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.
Non-Canadian residents who own Canadian real estate and collecting rental income have two ways to deal with the Canadian tax liability.The first method is remit to the CRA, 25% tax on the gross rent collected. This 25% is due to the CRA on the 15th of the following month the rental income was credited to the non-Canadian resident. This tax is considered the final tax liability on the rental income and the non-Canadian resident has no further obligation. However, the non-resident ... Read More
Death of a family member is one of the most stressful events in life. To compound the grief, there are final tax matters to deal with either by April 30th of the following year or 6 months after the date of death.
What To Do Upon The Death of a Taxpayer?Upon the death of a taxpayer, at a minimum, there is a final return (“terminal return”) to be filed with the CRA and three optional returns to be filed if desired. In addition, a trust return to report income received after death is ... Read More
The use of cloud-based accounting software began to surface about five years ago, amongst my clients. Since then, I’ve seen more young entrepreneurs adopting software quickly and with minimum training. Accounting software, desktop or cloud-based, is supposed to be user friendly for non-accountants, and this has been the case since accounting software came onto the scene in the 1990s. Now, with cloud-based accounting platforms, the clumsy need to transfer an actual physical file to various users ... Read More
A few weeks ago, I wrote a blog under a similar title. At the time of my writing, our Finance Minister in Ottawa, Mr. Bill Morneau, had yet to surprise us incorporated small-business owners with his plan to eliminate tax planning tools commonly used by the incorporated self-employed. I will not go into all the proposed tax-rule changes, but I will discuss the one proposal that may impact the Capital Dividend Account tax planning I wrote about just before the announcement. One of the ... Read More
As a non-resident, a little bit of extra tax planning is required when selling Canadian real estate.
The 25% Withholding TaxThe CRA requires that the purchaser withhold 25% of the gross sale amount from a non-resident. (Note that the 25% of the gross sale proceeds withheld would normally be in the seller’s lawyer’s trust account, and this individual has the undertaking of releasing the funds to the CRA and the balance to the seller once the Certificate of Compliance has been obtained ... Read More
A Brief Analysis of Real Estate Gains & Canadian Income TaxRecently there has been a lot of media attention focused on financial gains being made in Vancouver’s housing market and the favorable tax treatment given to real estate used as a principal residence through the Canadian Income Tax Act. Without getting into the technical details of this tax treatment and all of the possible complex scenarios, the simple rule is that as long as a taxpayer or an immediate family member ... Read More
While Inheritance is Non-taxable, A Word of CautionInheritances are non-taxable for Canadian taxpayers regardless of whether or not the inheritance comes from a Canadian citizen or a foreign citizen. This non-taxable tax treatment is also consistent regardless of whether or not the inheritance is straight cash, a summer house, a rental building or shares of a company. Before you become complacent, a word of caution! The non-taxable status of an inheritance doesn’t mean there aren’t ... Read More
If I Ignore CRA’s Request to File Outstanding Returns – Tales of Two Taxpayers - submitted by Lilly Woo, CA, CFE, CFP It has been a strange summer for me. As the 2014 tax season came to an end on April 30, 2015, I was relieved as always and mentally plan for the lazy summer I wanted to enjoy. Then a strange thing happened. I received a phone call from a friend (“Paul”) whom I have lost touch with six years ago. He sounded stressed right away. As soon as we were through the initial ... Read More