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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Reporting Tips for Service Workers
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Reporting Tips for Service Workers

Tips received by servers and other individuals in the service industry are taxable. However, since tips do not show up on T4 slips, some taxpayers are under the false understanding that they are either not taxable, or only partially taxable. In a February 3, 2020 Federal Court of Appeal case, the Court upheld the Tax Court decision that tips received by the taxpayer from his employment as a slot attendant at a casino were properly…

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Starting a Business and Not Getting Paid: Can I Collect EI?

In a January 10, 2020 Federal Court of Appeal case, the Court conducted a judicial review of the denial of the taxpayer’s EI benefits. While receiving benefits in 2010 and 2011, the taxpayer had incorporated a corporation and engaged in preliminary work to set up its business. In early 2015, the Canada Employment Insurance Commission (CEIC) was advised by CRA that the taxpayer had applied for a business registration number while collecting EI. A taxpayer can operate a business while collecting EI benefits where his business activity is to such a minor extent that a person would not normally rely on…

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May 15, 2020 Update
CRA National Headquarters in Ottawa, ON

May 15, 2020 Update

This week has brought another program to assist business owners (not sole proprietors), who did not qualify or were turned down for the Canada Emergency Business Account loan ($40K). This is an interest free loan, with a forgivable component (if certain conditions are met). Mind you, the contribution is also taxable. The “Regional Relief and Recovery Fund (RRRF)” is delivered to Western Canadian businesses through the Western Economic Diversification Fund (WD).  The funding available is…

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Update May 8

75% wage subsidy program (Canada Emergency Wage Subsidy “CEWS”) Please see the following link to our newsletter provider for important clarifications. Such as what is defined as eligible wages (dividends do not count), periods for the calculation and other items.  https://www.videotax.com/web-tips-articles/cews-faq-updated-partnerships Canada Child Benefit (CCB) Increase Families will receive an additional $300 per child as a one time increase to May’s payment.  https://pm.gc.ca/en/news/news-releases/2020/05/03/families-receive-increased-support-through-canada-child-benefit Province of BC, $1,000 Emergency Benefit for workers On May 1st, applications…

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Trusts for Disabled Beneficiaries: Good News!

One common planning technique for disabled individuals involves the use of a trust under which the trustees possess ultimate discretion over any distributions to be made. In other words, the beneficiary has no enforceable right to receive any distributions from the trust unless or until the trustees exercise their discretion in the beneficiary’s favour. The intent of such a trust is that the trust assets not be considered assets of the beneficiary, such that they…

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  • Post Category:Tax Planning

Employment Expenses: Costs of an Assistant

A November 5, 2019 Tax Court of Canada case reviewed the deductibility of employment expenses by a manager overseeing the Canadian sales force and operations of a multinational manufacturer of dental instruments and products. The taxpayer’s employer had no Canadian office, and she travelled extensively to meet with sales representatives, dealers and customers throughout Canada. Expense of assistant Almost half of the taxpayer’s claimed expenses, which exceeded $80,000, related to her husband’s role as her…

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  • Post Category:Tax Planning

Unclaimed Bank Deposits or Property

Unclaimed property refers to accounts at banks, financial institutions, and other organizations where there has been no activity generated or contact with the owner for a period. Typical forms of unclaimed property can include chequing or savings accounts, term deposits, Guaranteed Investment Certificates (GICs), bank drafts, traveller’s cheques, money orders, and certified cheques. A number of different organizations (depending on the governing legislation) collect these funds and administer the return to their rightful owner, where…

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Demand For Client Information: CRA’s Abilities

Canada Revenue Agency uses third parties to get information about other taxpayers to ensure they are complying with their tax responsibilities. This could include obtaining information from a business about its employees, customers or suppliers, without needing to list their specific names. CRA has recently announced that they intend to continue and increase the use of these information gathering methods. In order to obtain such information without providing specific names, CRA must first obtain the…

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  • Post Category:Tax Planning
Property Flipping: Income or Capital?
House Flipping

Property Flipping: Income or Capital?

In an August 14, 2019 Tax Court of Canada case, at issue was whether the sales of four properties in B.C. were on account of income (fully taxable) or capital (half taxable), and whether they were eligible for the principal residence exemption (potentially tax-free) as claimed by the taxpayer, a real estate agent. Essentially, the Court was trying to determine if the properties were purchased with the intent to re-sell for a profit, or for…

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