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 →
Immigrants to Canada are given a permanent resident status so as to have the legal right to live, work or study anywhere in Canada. Immigrants need to meet Canadian residency requirements in order to keep their permanent resident status. There is a misnomer that immigrants in fulfilling their Canadian residency requirements as permanent residents of Canada should also be residents of Canada for tax purposes. As explained below, the permanent resident requirements are different from the tax resident requirements. Thus, in reality, it is possible for permanent residents not to become tax residents of Canada while maintaining their legal status as permanent residents in Canada. 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.
If so, do you want to minimize your Canadian taxes on the future income to be generated from such overseas inheritance? If your answers to both questions are “yes”, you will have to initiate your planning process before the death of the person from whom the overseas inheritance is expected to come. Read more →
For individuals, the personal income tax planning opportunities are generally very limited. However, if you are a professional, self-employed or you own a business, you will find twelve income tax tips in this article to cut your tax bill for your business income. Read more →
Tax planning should be considered all year round, not just at year-end or when you file your tax return. Nevertheless, there are still many time-sensitive issues that you need to address before January 1 and early 2015 to reduce your taxes for 2014. Read more →
The Universal Child Care Benefit is administered under the Canada Child Tax Benefit program and is paid to all families with eligible children, regardless of the family’s income level, to help cover the cost of child care.
The Family Tax Cut is a new income splitting measure introduced by the Federal government on October 30, 2014. Eligible families can start to claim the Family Tax Cut as a non-refundable federal tax credit in the spring of 2015 when they file their 2014 tax returns. Since this is only a federal tax credit, there is no impact on the provincial tax calculation.
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.