 8938, 5471, or 8865.
A number of Canadians are investing in the U.S. real estate market with a U.S. limited partnership, whose limited partners are solely Canadian residents and the general partner is a U.S. C corporation, whose shareholders are also Canadian residents.
A recent post (8/26/16) on the Tax Justice website was titled – Why We Must Close The Pass-Through Loophole? That caught my attention as I was trying to think what the “loophole” might be? A loophole is a provision that can be used beyond its intended purpose because the rule is not written specifically enough. When a rule is being used as intended, it is not a loophole. For example, sometimes the mortgage interest deduction is called a loophole, but it is not. People deducting interest on the mortgages on their primary and vacation homes is using the rule as intended.
I am not sure, if I were asked to, which one I would put my money on in this battle. While both are mammoth forces to be reckoned with, social media giant Facebook might be smarter. However, the IRS has been indomitable for decades.
According to the IRS, Facebook owes them billions – roughly $3 to $5 billion!
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
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.
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.
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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