A Canadian business owner who carries on an active business through a corporation may be eligible for an $800,000 lifetime capital gains exemption (indexed for inflation after 2014) on the sale of his/her corporation shares or on the deemed disposition of his/her corporation shares immediately before his/her passing. For a Canadian business owner in the top marginal tax bracket, the claim of the $800,000 lifetime capital gains exemption will result in a tax saving ranging from $156,000 to $200,000, depending on the province in which the business owner is a resident.
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Canadians earning income from US rental property can be fraught with unexpected cross-border tax problems, which could severely hurt their after-tax return on investment. It is important to consult a cross-border tax professional before the purchase to understand all the US and Canadian tax implications of owning US rental property and to make the best decision for their situation on the right structure to own and finance the purchase of US rental property. Read more →
If your company is a foreign corporation doing business in Canada, this presentation will give you an overview of how Canada taxes your company’s profits from carrying on a business in Canada.
Just by way of background, my name is Claudia Ku. I am a Chartered Professional Accountant and a Chartered Accountant in Toronto, Ontario. I am a tax accountant with specialized knowledge and experience in Canadian international tax. I help my foreign corporate clients to manage their Canadian tax issues, whether they are income taxes, withholding taxes, payroll taxes or sales taxes. I also help them to meet all their Canadian tax filing requirements. More importantly, I help to structure their Canadian operations so as to minimize the effective worldwide tax rate of the foreign parent company.
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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Canada federal income taxes (both personal and corporate) and indirect taxes (i.e., goods and service tax) are levied under the provisions of the Income Tax Act and the Excise Tax Act. Provincial and territorial income and sales taxes are levied under various provincial statutes. Pursuant to tax collection agreements signed with all provinces and territories, except for Quebec, the federal government also collects the followings provincial income and sales taxes:
- personal income taxes – on behalf of all provinces and territories, except Quebec;
- corporate income taxes – on behalf of all provinces and territories except Alberta and Quebec.; and
- sales taxes – on behalf of five provinces, including New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island
Although there are no increases in the CPP contribution rate and the EI premium rate in 2014, if your earning for the year will exceed the maximum pensionable/insurable earnings, your annual CPP and EI contributions may still go up slightly (by approximately 2.9% and 2.5% respectively) due to the increases in the maximum pensionable/insurable earnings. Read more →
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).
This article provides a general overview of the Canadian income tax framework relevant to non-resident multinational corporations doing business in Canada directly or indirectly through a partnership. This article does not cover the scenario where the non-resident corporations carrying on a business in Canada through a Canadian subsidiary.
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You may find this article relevant to your estate planning if you are:
- a Canadian resident but not a US citizen and the fair market value of your US-situs assets exceeds US$60,000; or
- a Canadian resident and a US citizen and the fair market value of your worldwide assets exceeds the “unified credit exemption” amount in effect on the date of death (US$5.25 million for 2013 which is indexed for inflation).