What is Capital Gains Tax? Capital Gains tax is a tax rate that is applied to income earned from the sale of capital property. This differs from the tax rate that is applied when you earn regular income.   How…

What is the Gig Economy? The gig economy is defined as one in which temporary, flexible jobs are much more common and companies lean more towards hiring independent contractors and/or freelancers instead of full-time employees. A common example of a…

Canadian income tax rates vary according to the amount of income a taxpayer earns. In addition, taxpayers pay different rates on different portions of their income, pending which bracket the income falls under. Canada has what is considered a “marginal…

Schedule 7 is a form that is attached to your Income Tax Return and it calculates your Registered Retirement Savings Plan (RRSP) deduction. The RRSP deduction lowers your taxable income, which means you pay less taxes than you would if…

HST stands for “harmonized sales tax”. A harmonized sales tax is otherwise known as a consumption tax, which is a tax levied on spending (think of goods and services). Typically, this tax is used in provinces where both the federal…

The Canada Pension Plan (CPP) operates throughout Canada, except in Quebec, where the Quebec Pension Plan (QPP) exists, aiming to provide contributors and families with partial replacement of earnings in the case of retirement, disability, or death. With very few…

The Working Income Tax Benefit (“WITB”) is a refundable tax credit intended to provide tax relief for eligible working low-income individuals. Because it is a benefit / credit, taxpayers may be entitled to the Working Income Tax Benefit even if…

The marginal tax rate is the percentage of tax you will pay, which is based on the amount of income you earn. The more money you make, the more tax you are expected to pay. This approach is otherwise known as…

The Canada Revenue Agency’s (CRA) Schedule 5 is used when taxpayer’s want to claim an amount for an eligible dependent, the amount for an infirm dependent age 18 or older, a caregiver amount, or an amount for a spouse or…

CRA Schedule 1 A Schedule 1 Federal Tax Form, or a CRA Schedule 1 as some people call it, is used to calculate the percentage of your income you are going to pay as taxes. If you are looking at…

While health care in Canada is publicly funded, there are various out-of-pocket medical expenses that taxpayers incur on a daily basis. Examples include over-the-counter medications, eyeglasses, vitamins and other items not covered by provincial or private health insurance. What many…

What is Rental Income? Rental income is any income earned for allowing others the use of a specific space. This includes houses, apartments, individual rooms, office space, or any other real or moveable property.   Do You Have to Pay…

The Tuition Tax Credit The tuition tax credit (“TTC”) is a non-refundable tax credit that helps Canadian students who are currently attending, or recently finished attending post-secondary education. The cost of post-secondary education represents a financial detriment to many Canadian students and…

Exporting Vehicles – GST/HST and Input Tax Credits The sale and export of vehicles from Canada should theoretically yield GST/HST refunds. These are known as Input Tax Credits (ITCs). The reason for this is because you would have paid GST/HST…

GST/HST Audits after already being Audited Subject to exceptions, Canadians running businesses are expected to collect and remit GST/HST to the government on most of their sales. Sometimes, though, they may not even know that they were running a business…

In 2017, the Federal Government announced its intention to make sweeping changes towards small business taxation in Canada. The government initially targeted hallmarks of tax planning strategies for small and medium-sized business owners under the ostensibly stated goal of bringing…

Cryptocurrencies and the CRA In the distant past, the wild west of 2016, cryptocurrencies were a novelty; for the use of those with a particular distaste of central banks, or a desire to visit society’s seedy underbelly without leaving their…

This is part two in a series of posts discussing Indirect Verification methods used by the Canada Revenue Agency (“CRA”). If you want to reach about what these are or learn about the various types, consider reading part one found here….

