It is the obligation of a Canadian resident Individual, or a corporation in incorporated in Canada or partnership or a trust to disclose their ownership in the foreign entities. If that applies to you and you have failed to report, the penalty may range from $2,500 per year to $12,000.
RKB Accounting is a cross-border tax expert, can help in complying with these critical tax issues.
You get a 20% tax credit on your accommodation expenses when you book a vacation rental in Ontario in 2022. The maximum credit you can claim is $200 which is 20% of your $1,000.00 vacation rental expense. This was introduced by the honorable Doug Ford government to boost the Ontario truism industry affected by COVID restrictions.
Some major refundable tax credits are….
Non-refundable credits are credits that only reduces your income liability. If you do not have any income tax payable left on your tax return, you loss any unapplied balance in your non-refundable tax credit. This could be an example of a good tax planning tool that when you want to invest in your RRSP, you need to make sure that first your are using all your non-refundable tax credits.
Refundable tax credits you get as a refund or it paid to you if you are eligible even though you do not have any income tax payable on your tax return.
December 15, 2022, Department of Finance, Ottawa introduces the Multigenerational Home Renovation tax credit with effect from January 1, 2023. When you establish a secondary suit in your house to accommodate a senior or an adult who is disable in your family and spent up to $50,000, you can get 15% of this amount which is up to $7,500.00 as tax credit. This is non-refundable tax credit.
If your business name is different than your legal full name, you are required to register your business name with the province and obtain a master business license for a term. You may need to renew this license after the expiry of the term. You may also choose to incorporate your business name either provincially or federally in which case you need not to obtain a master business license.
If you are starting new, you may also follow the links below to learn more….
Basic personal amount is a threshold amount for individual income tax purposes and income up to this amount is exempt from income-tax. The set for federal and provincial threshold are normally different. Each province has its own threshold amount. For the tax year 2023 if you have income up to $11,865.00 in Ontario, you do not have to pay provincial income tax. This threshold amount for 2023 income-tax is $21,003.00 if you live in Alberta. The federal threshold for 2022 tax year is $14,398.00. The federal and provincial threshold amount is adjusted every year for inflation. Please follow our NEWS CANADA for an update.
Yes, you can but you may have to pay tax. A non-resident of Canada can invest in TFSA (Tax Free Saving Account) if he/she is 18 years of age or above and has a valid Social Insurance Number (SIN) in Canada. However, you have to pay tax every month which is 1% of the amount that you have invested in your TFSA (Tax Free Saving Account) as long as you are a non-resident of Canada.
The options to invest in your TFSA (Tax Free Saving Account) is limited. You can only invest in Cash, mutual funds, stocks and securities that are listed on a stock exchange, government or corporate bonds, guaranteed investment certificates (GIC), and certain shares of small business corporations.
If you have received a collection notice or a collection call, or if you are not able to pay your personal or business taxes, arrears or balance owing to CRA, we can talk to CRA on your behalf, to negotiate and make arrangement.
Only if you own more the $100k properties outside Canada. If you fail to declare the penalty is $2,500.00 every year. This applies to all Canadian residents for tax purposes. To learn more please visit “Reporting more than 100k properties outside Canada.”
If you have build your new house or have substantially renovated or have made a major addition, you my be entitled to claim the Federal HST Rebate. You claim is limited to the amount of federal HST that you have paid on the land, construction materials, labour, and to the contractors.
However, to be eligible to claim the federal HST rebate the fair market value of your house should not exceed $450,000.00. If the fair market value of your house exceed $450,000.00, you still be eligible to claim Ontario GST Rebate if your house is in Ontario.
If you are eligible, the maximum Ontario GST you can claim are limited to $24,000.00 if you have paid HST on the purchase of your land otherwise the maximum claim is limited to $16,080.00.
If you have build your new house or have substantially renovated or have made a major addition, you my be entitled to claim the Federal HST Rebate. You claim is limited to the amount of federal HST that you have paid on the land, construction materials, labour, and to the contractors.
However, to be eligible to claim the federal HST rebate the fair market value of your house should not exceed $450,000.00. If the fair market value of your house exceed $450,000.00, you still be eligible to claim Ontario GST Rebate if your house is in Ontario.
CRA is responsible for maintaining a fairness and integrity in the Canadian tax system. You need to respond to CRA on a timely basis with the appropriate, books and records and documents. CRA ensures that you have paid the right amount of taxes and the appropriate amount of taxes have been refunded to you that your are entitled to. Please follow the link Business audits to know about the process, your rights and responsibilities.
You can get information about all the following program account that you have registered with CRA. You can view your filing status and the balances owing
or the payments made.
