Search found 153 matches

by Serdic
12 Aug 2020 08:46
Forum: Taxing Situations
Topic: Lifetime capital gains exemption - active vs passive business
Replies: 3
Views: 745

Re: Lifetime capital gains exemption - active vs passive business

It's a question of fact, but the CRA has taken the position that a day trader may be engaged in an active business. From T.I. 2000-0030125 Principal Issues: Does a day trader who incorporates his business qualify for the small business deduction? Position TAKEN: Question of fact, but it would likely be an active business and would likely not be considered a specified investment business. Reasons FOR POSITION TAKEN: Frequency of transactions and period of ownership would indicate an active business. Traders and dealers in securities are generally not considered to have a business the "principal purpose" of which is to earn income from property and thus would not be a "specified investment business". Some of the factors la...
by Serdic
06 Apr 2020 07:14
Forum: Taxing Situations
Topic: Tax documentation TD Tax Pack
Replies: 10
Views: 604

Re: Tax documentation TD Tax Pack

I have not been asked but there is anecdotal evidence online over time that CRA asks, and does ask for specific evidence. FWIW, the only time I've seen the CRA inquire about anything on Schedule 3 is if there was a tax free treatment of a transaction (sale of small business shares) or a massive loss being claimed (usually a terminal loss in real estate, which they will seek to recharacterise on account of capital). For most taxpayers, I'd like to say that the T5008 or other gain loss report is fine, but it's never come up. If the CRA did start questioning it, there would be pushback from CPA Canada since most firms use the report as the first and last word. The last thing we want to do when preparing personal returns is reconstruct a gain ...
by Serdic
29 Dec 2019 22:58
Forum: Taxing Situations
Topic: Survey for those who prepare their own taxes
Replies: 48
Views: 2559

Re: Survey for those who prepare their own taxes

Norbert Schlenker wrote: 29 Dec 2019 20:19 To my knowledge, no tax software of any kind, whether mass market or built for CPAs, does this.
There might be something with TaxTemplates, I don't know. The only automagic analysis in Taxprep happens on a pension split (even then it runs from 0 to 50%). I can't remember if the 82(3) transfer of dividends is automatic or if I have to override to make it so.

But yes, when I have to do a proforma, I typically have to build a client specific model.
by Serdic
27 Dec 2019 18:42
Forum: Taxing Situations
Topic: Survey for those who prepare their own taxes
Replies: 48
Views: 2559

Re: Survey for those who prepare their own taxes

I'm a professional accountant and while I use CCH Taxprep for clients returns, I do my own in SimpleTax as my family's returns are simple. This keeps my information out of the firm's systems and it's portable should I choose to work elsewhere.
by Serdic
27 Dec 2019 17:20
Forum: Taxing Situations
Topic: "Net income" for GST rebate
Replies: 3
Views: 468

Re: "Net income" for GST rebate

Line 236 for the family is the income test for both the GST credit, and the Ontario benefits.

https://www.canada.ca/en/revenue-agency ... mount.html
by Serdic
22 Dec 2019 09:09
Forum: Taxing Situations
Topic: How to handle selling employer share grants (vesting) in USA
Replies: 44
Views: 2567

Re: How to handle selling employer share grants (vesting) in USA

Also be aware of the Canadian ACB of the shares. If it exceeds 100,000, you'll need to file the T1135 with your tax return.
by Serdic
30 Nov 2019 17:56
Forum: Taxing Situations
Topic: Impact of advanced declaration of dividend in a CCPC (Estate Planning)
Replies: 11
Views: 1602

Re: Impact of advanced declaration of dividend in a CCPC (Estate Planning)

I think that 56(2) applies when the dividend is declared and the dividend paid or payable will be included in income. Indirect payments (2) A payment or transfer of property made pursuant to the direction of, or with the concurrence of, a taxpayer to another person for the benefit of the taxpayer or as a benefit that the taxpayer desired to have conferred on the other person (other than by an assignment of any portion of a retirement pension under section 65.1 of the Canada Pension Plan or a comparable provision of a provincial pension plan as defined in section 3 of that Act) shall be included in computing the taxpayer’s income to the extent that it would be if the payment or transfer had been made to the taxpayer. And if they don't get yo...
by Serdic
28 Jul 2019 11:00
Forum: Taxing Situations
Topic: Rent your condo to your company
Replies: 5
Views: 1914

Re: Rent your condo to your company

Since you'll be taking the deduction for the office rent and utilities in the corporation, that would leave any mortgage interest, insurance, property taxes, and any maintenance as deductions against the rental income on your personal return. You may of course also claim CCA against the rental income to the extent that it doesn't create a loss, however this may result in recapture on the sale which would result in a large inclusion Additionally since this commercial rental income, you may need to register for HST since since this would not be an exempt supply. Assuming a 700 sq foot condo, at the average lease rate of $7.03 per sq foot, this translates to 59k of gross rental income, and would exceed the small supplier limit. (https://www.gl...
by Serdic
06 May 2019 23:49
Forum: Taxing Situations
Topic: T3 Trust Return Questions
Replies: 5
Views: 1652

Re: T3 Trust Return Questions

2) Yes, this is a Graduated Rate Estate.