Indirect Verification of Income Audits & the Canada Revenue Agency Indirect Income Verification methods are an extremely powerful weapon in the CRA’s arsenal, particularly when dealing with small businesses or individuals who do not have an extensive paper trail. Where a…

On December 13, 2017, the Department of Finance re-released its draft legislation regarding income splitting rules and provided guidance to the revised legislation. The Government’s stated objective for changing the income splitting rules is to limit the ability of owners…

In our first discussion of when to hire tax lawyers, we discussed their experience in advocacy and knowledge of the legal avenues open to you to seek redress under Canada’s tax laws. Here, we will discuss one of the most important…

Do you have unfiled tax returns, or have you incorrectly reported income? If so, you may be eligible for the Voluntary Disclosures Program. The Voluntary Disclosures Program incentivizes taxpayers to correct previous non-compliance by offering relief from penalties, a reduction…

Realtors in Ontario have traditionally been left out in the cold when it comes to taking advantage of the tax benefits of professional corporations.  Under the definition section of the Real Estate Brokers Act, real estate brokers and salespersons are required…

You might be like thousands of Canadians who have not filed their taxes for the past few years. Whether it is just missing one year, or missing ten years, the pressure from not filing can make for some serious stress….

Auditor General Michael Ferguson has now released his much anticipated report for 2016. The report itself speaks volumes on the failures of the Canada Revenue Agency (“CRA”) at nearly every turn.   When a taxpayer disagrees with a Notice of…

When the Canada Revenue Agency (“CRA”) audits a taxpayer, there are many different auditing methods or techniques that may be used. One of the most widely used of these methods is the bank deposit analysis, which is normally completed as…

Taxpayers will always try and pay the lowest amount of taxes possible. That is why the difference between business income, and capital gains is so important. Business income is taxable on the full amount, where only half of the capital gain…

When the Canada Revenue Agency (“CRA”) processes a tax return, they produce a document detailing the results known as a Notice of Assessment. If you modify your filings, or if the CRA makes changes on their own, they will then issue…

The Canada Revenue Agency (“CRA”), like all other government decision-making bodies, are accountable for their actions. The Income Tax Act (“Act”) places upon the Minister of National Revenue the duty of administering and enforcing the Act. This includes quasi-judicial and purely…

Canadians, other than non-residents of Canada for tax purposes, are taxed on their worldwide income. However, Canadians who pay taxes in another jurisdiction, may be able to claim a foreign tax credit so that double taxation does not occur. Section 126…

Replacement Property Rules – Deferring a Capital Gain Normally, if you sell a property at a higher amount than the purchase price, there will capital gains taxes payable. However, sections 44, and 44.1 of the Income Tax Act allow for…

A Registered Retirement Savings Plan (“RRSP”) is a tax deductible way of funding your retirement. Contributions made are deductible from your income, which lowers the overall amount of taxes you are going to pay that year. Withdrawals from the account…

The Lifetime Capital Gains Exemption (LCGE) is an incentive created by subsection 110.6 of the Income Tax Act. It allows taxpayers the opportunity to sell certain qualified shares or property on a tax-free basis. Depending on what is being sold, taxpayers…

If you rent out property, there are a number of expenses that may be deducted from your rental income to lower your overall tax bill. Some typical expenses include: Mortgage interest; Property taxes; Utility costs; Insurance; Advertising; Maintenance; and Property management…

A business investment loss is a capital loss from the sale of shares of a small business corporation, or it can be a debt owed to someone by a small business corporation. Capital losses may be deducted against Capital gains except…

A shareholder loan is money given by a corporation to a shareholder, or to someone who does not deal at arm’s length with the shareholder. If certain conditions are not met, the loan amount may become a taxable benefit to the…

Many individuals choose to incorporate their businesses because of the various tax deferrals and savings. However, taxpayers must be aware that the Canada Revenue Agency (CRA) will not allow certain types of businesses to benefit from these tax advantages. Specifically, the…

Where a property goes from principle residence to rental, or vice versa, it is known as a change of use in the property. When this occurs, there is a deemed disposition of the property. What this means is that the…

Keeping a Log Taxpayers must keep a logbook if they only have one motor vehicle and operate that same vehicle for business and personal use. This is done to separate personal usage (kms) and business usage (kms). When taxpayers write off vehicle…