Individuals who are residents of Canada are taxable on their worldwide income. To ensure all Canadian residents correctly report their worldwide income, the tax law requires Canadian residents annually file with the CRA the Form T1135 Foreign Income Verification Statement (commonly referred to as foreign property reporting) if they own, at any time during a year, “specified foreign property” with a total cost of more than $100,000 Canadian dollars. Generally speaking, specified foreign property includes funds or investments situated, deposited or held outside of Canada; debts receivable from or shares of non-resident corporations; real estate property, life insurance policy issued by a foreign issuer and interest in a non-resident trust. Read more →
Do you engage foreign individual or company (collectively referred to as “non-resident person”) as independent contractor to provide services in Canada? Are you the non-resident person providing independent contractor services in Canada? If you answer yes to either question, do you know that payments made in respect of services rendered in Canada by non-residents are subject to Regulation 105 withholding at a rate of 15%? There is an additional 9% withholding if the services are rendered in the province of Quebec by non-residents. These withholding requirements simply act to ensure that non-resident recipients of the service payments pay any Canadian income tax duly owing. Read more →
Canada’s tax system is based on self-assessment. In order for the governments to maintain public confidence in the fairness and integrity of Canada’s tax system, the Canada Revenue Agency (the “CRA“) is empowered to audit taxpayers of their compliance of the Canadian tax laws. If you have received a notification letter from the CRA that you are selected for a tax audit, this article will give you an overview of the audit process, your rights and obligations as a taxpayer under audit and the strategies you can employed to handle the audit process with the objective to achieve the best possible tax outcome for your particular situation.
Are you an incorporated business owner wondering whether you should pay yourself salary or dividends? It is not a simple straight forward question and there is no one-size-fit-all answer to it. Due to the introduction of eligible and non-eligible dividends and the changes of the gross-up and dividend tax credits in the past few years, the simple rules of thumb that used to work in the past do not apply any more. You should consider the following five factors based on your own specific circumstances to tailor-made your own salary-dividend strategy.
Below are highlights of the proposed tax measures introduced in the 2014 federal budget delivered by Finance Minister Jim Flaherty on February 11, 2014.
Measures concerning individuals
Personal Income Tax Rates
No proposed changes to the progressive personal income tax rates of 15%, 22%, 26% and 29%.
Taxation of Estates and Testamentary Trusts
The 2014 budget proposes to generally proceed with the measures described in the June 2013 consultation paper. Flat top-rate taxation will apply to grandfathered inter vivos trusts and testamentary trusts for 2016 and subsequent taxation years. Exceptions will exist for the first 36 months of an estate that is a testamentary trust. Another exception is for testamentary trusts created for the benefit of disabled individuals who are eligible for the federal Disability Tax Credit.
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The EHT is a payroll tax imposed pursuant to the Employer Health Tax Act on all employers who have a permanent establishment in Ontario. An exemption from the EHT is available for eligible employers (or an associated group of employers) such as:
- private sector employers;
- organizations that receive financial assistance from the government (but are not under government control); and
- crown corporations subject to tax under Part I of the Income Tax Act (Canada).