You can sign up for CRA My Account through this link on the CRA website. You need to provide your social insurance number, your date of birth, your postal code, and some information from your last filed income tax return. You will also create your user ID and password and answers some security questions. CRA has made it mandatory for multi factor authentication, hence either you need to provide your mobile number or download a passcode grid.
You can sign up for CRA My Account through this link on the CRA website. You need to provide your social insurance number, your date of birth, your postal code, and some information from your last filed income tax return. You will also create your user ID and password and answers some security questions. CRA has made it mandatory for multi factor authentication, hence either you need to provide your mobile number or download a passcode grid.
Once you signup for the CRA My Account, log in and authorize your tax representative. You will need your tax representative Rep. ID. You add or remove your tax representative any time once you have the access to CRA My Account.
You can sign up for CRA My Account through this link on the CRA website. You need to provide your social insurance number, your date of birth, your postal code, and some information from your last filed income tax return. You will also create your user ID and password and answers some security questions. CRA has made it mandatory for multi factor authentication, hence either you need to provide your mobile number or download a passcode grid.
CRA, The Canada Revenue Agency, is the administering body of the ministry of finance under the Government of Canada or the Federal Government or Provincial Government. The federal and provincial government imposes taxes on citizens, residents, and businesses, and CRA administers them. The national and local governments also provide benefits, and CRA issues them.
Algeria – Argentina – Armenia – Australia – Austria – Azerbaijan – Bangladesh – Barbados – Belgium – Brazil – Bulgaria – Cameroon – Chile – China (PRC)1 – Colombia – Croatia – Cyprus – Czech Republic – Denmark – Dominican Republic – Ecuador – Egypt – Estonia – Finland – France – Gabon – Germany – Greece – Guyana – Hong Kong – Hungary – Iceland – India – Indonesia – Ireland – Israel – Italy – Ivory Coast – Jamaica – Japan – Jordan – Kazakhstan – Kenya – Korea, Rep of – Kuwait – Kyrgyzstan – Latvia – Lithuania – Luxembourg – Madagascar – Malaysia – Malta – Mexico – Moldova – Mongolia – Morocco – Netherlands – New Zealand – Nigeria – Norway – Oman – Pakistan – Papua New Guinea – Peru – Philippines – Poland – Portugal – Romania – Russia – Senegal – Serbia – Singapore – Slovak Republic – Slovenia – South Africa – Spain – Sri Lanka – Sweden – Switzerland – Taiwan2 – Tanzania – Thailand – Trinidad & Tobago – Tunisia – Turkey – Ukraine – United Arab Emirates – United Kingdom – United States – Uzbekistan – Venezuela – Vietnam – Zambia – Zimbabwe
Signed but not yet adopted – Belgium – Lebanon – Namibia
Under negotiation – Australia – Brazil – China (PRC) – Germany – Malaysia – Netherlands – San Marino – Switzerland
Enhanced financial account information reporting is a program under which the Canada Revenue Agency shares your information with the United States, and the Internal Revenue Service in the United States shares with Canada. Under this program, all financial institutions must provide information and have certain reporting obligations.
If you are considered a resident of Canada for tax purposes, you need to report your worldwide income on your Canadian income tax return. You need to report income from other countries outside Canada. Canada has tax treaties with several countries in the world, and based on that, your income in those countries may not be taxable in which that country may ask you to provide a “Certificate of residency” or proof of your residency in Canada.
The CRA issues a notice of assessment (NOA), which shows the CRA assessment of your tax return filed. Usually, CRA mails you the notice of assessment after few weeks of your filing. However, you can obtain your notice of assessment from CRA “My Account.” Please follow the link either to register for my account to sign in with CRA. CRA My Account. A tax professional or a authorize representative can also help you getting your Notice of Assessment.
A notice of assessment shows your tax payable or refund status, this notice also explains the amount you can invest into your RRSP in the next year and the amount you can contribute to your TFSA. CRA will also explain if they have made any adjustments to your income or on your deductions.
Usually the bank asks you to provide a notice of assessment when you apply or renew your mortgage. A notice of assessment helps you plan your next years RRSP and TFSA.
Yes, you can if your spouse helps you in the business or helps you manage the office and administration, etc. for your business. You can pay a reasonable amount from the business. You can pay that either as a part-time or full-time employee or as a self-employed contractor. If you are paying as an employee then you do not need to deduct EI as your spouse will not be able to claim employment insurance. The income your spouse receives, he/she needs to report on his/her annual income tax return.
