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Tag Archive for CRA

Receiving Aggressive Calls From The Canada Revenue Agency?

Grant Gilmour

Are the aggressive collection calls you have been getting from the Canada Revenue Agency (CRA) real? The short answer is NO. The calls are a scam. Please read on.

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Good To Know… Part 3 – From Larry Stolberg, CPA, CA

Larry Stolberg - 11-27-15

Short Blog Posts In One Location…

◊ Green card holders who are holding cards close to 8 of the last 15 years need to examine their options to avoid becoming covered expatriates if they return to Canada and/or wish to give up the green card. Becoming a covered expatriate can have significant U.S. tax implications to you.

◊ CRA Form 1135 may become easier for 2015 if the aggregate cost of foreign property is not over $250K.

◊ Snowbirds need to watch their days presence in the U.S. to avoid deemed residency rules and related filing obligations! Read more

Good To Know… Part 2 – From Larry Stolberg, CPA, CA

Larry Stolberg - 11-25-15

Short Blog Posts In One Location…

◊ FBAR DUE DATES ALIGN WITH TAX RETURNS
The SURFACE TRANSPORTATION ACT OF 2015
Confirmation that the foregoing ACT in Section 2606(3)(11)  makes reference to Regulation 1.6081-5  of the IRC which confirms that the due dates will conform to the June 15th  automatic extension  if one resides outside of the U.S. on April 15th. One may file IRS Form 4868 to extend the date to October 15th. The Secretary may waive penalties for first time filers with the penalties if the 4868 is not filed.

◊ Leaving Canada requires departure planning not to be left to the day before you leave.

◊ CRA has changed the rules for the charitable gifts outlined in your WILL. Read more

Canada Is Checking Foreign Tax Credits

Larry Stolberg - 11-24-15

It is not uncommon for e-filed returns or paper filed returns that claim a credit for US tax for CRA to request verification.

US tax paid per Canadian withholding slips are not requested because the slips are issued  by a Canadian entity. They are looking to US tax claimed per US reporting slips such as W2s, 1099s, 1042s or from the US 1040/1040NR tax returns. US social security tax and medicare (ie., FICA) is creditable if it relates to US source wages or services performed in the US which is evident  on the W2.

Foreign tax credits claimed in respect of US computed from  the US tax return based on determination of what portion of the tax payable of the return relates to US source income that is creditable is usually supportable by submitting to CRA your schedules and copy of the federal (and state where applicable) return. Recently CRA has Read more

Good To Know… Part 1 – From Larry Stolberg, CPA, CA

Larry Stolberg - 11-20-15

Short Blog Posts In One Location…

◊ U.S. Tax withholding for Canadians
Make sure you have the correct amount withheld from US income received. Generally amounts withheld in excess of treaty rates  will not be creditable in Canada. In order to get the a refund from the IRS, you will need to file a U.S. 1040NR return and apply for an ITIN (individual taxpayer identification number) with the ITIN office.
Waiver forms such as the W8BEN should be submitted  to the payor prior to the anticipated receipt of any US income to ensure the lower treaty rate (which could be 0%, 5%, 10% or 15%) in lieu of the US IRS code withholding rate of 30%. Interest, dividends, royalties, pension are usually the types of income  that are overlooked. Read more

Transfer of Cross-Border Pensions To Your RRSP

Larry Stolberg - 11-19-15

Below is a CRA confirmation of this.

Numerous immigrants to Canada or those residing in Canada but have worked for say U.S. employers have entitlements to U.S. pensions such as 401K plans and in some circumstances they have U.S. IRAs. The Income Tax Act has provisions to allow transfers including a claim for any U.S. withholding tax or for applicable early withdrawal penalties.

Examination of both the U.S. and Canadian tax provisions should be dealt with before any transfer takes place to ensure the rollover is available in Canada.


TRANSFER OF SWISS PENSION TO AN RRSP Read more

The Basics of Offshore Tax Planning For Canadian Corporations – Part 4

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Transfer Pricing Issues

As is the case with most major counties, Canada has rules in its tax laws aimed at preventing income from being shifted to other jurisdictions by unreasonable transfer pricing [1].

To date, most of the activity of the CRA and reported tax cases has focused more on inbound transfer pricing issues involving charges by multi-national corporations to Canadian subsidiaries. However, the rules can certainly be applied in connection with outbound tax planning of the type being outlined in this series [2].

If the CRA successfully applies these rules, they could lead to a reassessment of Read more

Americans Earning Rental Income In Canada Have To Carefully Follow The Rules!

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Many Americans hold interests in income-producing properties in Canada. In many cases, when they acquire them, they do not obtain proper advice regarding the Canadian tax implications and requirements.

This can be quite costly-in the absence of following certain procedures, an American resident earning rents from Canadian real estate can be subject to a 25% Canadian tax on GROSS rents (that is, no deduction for related expenses). This can apply even if no profit is being earned from renting the property.

As a general rule, a non-resident who earns rents for the use of Canadian real estate is subject to 25% tax on the gross rents under Part XIII of the Income Tax Act (“the Act”). This Read more

United States LLCs And Canadian Residents – A Bad Combination!

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There is a big problem for Canadian residents who use U.S. LLCs- the Canada Revenue Agency (“CRA”) considers them to be corporations, even if they are considered disregarded entities (if only one shareholder) or partnerships (with two or more shareholders) for US tax purposes.

Furthermore, the CRA does not consider the LLC itself to be a resident of the US for the purposes of the Canada-U.S. Income Tax Convention (“the Treaty), since the LLC is not liable to tax (assuming it has not elected to be treated as a corporation under the US “check the box rules”).

In fact, in many cases, US LLCs that are controlled by Canadians will be considered Read more

A Pitfall For Americans Using Canadian ULCs

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Unless you are very active in Canada-US cross-border tax planning, you probably are not aware of the fact that, a few years ago, the 5th Protocol to the Canada-U.S. Tax Convention (“the Treaty”) created a problem in connection with the ownership of Canadian Unlimited Liability Companies (“ULCs”) by U.S. Residents.

ULCs are a strange feature of corporate law-they are corporations with unlimited liability. At one time, Nova Scotia was the only jurisdiction in Canada that had these entities, and they were modeled after similar entities existing under UK corporate law. However, some years ago Alberta and British Columbia jumped on the ULC bandwagon.

From a Canadian tax perspective, ULCs are taxed in the same way as “normal” Canadian Read more

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