In a recent blog, I explained why a CCPC shareholder is better off holding real estate investment or any passive investment in a CCPC versus personally. Those who are familiar with recent changes to CCPC tax laws will note that there is a $ 50,000 investment income ceiling, after which for every $ 1 additional investment income dollar will claw back the SBD by $ 5. Hence, once investment income reaches $ 150,000, the entire SBD will be eliminated. In other words, there is no income that ... Read More
Difference Between Real Estate Development and Real Estate InvestmentThere is much confusion on the tax efficient way to hold real estate. The confusion is because taxpayers confuse real estate development with real estate investment. If a taxpayer is planning to buy a piece of land and build a new house or substantially renovate an existing house, this is real estate development, NOT real estate “investment”. The distinction is very important because the tax treatment of the ... Read More
During the summer of 2017, CCPC shareholders and tax advisors across Canada were surprised with by the announcement of new tax rules and restrictions that were being planned by the Minister of Finance. Basically, Ottawa felt that the existing rules at the time were too generous for the CCPC shareholders and intended to scale the “tax perks” down considerably. Almost two years later and with much drama during the interim, the new tax regime is now in place and time will tell how much extra ... Read More
12 Tax Rules and Real Estate Gain from sale of principal residence not taxable. Loss from sale of your principal residence not tax deductible. Sale of principal residence must be reported on the personal tax return. If a taxpayer owns more than one home for personal use and/or investment purpose, professional advisor should be consulted for optimal principal residence planning. The rules are complicated. Loss from sale of your real estate investment is considered a capital loss ... Read More
There is a trend taking place in the last twelve months. The number of CRA reviews that I am dealing with have increased noticeably. Many of these reviews are not for an earth shattering amount of GST or income taxes being reviewed. They are what I would call random audits to see if the taxpayers randomly chosen are being honest and then extrapolate from there.
Lack Of Experienced CRA Reviews Are Costing Taxpayers MoneyWhat I am noticing is the initial CRA contact person who ... Read More
More small businesses are now on cloud account software. Many business owners are performing the bookkeeping functions on their own and just as many business owners hire a bookkeeping firm who specializes in cloud software to do the bookkeeping. Now, AI is getting involved to limit human coding errors that still exist with cloud software. As for me, the external accountant, I have noticed considerable improvement with both, the software and the users maximizing the software full ... Read More
Many mature businesses have endured this at least once during their life time – a CRA tax audit. Most businesses survive an audit with no issue. This happens when the business has an adequate set of financial records that is easy for the CRA auditor to examine. So what makes up an adequate set of financial records. First of all, the CRA audit has changed from twenty years ago. In the past, an actual person came to the business premise to examine the books and records. Hence if the ... Read More
Just two years back, when buying condo presales was the rage of investing free cash in Vancouver, I wrote a short blog cautioning investors to begin preparation years ahead for the closing date of the deal. When the condo completes, full payment of the balance on the condo is required to close the deal; hence qualifying for the mortgage at that future time required some income reporting planning. Back then, waiting for construction completion date to close the deal was not necessarily part ... Read More
As 2018 comes to an end, tax advisors across Canada are busy restructuring and planning many corporations to respond to the new tax rules that came into existence this year.