GST/HST Input Tax Credits: Reasonable Expectation of Profit

A July 28, 2022 Tax Court of Canada case considered whether input tax credits (ITCs) in respect of a farming operation’s expenditures were available. The farming activity consisted of breeding and racing various horses and involved at least four full-time employees at one point. Over a nine-year period (2007-2015), the operations never experienced positive net earnings and more than $4 million in losses were accumulated. The owner partially financed operations with earnings from his law…

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Crowdfunding: Taxable or Not?

A June 2, 2022 Technical Interpretation discussed the taxability of funds received through crowdfunding campaigns. CRA first noted that amounts received through a crowdfunding arrangement could represent loans, capital contributions, gifts, income or a combination of two or more of these. This means that the funds received could be taxable (such as business income) or not (such as a windfall, gift or voluntary payment). As the terms and conditions for each campaign vary greatly, the…

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Shared Custody Arrangements: Impact of School Closures

In an April 21, 2022 Tax Court of Canada case, the Court reviewed whether the taxpayer and her former spouse were shared-custody parents of their three children for the period from January 2019 to June 2021 for the purpose of the Canada child benefit (CCB). In shared-custody arrangements, each individual will get half of the payment they would have received had the child lived with them full time. While the Minister initially fully paid the…

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TFSA Overcontribution: Relying on Information in Your CRA Online Account

One challenge when relying on CRA-provided information online in respect of TFSA contribution room is that the information is not updated on a real-time basis due to the delay in receiving information from TFSA issuers. Although CRA has many disclaimers surrounding this issue, some individuals may be unaware or misinterpret their comments. A July 14, 2022 Financial Post article (Taxpayer relying on CRA website info gets hit with penalty for contributing too much to TFSA,…

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Buying and Selling a Home: Budget 2022 Proposals
CRA Programs - Buying and Selling a Home

Buying and Selling a Home: Budget 2022 Proposals

The 2022 Federal Budget included several proposals that would significantly change the taxation environment when buying and selling a home. Broadly, the government proposed various incentives for first-time buyers and extended family units in addition to bright-line tests/restrictions for those purchasing homes for profit (e.g. home flippers). Taxpayers should consider how the changes will affect their intended purchases and sales. In some cases, it may be beneficial to expedite a purchase or sale, while in others, it may…

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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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Employees Working From Home During COVID-19: Personal Tax Deductions

Due to the COVID-19 pandemic, many employees worked from home during a portion of 2020. On December 15, 2020, CRA released guidance on two new options available for employees claiming expenses related to working from home on their personal tax return.  While this will clearly impact an employee’s personal tax filing, it should also be considered by employers. A key question employers need to answer is whether they should provide an employer certification in respect…

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OAS Deferral: Undoing and Application

Photo by Tristan Le from Pexels As of July 1, 2013, where receipt of Old Age Security (OAS) is delayed, the monthly pension is increased by a factor of 0.6% for each month deferred, to a maximum increase of 36% (60 months, commencing receipt at age 70). In a March 25, 2020 Federal Court case, the Court reviewed Service Canada’s decision to deny relief to an individual who applied to cancel his OAS pension slightly more than one…

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Working From Home During Covid-19

In order for home office expenses to be deductible against employment income, the employee must be required by contract to incur such expenses, and one of the following has to be met: The home is where the employee principally (more than 50% of the time) does their work.The employee uses the space exclusively to earn employment income, and it is used on a regular and ongoing basis for meeting clients, customers or other people in…

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Real Estate Sales: Taxable or Not?

In general, gains are fully taxable where the taxpayer buys a property with the intention to sell for a profit (sold on “account of income"). In other cases, half the gain is taxable (sold on “account of capital”). When a sale on “account of capital” involves the sale of a principal residence, the tax may be reduced or eliminated by using the principal residence exemption. In a December 13, 2019 French Tax Court of Canada…

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