Exempt supplies means those supplies are never taxable for GST/HST purposes. Zero-rated means the supplies are taxable, but in specific circumstances like “export,” they are zero-rated. If you are supplying goods and/or services that are exempt for GST/HST purposes, you can not claim input tax credit (ITC) even if you are registered for GST/HST in Canada. If you are supplying goods and/or services that are taxable but in your case it is zero rate as you are exporting them, you should be able to claim input tax credit (ITC) on the expenses that you have incurred. Please visit our Canada blog for “GST/HST” for more information.
You must register for GST/HST if your business is providing taxable goods or services within Canada and your revenue from all taxable supplies exceeds the threshold in four consecutive months. If you are exporting your taxable goods and services outside Canada, you do not need to register for GST/HST even if you exceed the threshold.
Please visit our Canada blog for “GST/HST” for more information.
When you exceed the above threshold you must register for GST/HST in Canada and charge GST/QST/HST to your customer as per the applicable rates. As recently announced by CRA, you must register for GST/HST if you are providing ride share, taxi, limousine, etc. services in Canada irrespective of the threshold.
You can also register for GST/HST “voluntarily” if you supplying taxable goods or services in Canada even if you have not crossed the threshold.
We encourage our clients to register for GST/HST.
Our services include helping you registering for GST/HST and QST.
You do not have to pay WSIB when you are paying salaries and wages to senior management. Senior management is not covered by WSIB. WSIB, as it stands for “Workers Safety and Insurance Board” provides insurance benefits to a worker who is injured during his employment hours. If you are a self employed person, you can contact WSIB if they can cover you for the accidental benefits, in which case they will ask you to pay the premium. For further information please visit “Hiring an employee.”
WSIB stands for “Worker Safety Insurance Board. The Worker Safety Insurance Board provides accidental insurance to your employees and workers.
The employer needs to report the gross insurable earnings and pay the premium as per the prescribed rate every month, quarter or annually. To learn more, please visit our Canada Blog for “Hiring an employee.”
Once your employee meet with an accident or injured while working, you need to report this to Worker Safety Insurance Board. WSIB also helps employer how to improve safety at your work place and educate employees for safety standards.
CPP is the Canadian Pension Plan contribution that an employer is responsible for deducting from each employee’s pay cheque and contributing employer share. To learn more, please visit our Canada Blog for “Hiring an employee.”
When a employee retires usually at the age of 65, he can apply for CPP and will receive CPP for the rest of his/her life. CPP is a taxable benefit. If an employee is eligible for CPP he can receive his CPP amount any where in the world. The employee may also apply and qualify for further benefits.
If you are paying salary and wages to your spouse, you do not need to deduct and pay employment insurance. Service Canada will not cover your spouse for an EI claim. To learn more, please visit our Canada Blog for “Hiring an employee.”
EI is the employment insurance premium that an employer is responsible for deducting from each paycheque of the employee and contributing employer share. Employer stop deducting employment insurance in a year when the employees gross wages has reach the maximum limit. To learn more, please visit our Canada Blog for “Hiring an employee.”
Employment insurance provides benefits to employees when they loss their job without their own fault. Employment insurance Canada also assists employees who loosed their jobs in getting further education and training which can help employee in finding a new job or starting a new carrier or become a self-employed.
No. That is your personal use. You can only claim mileage when using the vehicle for business purposes. For e.g., visiting customers, suppliers, accountants, etc. Please visit our Canada blog “Motor Vehicle Expenses CRA” to learn more about this topic.
Yes. You can write off your down payment over the period of the lease term. Under the financing arrangement, you claim amortization hence you can not write off the down payment. Please visit our Canada blog “Motor Vehicle Expenses CRA” to learn more about this topic.
Assuming you will be parking the vehicle at your residence over the night, it is not advisable to buy the saloon car under the corporation. Stand charge may apply, which will be added to your income. Please visit our Canada blog “Motor Vehicle Expenses CRA” to learn more about this topic.
No. You can claim it as a medical expense on your personal income tax return. For further information please visit our Canada blog for “36 small business expenses you can claim.”
No. You can only write off as your business expenses if the policy was required as per the financing agreement for the business finance. For further information please visit our Canada blog for “36 small business expenses you can claim.”
Yes. You can take loan from the corporation, but you have to repay within 365 days otherwise that will be added to your income as Dividend.
Yes, however, the corporation does not have to deduct EI and contribute; the corporation does not have to pay WSIB.
Yes, the shareholder and the corporation have to file an election under section 85 of the Canada Income Tax Act. To know more please visit our Canada blog “Transfer of assets between the Shareholder and the Corporation.”
The dividend is the corporate profit declared by the corporation from its retained earnings and paid to the shareholder. The shareholder includes dividends as income on their tax return and pays tax on that. Dividend is not a tax deductible expense on corporation’s income statement. The corporation pays dividends to its shareholder from the after tax profits.
