Covid-19 Medical Expenses: Tax Treatment

Medical expenses eligible for a personal tax credit are limited to those specifically provided for by the Income Tax Act. While an expense may clearly relate to an individual’s health, it may still not be an eligible medical expense. CRA recently provided comments on a number of medical expenses related to COVID-19. Face masks In a February 25, 2021 Technical Interpretation, CRA opined that the costs of a non-medical mask, that is mostly used to protect others from…

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Travel Allowances: Limited Distance Covered

In a March 5, 2021 French Technical Interpretation, CRA commented on whether a travel allowance paid to employees on a per kilometre basis, but only up to a limited number of kilometres, could be a non-taxable allowance. For the allowance to be non-taxable, it must be a reasonable allowance for the use of a motor vehicle when travelling in the performance of employment duties. Further, measurement of the use of the vehicle must be based…

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CRA Collections: Potential Impact on Business

Photo by cottonbro from Pexels As some businesses struggle with cash flow, they may be motivated to prioritize suppliers and other creditors ahead of CRA. A recent court case demonstrates CRA’s power to collect tax arrears and the impact of CRA exercising this power on a business. In a June 11, 2021 Court of Queen’s Bench of Alberta case, the taxpayer had fallen into arrears in respect of both GST/HST and payroll remittances. Payment arrangements were entered into…

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Immediate Capital Asset Write-Off: Budget 2021

The 2021 Federal Budget proposed to allow immediate expensing of certain property acquired by a Canadian-controlled private corporation (CCPC) on or after April 19, 2021 (Budget Day) and before 2024. Up to $1.5 million per taxation year is available (shared among associated CCPCs, and prorated for short taxation years), with no carry-forward of excess capacity. Property eligible for this immediate write-off is quite broad. It includes all depreciable capital property, other than certain assets with…

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Loans for Value: Income Splitting Tool

Special attribution rules prevent the shifting of income between certain related people (including a spouse, parent, grandparent, sibling, uncle or aunt). Consider the situation where high-earning Spouse A gives investments to low-earning Spouse B so that investment income can be taxed at Spouse B's lower tax rate. The attribution rules prevent this by requiring the earnings to be taxed in the hands of the transferor, Spouse A. However, these rules do not apply where the…

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  • Post category:Tax Planning

Real Estate Projects: Watch Out!

General CRA activity Over the last few years, CRA has focused on purchases and sales within the real estate sector. They are reviewing transactions for several items, such as: property flips on account of income;ineligible principal residence claims;commissions on sales;pre-sale condo assignments; andeligibility for the GST/HST new housing and rental rebates. One method for reviewing such transactions is by requiring taxpayers to respond to a detailed questionnaire. The questionnaire covers items such as: date and…

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  • Post category:Tax Planning