In the U.S., the consumption taxes we are most familiar with are the sales tax and some excise taxes, such as on gasoline, alcohol and tobacco. We typically think of these taxes as having to be imposed at the point of purchase. There is an advantage to this because you’ll know at that time if you can afford to pay the tax. Disadvantages to this approach include that the vendor has additional compliance to collect and remit the tax (and penalties if done wrong) and the rate can’t be adjusted for the income level of the buyer (although I understand many might not view this as a disadvantage).
This week, the City Council in Portland, Oregon modified the business license tax for publicly traded companies subject to SEC reporting. Basically, before the change, this tax is 2.2% of adjusted net income (City Code 7.02.500). The new language increasing this for either a 10% or 24% surtax, follows:
We get used to certain rules in the tax system and then think they HAVE to be there. But, often, that is not the case. I think the rules related to divorce are good examples.
Alimony is deductible by the payer and taxable to the recipient. This violates the “fruit of the tree” doctrine from the famous 1930 US Supreme Court case, Lucas v Earl.
Revisions to Section 55 of the Income Tax Act (“ITA”) may prevent the tax-free payment of inter-corporate dividends within a related corporate group.
With the exception of Part IV tax where applicable, the related party exemption per S55(3)(a) will no longer be available to allow cash dividends say paid from Opco to Holdco unless there is safe income in the payor corporation at the time of the dividend payment.
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.
This article will discuss the general aspects of capital gains and losses, the brokers reporting to investors, how and where they are reported on Form 1040 and supporting schedules.
It is advantageous to have investment income in the form of long-term (held longer than one year) capital gains (LTCG) because they are taxed at a lower rate than ordinary income. For 2016, the net LTCG will be taxed at various rates depending on the tax bracket:
Every four years we usually see at least one bill introduced in Congress to make Olympic medals and related prize winnings (such as cash) non-taxable to the athletes. Why? There is no good reason for excluding this prize income. All prizes are taxable because they are an accession to wealth which is what our income tax system is based upon. If you win a raffle or win on Jeopardy!, the prizes are taxable.
Why should an Olympic medal be different?
In all likelihood, you are absolutely critical to the success of your business. Without you, there is no business.
We want to fix that.
With a little luck and a lot of hard work, we can help you become an Inconsequential Owner. Having said that, perhaps a bit of explanation is in order.
Regulation 102 of the Income Tax Act (ITA) requires payroll withholding on income derived by virtue of employment. This applies to, say, a U.S. employer sending its employee to Canada to work on an assignment. Withholding would include income tax and contributions to the Canada Pension Plan (CPP) and Employment Insurance (EI).
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.