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.
Archive for Corporate
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.
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.
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?
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.
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.
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.
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
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
Strategies that motivate management to listen to the Tax Department is what we will address in this week’s post. Although there are dozens of topics I could address, this post will address a couple of challenges faced by most anyone leading a tax organization when it comes to compensating your tax team. This post will also provide solutions; these are solutions intended to make your job leading a tax organization easier. Although I know better than to put “ Head of Tax” and “Easy” in the same line, leading a tax organization is one of the toughest jobs out there today. Read more
According to Law360 (subscription required), an ex-managing director at corporate acquisition business MidCoast Financial Inc. was found not guilty by a Pennsylvania federal jury on Wednesday over his alleged involvement in a complex $200 million corporate tax fraud scheme.
Donald Stevenson of North Palm Beach, Fla., 58, was cleared after a six-day trial on charges that he conspired to defraud the U.S. and corruptly endeavored to obstruct and impede the due administration of Internal Revenue Service laws. Stevenson, the only defendant to be acquitted in the scheme, faced 8 years in prison.
Federal prosecutors alleged that Stevenson and others conjured up and participated in an elaborate scheme Read more
The 2015 Federal Budget proposals to section 55 may cause otherwise tax free inter-corporate dividends to be subject to taxation as proceeds of disposition (ie., capital gains) that previously were exempt from the ambeit of section 55. Computation of safe income or post-1971 tax retained earnings may now be required in every instance to ensure one is not caught. Timely section 55(5)(f) designations filed by the recipient corporation may also have to be made. The proposal was to be effective for dividends paid after April 20, 2015. Hopefully there will be further consultation on the matter and the final legislation will only affect those circumstances to which the proposal was intended.
Caution should be made to companies currently paying dividends or wishing to implement various purification techniques, capital gains crystallization and other restructuring that may involve section 55 of the Income Tax Act Read more