3) Yes to both.

4) Use the year end as the wind up date.

5) Did your brother receive the cash? If so, he reports it on line 114 of his return. In tax software, report it as a T4A(P) with the appropriate box number. This has the benefit of not requiring a T3 to be filed, and 2, 3, and 4 are moot. If that's not the case, then I have to brush up on Estate residency to answer number 1), which I'm ignoring for now.
by Serdic
06 May 2019 22:33
Forum: Taxing Situations
Topic: StudioTax: How to include a note to CRA with your return?
Replies: 79
Views: 5055

Re: StudioTax: How to include a note to CRA with your return?

Having read through this thread, I think you're over-complicating this. You do not need a note, and Questtrade can be wrong, wrong, wrong about their calculations as you are responsible for your own return and calculations. On the last point, Questtrade, as a brokerage, will never assume any responsibility or liability for its tax calculations with respect to ACB and capital gains. Sure, they may hand out a nice gain/loss report, and people may use it to report their capital gain/loss for the year, but if it ever gets questioned by the CRA, and you get hit for more tax, Questtrade is going to shrug and let you talk to their most junior telephone rep (if any) as you complain about the reports. So, if you don't trust them, don't use them. Eve...
by Serdic
02 Nov 2013 19:36
Forum: Taxing Situations
Topic: Investment income in a CCPC
Replies: 1100
Views: 151900

Re: Investment income in a CCPC

That said, it looks like unless you're in the top marginal tax bracket, it would still be somewhat better to donate personally, which I didn't realize. (Somewhat unfortunately since the reason this caught my eye is that I just made a corporate donation today! :facepalm:) And if I was your accountant, then at year end, I would see that and ask: "ClosetIndexer, I see a donation here for $X, did you mean to make that through the corporation?" to which you would reply, "No, I wrote it using the wrong chequebook/credit card" And I would say, "Very well, I'll run this through your shareholder account and ensure that is recorded as a draw, and will be included in the T4/T5 being issued. Claim the donation on your 201X T1....
by Serdic
22 Oct 2013 19:48
Forum: Taxing Situations
Topic: PSB rules - Should I give shares away?
Replies: 14
Views: 1748

Re: PSB rules - Should I give shares away?

When looking at if someone is a PSB, the first thing the Tax Court will look at the intent of the contract. If an independent contractor intent is documented, that is a big first step in proving you are not a PSB. This assuming that you get audited in the first place, and if you do, appeals will confirm the audit, so you'll have to appeal to Tax Court. As Adrian said, fly low and for the love of God, do not fill in anything relating to PSB on Schedule 7 of your T2 return. Once intent is looked at there are a number of tests that will be applied to determine if you are an incorporated employee, or an independent contract. I'll refer you to the CRA guide which covers this off: http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-e.html As a knowle...
by Serdic
15 Aug 2013 22:21
Forum: Taxing Situations
Topic: Investment income in a CCPC
Replies: 1100
Views: 151900

Re: Investment income in a CCPC

There might be situations where taking securities in-kind as a form of dividend would be beneficial. Any suggestions? Well, if the corp gets a capital gain on the dividend in-kind, that would increase its Capital Dividend Account balance. The corporation could file a capital dividend election under 83(1) and pay a tax free dividend on top of the dividend inkind. eg, you have 1,000 shares of BB worth 100,000. The ACB is 10,000. Dividend in-kind is 125,000 of dividend income to you. Corp gets a 90,000 gain, and is taxed on 45,000. The other 45,000 goes into the Capital Dividend account and you can elect to pay that out. Capital dividends are extremely time sensitive - don't take the money until the election is filed. Mostly typing out loud h...
by Serdic
15 Aug 2013 22:04
Forum: Taxing Situations
Topic: Investment income in a CCPC
Replies: 1100
Views: 151900

Re: Investment income in a CCPC

You can transfer personal assets tax free to a holding corporation. The corporation can then pay you the loan back tax free. So you can take investment income out of the corporation tax free up to the amount of the loan. To do this, you'll need to file an election under Section 85(1), using the prescribed form T2057. In the corporation, you'll want to make sure there is a class of shares that are retractable (redeemable at the option of the holder). In a Section 85 there will need to be some share consideration issued, and this is the class of share's you'll use. I've not prepared an election where this wasn't the case. The balance of the consideration will be a promissary note payable to the shareholder, and this is the loan that will be ...
by Serdic
13 Aug 2013 20:53
Forum: Taxing Situations
Topic: Depositing cash to corporation?
Replies: 1
Views: 628

Re: Depositing cash to corporation?

Similar situations happen with insurance guys - if they issue you a T4A, then when you file your T1, you'll send a letter to the CRA stating that the amounts received have been deposited into the corporate account and reported as income in the period ending <date>.

Include a copy of the T4A and send the letter to your tax centre.
by Serdic
31 Jul 2013 18:02
Forum: Community Centre
Topic: Favourite beers
Replies: 339
Views: 10195

Re: Favourite beers

Quite enjoying Innis & Gunn Scottish Pale Ale, as well as the Rum Finish.

