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Divorce Settlement: Family Business

In a June 11, 2018 Court of Queen’s Bench for Saskatchewan case, at issue was whether a $500,000 settlement upon separation was taxable and whether the dispute over its tax status rendered the settlement void. The settlement did not concern a division of marital assets but, rather, rights to income and property forgone or promised during the term of the marriage. In particular, the recipient (Mr. R) was primarily seeking payment in respect of insufficient…

Post published:November 14, 2018
Post Category:Business – Taxes

Interest on Delinquent Accounts: Proper Disclosure on Legal Documents

In a November 10, 2017 Alberta Court of Queen’s Bench case, the amount of a creditor’s claim was challenged after an uncontested default judgment. The claim included interest calculated at 1% per month as stated in the contract. However, where a rate is not stated in per annum terms, the legal maximum is capped at 5% annually under the Canada Interest Act. Therefore, the interest payable was legally capped at 5% per year, rather than…

Post published:November 5, 2018
Post Category:Special Interest

Director’s Liability: Helping Out Family

Being a director of a corporation comes with many responsibilities. Failing to exercise due diligence in ensuring source deductions (such as EI, CPP, and income tax) are properly withheld from wages and remitted to CRA may result in a director’s personal liability for the corporation’s outstanding amount. A June 12, 2018 Tax Court of Canada case examined whether an individual who set up a corporation (along with a bank account) for his brother to operate…

Post published:October 29, 2018
Post Category:Business – Taxes / Charities / Corporate Taxes / Individual – Taxes / Personal Taxes / Special Interest

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Retaining Employment Insurance Benefits: Starting Part-Time Work

As of August 12, 2018, the “Working While on Claim” program became a permanent part of the Employment Insurance (EI) system. Prior to the program, an individual could earn a very low weekly amount, after which the EI benefit would be eroded on a dollar for dollar basis of earnings. Under the new rules, a person who earns income while receiving EI benefits can keep $0.50 of their EI benefits for every dollar earned, up…

Post published:October 26, 2018
Post Category:Individual – Taxes / Personal Taxes / Professionals / Special Interest / Tax Planning

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…

Post published:October 25, 2018
Post Category:Special Interest

Interest Deductibility: Returns of Capital

In an April 20, 2018 Tax Court of Canada case, at issue was whether the taxpayer could deduct interest incurred in 2013, 2014, and 2015 related to $300,000 borrowed in 2007 to purchase mutual funds. From 2007–2015, the taxpayer received a return of capital* from the funds, totalling $196,850 over the period. The taxpayer used some proceeds to reduce the loan principal, but the majority was used for personal purposes. Taxpayer loses The Court examined…

Post published:October 23, 2018
Post Category:Business – Taxes / Individual – Taxes / Personal Taxes / Retirement / Tax Planning

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…

Post published:October 17, 2018
Post Category:Individual – Taxes / Personal Taxes / Special Interest / Tax Planning

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…

Post published:October 16, 2018
Post Category:Personal Taxes / Special Interest / Tax Planning

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,…

Post published:October 15, 2018
Post Category:Business – Taxes / Corporate Taxes / Individual – Taxes / Professionals / Special Interest / Tax Planning

Employer-Sponsored Social Events: After the Party

In an April 9, 2018 French Technical Interpretation, CRA clarified their position on taxable benefits arising from employer-sponsored social events, such as a holiday party or other event. Where the cost of the social event does not exceed $150/person (previously the limit was $100), excluding incidentals such as transportation, taxi fares and accommodations, there would be no taxable benefit to employees. CRA indicated that the cost should be computed per person who attended, and not per person invited. If the cost exceeds $150/person, the entire amount, including the additional cost, is…

Post published:October 10, 2018
Post Category:Business – Taxes / Corporate Taxes / Employee Discounts / Individual – Taxes / Personal Taxes

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