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
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
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
Canadians moving abroad have the option to either continue maintaining their residential ties to Canada or sever them (or most of them) completely. By continuing ties, the obligation to pay Canadian taxes will continue. Similarly, if a Canadian plans to not pay taxes on income earned outside of Canada, they must sever ties with Canada so that they’re no longer considered a Canadian “resident” for taxation purposes.
When Cutting TiesIf a Canadian chooses to sever ties, steps must be ... Read More
When a Canadian is deciding if they should work abroad for a few years, thought should be given to whether or not they want to continue holding ties to Canada and pay Canadian taxes on worldwide income or sever most of their ties with Canada so that their obligations to pay Canadian taxes are limited only to income earned from Canadian sources. Many taxpayers automatically assume that taxes will be lower if ties to Canada are severed. Although this might be correct, taxpayers should pay close ... Read More
Filing Canadian Income Tax LateTaxpayers are only human and sometimes we fall behind on our tax filings. Marital breakdowns, family emergencies and mental health issues are just a few of the reasons taxpayers are unable to file their returns on time. Life has a way of changing our routines and habits, and for an unfortunate few, this means that they miss their Canadian income tax filings. Before you know it, a few years have passed, and a subtle slip-up is now several years of ... Read More
CRA's Voluntary Disclosure ProgramSometimes taxpayers make mistakes with their annual tax filings. These mistakes come in many forms: an omission, an understatement, a misclassification of an income, an information return left unfiled, or perhaps the tax advisor may have inadvertently misinterpreted the Income Tax Act. The examples are endless.
A second chanceTaxpayers who find themselves in these types of stressful situations can stress no more; the CRA has a program that ... Read More
When an incorporated business in Vancouver calls asking for professional representation for a CRA audit, the first question I ask myself is “Why is the person who was paid to prepare the tax return not doing the representing?” A very common answer is something like “My wife who is not a professional accountant prepared the tax return. She does not have the knowledge to deal with the CRA.” However, this year, I received an unexpected answer: “My accountant has been charged with fraud." The ... Read More
If your Vancouver business receives a letter from the CRA (Canadian Revenue Agency) asking for documentation to support an HST or corporate tax return, it is not a good idea to deal with the matter on your own. Hire a Vancouver chartered accountant to represent you during the business tax audit. First of all, CRA auditors are accountants. When they request information, they basically expect to see accounting information, not a lengthy verbal explanation on why your HST return for this year is ... Read More
Tax Tip for Business Owners Here is a good tax tip that greatly benefits young entrepreneurs and businesses trying to survive the effects of the current recession: If you are the owner of an incorporated business, there are two ways to pay yourself – wages and dividends. Why are dividends the better way to pay yourself? Most of us are very comfortable receiving pay because even prior to becoming an entrepreneur, we have had summer jobs where we received a pay cheque and even made RRSP ... Read More