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Section 85 Rollover: What is it and why is it required

As per Section 69 of the Income Tax Act, when a taxpayer transfers a property to a person with whom they are not dealing with at arms length, the taxpayer is deemed to have disposed of the property at fair market value. A corporation is a person under the Income Tax Act. Related individuals areContinue reading “Section 85 Rollover: What is it and why is it required”

Section 216 return: Rental income earned by a non-resident

Non-residents are required to pay taxes in Canada on all Canadian sourced income. However, for non-residents they can skip paying taxes on that income since they no longer live in Canada. To counter that the CRA requires that for all payments that are made to non-residents 25% of the gross amount be withheld and remittedContinue reading “Section 216 return: Rental income earned by a non-resident”

Accelerated Investment Incentive

Accelerated investment incentive what is it and how does it work. To encourage Canadian business to invest the Canadian government has increased the depreciation that businesses can claim in the first year that they purchased the asset. The accelerated investment incentive replaces the half year rules which previously reduced the depreciation that businesses could claimContinue reading “Accelerated Investment Incentive”

Shareholder loan

Shareholder Loan What is it and how does it work? When a share holder loans money to the corporation or withdraws money from the corporation a shareholder loan is created, there are two types of share holder loans which are due from shareholder or due to shareholder. I will be writing about both types ofContinue reading “Shareholder loan”

Residency status of a corporation and tax on non-resident corporations

The residency status of a corporation is very different when compared to residency status for individuals. For individuals residency status is based on ties to Canada, for corporations any corporation incorporated in Canada after April 26, 1965 is deemed to be a resident of Canada. Since residents of Canada are taxed on their worldwide incomeContinue reading “Residency status of a corporation and tax on non-resident corporations”

Investment income earned inside a corporation

Investment income earned inside a corporation is called aggregate investment income and is taxed an additional 10.67% to the standard corporate tax. Aggregate investment income consists of interest, rent, royalties and taxable capital gain. The total tax on investment income is 19.5% combined federal and provincial rate. The breakdown of the tax on investment incomeContinue reading “Investment income earned inside a corporation”

RRSP Contributions and Withdrawal

RRSP contribution room is calculated based on Prior years earned income. RRSP contribution room is limited to the lower of 18% of prior years earned income for RRSP and $26,230 for 2018. Earned income for RRSP consists of: Income from office or employment including all taxable benefits without any deductions. Income from a business (T2125)Continue reading “RRSP Contributions and Withdrawal”

Becoming a non-resident of Canada

Whenever people leave Canada to permanently move to another country or take up employment in another country there is a lot of confusion surrounding what needs to be done. Before I get into the tax benefits and implications, I would like to start talking about residency status. To Determine someone’s residency status the CRA looksContinue reading “Becoming a non-resident of Canada”

Sale of a property by a non-resident

A lot of time when a non-resident sells their Canadian property they are in for a shock when they learn that their lawyer will be withholding 25% of the gross selling price to remit to the CRA. Whenever somebody sells property in Canada the buyer’s lawyer is responsible for doing enough due diligence to determineContinue reading “Sale of a property by a non-resident”