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Tag Archive for Canadian Income Tax Act

Canada Tax – Books And Records Kept Outside Of Canada

Grant Gilmour Books And Records Kept Outside Of Canada

Is a non-resident corporation that is registered for a Goods and Services Tax/Harmonized Sales Tax (GST/HST) account with the Canada Revenue Agency (CRA) required to keep records and books of account in Canada?

The Canadian Income Tax Act (ITA) requires everyone who registers for a GST/HST account to keep records and books of account in Canada in either English or French. However, CRA does allow the books and records to be kept outside of Canada in some circumstances. Read more

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 Court Case Showcases CRA Incompetence

Larry Stolberg

The Canadian Income Tax Act provides a time period in which one may appeal a Notice of Assessment (NOA) or Reassessment. It is not unusual for a taxpayer not to have received the NOA. Although the taxpayer should advise Canada Revenue Agency of any change in addresses or to correct an incorrect address on file, this case was decided on the premise of the lack of communication to the taxpayer of CRA’s assessment of tax payable for a taxation year.

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The Implications of Spin-off Reorganizations by U.S. Public Companies for Canadian Residents

It is very common for U.S. public corporations to “spin-off” their holdings in other US corporations, so that their shareholders own such holdings directly.

If properly implemented, a reorganization of this nature should be tax-free for US tax purposes as result of the application of IRC Sec. 355.

The Canadian Income Tax Act (“the Act”) has its own system for allowing “divisive reorganizations” to be implemented on a tax-free basis. In this country, they generally have to be structured as a “butterfly reorganization” under complex rules in paragraph 55(3)(b) of the Act, and related section. The shares to be spun-off would not be directly transferred to the shareholders of the distributing company. Instead, a more complex series of Read more