Archives for Tax

How to Survive an Audit

How to Survive an Audit

The thought of being audited is dreaded by most taxpayers. This fear stems from being unprepared. Often, tax returns are mismanaged, receipts are lost, and bank statements are unorganized. Audits are a central Canada Revenue Agency enforcement method. As such,…

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What is HST in Canada?

What is HST in Canada?

The harmonized sales tax (“HST”) is a consumption tax in Canada and it combines the goods and services tax (“GST”) and provincial sales tax (“PST”) . It is most often used in provinces where both the federal goods and services…

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Marijuana and Taxes

Marijuana and Taxes

The Liberal Government continues to work towards legalizing marijuana throughout Canada by releasing proposed amendments to the Excise Tax Act concerning the production and sale of legal cannabis. On April 13, 2017, the Liberal Government introduced to Parliament Bill-45, “an Act…

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what is tax payer relief

What is Taxpayer Relief?

Taxpayers aren’t perfect, and quite frequently circumstances beyond their control prevent them from meeting their tax obligations. While the Canada Revenue Agency (“CRA”) won’t come to arrest you (in most circumstances), they can penalize taxpayers through the use of penalty…

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Corporate Reorganization

Section 85 Rollover

What is a Section 85 Rollover? The Income Tax Act (“ITA”) contains several provisions that allow a taxpayer to transfer ownership of property without any immediate tax consequences, with section 85 being one such provision. The general rule is that transfers…

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Real Estate Audit

The Principal Residence Exemption is Canada’s most lucrative tax break. When a taxpayer sells his or her personal residence, providing the conditions are met, the gain from the sale is non-taxable. This provides a very large incentive for taxpayers to claim the…

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Cheque Cashing Centres

The Canada Revenue Agency (“CRA”) is currently conducting a massive audit program looking into taxpayers who have used cheque cashing services between the years 2006 and 2015. If you used a cheque cashing service between these years, and the CRA…

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Tax Scams

There are a number of scammers contacting taxpayers around Canada and scaring them into believing they owe the Canada Revenue Agency (“CRA”) money. This tax scam has been around for years now. These scammers claim that if the amounts owing are not…

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Spousal Rollover

Under subsection 70(5)(a) of the Income Tax Act, when a taxpayer passes away, they are deemed to sell, and re-purchase all non-depreciable, and depreciable capital property. This can create a very large tax bill for the estate of the taxpayer.  …

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Renting Out Your Property

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…

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Shareholder Loans

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…

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Precious Metals and GST/HST

According to subsection 123 of the Excise Tax Act, a precious metal is part of the definition of “Financial Instrument”. This is important because “Financial Instruments” are not subject to GST/HST on their sale.     Precious Metals Precious metals are bars,…

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Net Worth Audits and Assessments

Subsection 152(7) of the Income Tax Act and subsection 299(1) of the Excise Tax Act both state that the Canada Revenue Agency (CRA) is not bound by the information provided by any person. This means that if taxpayers provide their…

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Small Business Deduction

The small business deduction provides Canadian Controlled Private Corporations with a tax break on their first $500,000 of active business income.   Canadian Controlled Private Corporations (CCPCs) A CCPC is a private corporation which is controlled by resident Canadians.   Active Business Income…

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Transfers while Having a Tax Debt

Subsection 160 assessments under the Income Tax Act, and its Excise Tax Act counterpart subsection 325 assessments are the most powerful enforcement mechanisms that the Canada Revenue Agency (CRA) is able to use against taxpayers. The reason for this is simple. These…

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Illegal Income

It can be a complete shock to taxpayers when they learn that any money they made from illegal activities is still subject to tax. If an individual is caught committing a crime, and the police suspect that the person has made money…

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Motor Vehicle Expenses

When a vehicle is used for both personal and business purposes, it is necessary to keep a log to record the business use of the vehicle. The Canada Revenue Agency (CRA) will allow a taxpayer to deduct the business use…

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Directors’ Liability

Typically in Canada, your debts are your own. However, where corporations are involved that is not always the case. The Canada Revenue Agency (CRA) can assess directors of a corporation for certain kinds of corporate debts. The most common are…

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Gross Negligence Penalties

If you, knowingly or under circumstances amounting to gross negligence, made a false statement or omission on your tax return, the Canada Revenue Agency (CRA) may charge you with gross negligence penalties. The penalty is equal to the greater of:…

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Tax Residency

Canada allows its citizens to be residents of Canada for tax purposes, and non-residents of Canada for tax purposes. This is an important distinction as a non-resident of Canada for tax purposes will only be subject to Canadian taxation on…

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Employee vs. Independent Contractor

Many individuals choose to categorize themselves as an independent contractor (self-employed) rather than an employee because of the various tax advantages. The Canada Revenue Agency (CRA) has its own rules regarding whether a person is in a business relationship (independent…

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