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Tag Archive for Canada tax

Passive Investment Income Proposed Tax Changes

Grant Gilmour, Tax Advisor, Vancouver, BC, TaxConnections

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

Latest Podcast Guest: Tax Attorney John Richardson

Anthony Parent, Tax Advisor, Wallingford, USA, TaxConnections

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Plugging The “Pipeline” Raises The Spectre Of Double Taxation

peter Kurjanowicz Tax Advisor, TaxConnections

In a recent blog post I looked at a number of impacts that may be experienced by Canadian business owners should recent tax proposals become law. Many of these are more germane to long-term tax planning, however, one of them may have very immediate consequences. In the case where a business owner passes away or has recently passed away, the estate and executors will likely face immediate issues—and the potential for double taxation. Read more

Renegotiating NAFTA: Are We There Yet?

Dan McGeown, Tax Advisor, Toronto, Canada, TaxConnections

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

Tax Alert (USA) – US Tax Cuts & Jobs Act

Trevor Bennington, Tax Advisor, Langley, BC, TaxConnections

On November 2, 2017, the US Congress House Ways and Means Committee unveiled the tax reform plan called the Tax Cuts & Jobs Act.  The bill aims to simplify the Internal Revenue Code and introduce tax savings for the average American family.  Although it is unlikely that the legislation will make it through Congress unscathed, it does provide a more detailed blueprint of the tax reforms that the citizens would like to enact.  Below are highlights of the proposed changes. Read more

Canada Law: Family Members As Part-Time Workers

Blair Dwyer, Tax Advisor, Canada, TaxConnections

This continues consideration of the revised proposals on income splitting through a family corporation.  The government released these revisions on December 13, 2017.  If passed into law in their current form, the proposals will apply as of the start of 2018.

The revised proposals contain an exemption for an over-age-17 family member who is actively engaged on a “regular, continuous and substantial basis” in the activities of the family business corporation. Read more

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

ITIN For Bank Account Or PayPal

IRS will not issue an ITIN in order to allow a non-resident alien to open a USA bank account, it will only issue an ITIN for an existing open account that makes payments subject to withholding tax. The old conundrum is that most USA banks will not open an account without an ITIN. IRS will not issue an ITIN in order to allow a non-resident alien to open a USA bank account, it will only issue an ITIN for an existing open account that makes payments subject to withholding tax.

IRS will not issue an ITIN in order to allow a non-resident alien to open a USA bank account, it will only issue an ITIN for an existing open account that makes payments subject to withholding tax. The old conundrum is that most USA banks will not open an account without an ITIN. IRS will not issue an ITIN in order to allow a non-resident alien to open a USA bank account, it will only issue an ITIN for an existing open account that makes payments subject to withholding tax.

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Is This Canadian Baby An American Tax Cheat?

Is This Canadian Baby An American Tax Cheat?

A Canadian baby is learning about taxes, banking and activism at a tender age. The eight month old girl received a “Dear Valued Customer” letter from her Canadian bank when she was six months old advising her that her account information may be provided to Canada Revenue Agency to pass on to IRS.  The wee “Valued Customer” was directed to complete, sign and mail forms to the bank.

Baby Elle (not her real name) and her Canadian parents were Read more

Salary or Dividend – Compensation Strategy For Incorporated Business Owners

Are you an incorporated business owner wondering whether you should pay yourself salary or dividend?

It is not a simple straight forward question and there is no one-size-fit-all answer to it.  Due to the introduction of eligible and non-eligible dividends and the changes of the gross-up and dividend tax credits in the past few years, the simple rules of thumb that used to work in the past do not apply any more.  You should consider the following five factors based on your own specific circumstances to tailor-made your own salary-dividend strategy.

Annual Spending

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I Hit The Jackpot! Now How Do I Get My Withholding Back?

For Canadians gambling in United States casinos, “What happens in Vegas, doesn’t have to stay in Vegas”.

Unlike Canada, the United States considers winnings from gambling and lotteries to be taxable. Under the Tax Law jackpots of $600 or more will incur a non-resident withholding tax of 30%. So if you win $10,000 you only go back to Canada with $7000.

But as a Canadian, can you get that money back? The short answer is maybe. The US-Canada Tax Treaty allows Canadians to deduct their U.S. gambling losses (with a few exceptions) in a given year from winnings.

How do you substantiate the losses? You don’t have to submit your receipts to the IRS. Read more