Hence, Dividends are tax twice. Once the corporation pays tax on its income and then the shareholder reports as dividend income on his tax return and pays income tax on it. However, when the shareholder is reporting the Canadian dividends as income he also get “Dividend Tax Credit” on his tax return.
While structuring and planning for your corporate tax, you may need help from a tax professional. Our tax services include a proper tax planning since the begging of the corporate fiscal year.
No, an annual return is filed with Corporation Canada if it is a federal corporation, and with the province in which your business is located. The income tax return is filed with CRA only for income tax purposes. Failure to file an annual return may result in dissolution of your corporation.
The best province is the province in which your business is located. However, the following provinces allows a non-resident Canadian to incorporate. These provinces are British Columbia, Nova Scotia, New Brunswick, Quebec and Ontario.
Depending on your situation, in general, federal incorporation is better than provincial. To learn more, please visit our Canada blog “What are the primary business structures in Canada?”
Major benefits are limited liability protection, name reservation, and lower taxes for a Canadian Controlled Private Corporation. To learn more, please visit our Canada blog “What are the primary business structures in Canada?”
No. You may continue as self-employed. However, if you want to take advantages of incorporation get in touch with your accountant for further advice or to learn more please visit our Canada blog “What are the primary business structures in Canada?” https://www.rkbaccounting.ca/what-are-the-primary-business-structures-in-canada/
You need to have at least 25% of your Board of Directors resident in Canada to incorporate a Federal Corporation in Canada. There are few provinces, including Ontario allow a non-resident to incorporate provincially. To learn more, please visit our Canada blog “What are the primary business structures in Canada?” https://www.rkbaccounting.ca/what-are-the-primary-business-structures-in-canada/
Only if you own more the $100k properties outside Canada. If you fail to declare the penalty is $2,500.00 every year. This applies to all Canadian residents for tax purposes.
Foreign tax credit is the deduction from your total taxes payable on your Canadian tax return. You can claim foreign tax credit if you have paid income tax to another country with whom Canada has a tax treaty.
If Canada has a tax treaty with another country, you will be eligible to claim foreign tax credit to avoid double taxation issues.
It depends on your tax residency status. If it is determined that you are resident of Canada for tax purposes, you file your income tax return in Canada.
All residents of Canada, for tax purposes, have to report their worldwide income in their income tax return, irrespective of their citizenship or immigration status. If your residency status is determined as a non-resident of Canada for tax purposes, then you do not have to report your worldwide income.
The CRA issue a notice of assessment (NOA), which shows the CRA assessment of your tax return filed.
By the 60th day of the following year unless it falls on weekend or a nation holiday in which case the next business day will be the deadline.
This is a tax deferral retirement saving plan. When you contribute to your RRSP within your allowable limit, the amount you contributed is deducted from your total taxable income. The year you withdraw money from your RRSP, the amount you withdraw is added to your total taxable income. To learn more, please visit our Canada blog “RRSP Tax Planning.”
No. You contribute to fund your children university education as per the specified limit and the Government of Canada also contribute as a government grant to your children RESP. The amounts contributed by the Government of Canada as a grant will be taxable in the hand of your child when they withdraw.
Bonus can be a very good corporate tax planning tool, when the shareholders wants to withdraw profits from their corporations in Canada. You can avoid the penalties and interest on late payment of withholdings taxes on the bonuses paid to your shareholders. On the regular salaries and wages paid to the shareholders, you need to withheld tax cpp, match the cpp employers contribution, pay the CRA payroll remittances on a regular basis. Usually, for a monthly remitter, the payroll remittances are due by the 15th of the following month. If you do not pay by the due date CRA will charge a penalty and interest. The amount of penalty increase as you repeat you defaults. If you are paying bonus to your shareholder you can the withholding taxes within the six months from the date of the bonuses declared to your shareholders.
Withdrawing profits from the corporation involves proper tax planning. You should consult with a tax professional. We provide corporate tax planning services to our corporate clients since the beginning of their corporate fiscal year.
You may need to plan before you fall into double taxation or loss some benefits and exemptions. Your tax status may change from resident to non-resident. However, you will still be responsible for paying income tax on your income from Canadian sources. You may be subject to non-resident withholdings taxes.
TFSA is your “Tax Free Saving Account.” You can open an account with a financial institution to deposit the money within your contribution limit and room for the year. Any income generated in this account is tax-free throughout your life time. However, you have to be 18 Years of age and a with a valid Social Insurance Number (SIN). The amount you can contribute to your tax free savings account is based on your contribution limit which is communicated to you by Canada Revenue Agency every on your notice of assessment. If you contribute more than your limit, Canada Revenue Agency will charge you a penalty.