CRA Tax Scams

There are several types of Canada Revenue Agency (CRA) scams going on right now. The image above is an example of what some people are receiving via email. The CRA will never send or request e-transfers of any kind. They will only send payments by direct deposit or cheque in the mail. If you receive an e-Transfer claiming to be from the CRA, it’s likely a scam! See more examples on the CRA website. The…

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Claiming Child, School, and Tutoring Costs

If you work or go to school and need childcare services you may be able to claim those expenses on your tax return. Some of the services are: caregivers providing child care services; day nursery schools and daycare centres; fees for child care services offered through educational institutions; day camps and day sports schools where the primary goal of the camp is to care for children (an institution offering a sports study program is not…

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Reporting a Foreign Property

The CRA has made changes to Form T1135 . It allows taxpayers who held foreign property with a total cost of less than $250,000, throughout the year, to report under a new simplified reporting method rather than providing the detail of each property. If the total foreign property is $250,000 or more, at any time during a year, the current detailed reporting method will continue to apply. For more information, click on: Reporting for the 2015…

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Directors: Can They Be Liable for Corporate Income Taxes?

A December 11, 2017 Tax Court of Canada case examined whether a taxpayer was liable for unpaid income taxes of the corporation of which he was a director. CRA’s assessment was based on the assertion that the taxpayer was a legal representative of the corporation and had distributed assets of the corporation without having first obtained a clearance certificate from CRA. A clearance certificate essentially confirms that the corporation has paid all amounts of tax,…

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Donation Receipts: How Complete is Complete?

Charities should ensure that any donation receipts issued are fully compliant with the tax rules. Failure to do so may result in the donor being denied a charitable donation if reviewed by CRA. This could cause operational and goodwill problems for the charity. Receipts for cash gifts must have the following: a statement that it is an official receipt for income tax purposes; the name and address of the charity as on file with CRA;…

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Home Buyers Need to Check Residency of Home Sellers If They Suspect the Seller Is Not Canadian

When Canadians purchase a home, they are required to withhold part of the purchase price should the seller be a non-resident of Canada. A recent Tax Court of Canada decision (Kau v. the Queen [2018 TCC 156]) should serve as a warning to clients and professionals alike, to watch for any red flags that might suggest the seller is not a resident of Canada. As a result of this recent court decision, the home buyer…

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Reasonable Vehicle Allowances: GST/HST Claim

A travel allowance paid to an employee for the use of their personal vehicle for business purposes will be non-taxable if it is reasonable. Where such reasonable allowances are paid, an input tax credit (ITC) may be claimed by the employer. The ITC is computed as the imputed GST/HST in the allowance, without adjustment for the fact that some costs likely did not attract GST/HST. In non-harmonized provinces/territories (such as Alberta and BC), the ITC would be 5/105 of the allowance. The ITC in a harmonized province is different.…

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Family Members: Can I Pay Them a Salary?

For a small business, whether operated as a corporation, proprietorship or partnership, it is quite possible that relatives of the owners or partners may be engaged as employees. Due to the closer familial relationship between employer and employee, CRA pays particular attention to ensure that the salary is truly an eligible deduction to the business. According to CRA, salaries to children and spouses are deductible as long as all of these conditions are met: the…

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Digital Currency: Basics And Tax Implications

Digital Currency (DC) is essentially electronic money. It’s not available as bills or coins. Cryptocurrency is a type of DC created using computer algorithms with the most popular being bitcoin. No single organization, such as a central bank, creates DC. DC is based on a decentralized, peer-to-peer network. The “peers” in this network are the people that take part in DC transactions, and their computers make up the network. DC can be used to buy…

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