Can't find any Blonde. :cry: It's a real 10%'er!
by Serdic
18 Jul 2013 18:35
Forum: Taxing Situations
Topic: Starting a corporation
Replies: 11
Views: 1172

Re: Starting a corporation

So I have the opportunity to sign a 1 year contract. I could go about it either as sole proprietor or as a corporation. Will you have only one client? If so, will you be able to show that you are not really an employee under a different guise? CRA has a list of factors they look at, for example, do you work on their premises? With their equipment or tools? Do you decide on how to do the job? If CRA deems you to be an employee, then your incorporation will have been wasted. The CRA might deem you an incorporated employee, and the corporation would then be classed as a personal services business. This means you not be able to claim the small business deduction, and corporate revenues would be taxed at the general rate. Moreover, the only ded...
by Serdic
10 Jul 2013 22:02
Forum: Taxing Situations
Topic: Ontario Trillium Benefit
Replies: 7
Views: 4423

Re: Ontario Trillium Benefit

Thanks. Good to know - I do a number of returns with the Community Volunteer Income Tax Program and one of the things I end up explaining is the OTB. I suspect that now, most people will just stay on the monthly payments - something to plan for with the organizations that I volunteer with.
by Serdic
27 May 2013 23:10
Forum: Taxing Situations
Topic: Incorporation, share-structure
Replies: 4
Views: 1951

Re: Incorporation, share-structure

You can file articles of amendment to create and issue different classes of shares later. As to using a lawyer, this is one case where if you think a professional costs a lot, wait till you see how much an amateur costs. If you screw up the share structure now, you might get lucky and be able to just fix it with an aticles of amendment. If you get unlucky, you'll need to freeze the value of the shares and reorganise via election under Section 86(1) , which will require a lawyer, and will cost you a lot more money. Lawyers we work with tend to run around $2,000 for an incorporation, including all paperwork and filings. If you have to reorganize, that'll cost you between $5,000 and $8,000. If you don't reorganize under 86(1), you could trigge...
by Serdic
24 May 2013 09:15
Forum: Property: Owning, Renting, Managing, Investing and Mortgaging
Topic: Owning property without a partnership agreement
Replies: 10
Views: 2646

Re: Owning property without a partnership agreement

It is a partnership and there is a default agreement, based on your province. Here's Ontario's. Unless you have a specific agreement drawn up by lawyers, your partnership is governed by provincial statute.
by Serdic
05 May 2013 16:53
Forum: Property: Owning, Renting, Managing, Investing and Mortgaging
Topic: Buying a home/condo with corporate assets?
Replies: 15
Views: 6821

Re: Buying a home/condo with corporate assets?

You're welcome.

As to claiming some of the housing expenses in the corp, keep a list of total utilities, property tax, house repairs and maintenance, house insurance and mortgage interest. Assuming that you're using 15% of the house for office space, then 15% of the listed expenses can be claimed as "Occupancy expense" with the offseting credit in the shareholder account.

Anyways, discuss with your accountant (if you have one) if this can be claimed. Typically, it's can be done for companies with active business income - harder to justify for holdcos, and not at all possible for bare trustee corps.
by Serdic
05 May 2013 12:29
Forum: Property: Owning, Renting, Managing, Investing and Mortgaging
Topic: Buying a home/condo with corporate assets?
Replies: 15
Views: 6821

Re: Buying a home/condo with corporate assets?

IMO, corporations should purchase assets for the use of the corporation, especially if you want to eventually take advantage of the sale of qualifying small business corporation shares and access the lifetime capital gains exemption. If this is the case, then 90% of the assets of the corporation must be used in the production of active business income. If there is a house/rental unit involved, then before you can access the CGE, you'll need to purify the corporation and remove excess cash/assets, probably by elections under section 85(1) and 86. This takes lawyers time and accountants time, both of which are money. Your money. Now, our money. Like a MER, it's a frictional cost. If you want to use money from the corporation to buy a house, y...
by Serdic
03 May 2013 20:19
Forum: Taxing Situations
Topic: Canadian Tax System
Replies: 10
Views: 1473

Re: Canadian Tax System

There is no downside to filing a return, especially a nil return. The last thing you want is for her to try and access government services (or financial), and potentially being hit with a request to file or be denied for lack of filing. Further, her filing a nil return shows that you are entitled to her spousal amount.

If you need a hand with a return and your family income is low enough (under 30,000), you may be able to have it prepared under the Community Volunteer Income Tax Program.
by Serdic
29 Apr 2013 18:38
Forum: Taxing Situations
Topic: Deductibility of Tax Preparation Fees
Replies: 3
Views: 718

Re: Deductibility of Tax Preparation Fees

Where I work we'll claim last years accounting fees on schedule 4 as a carrying charge if they have a T3, T5 or are reporting a disposition on Schedule 3.

Otherwise, T2125 is where it'll go for self employed or T776 for rental properties.

If they have T2200 and are submitting T777 for employement expenses relating to commissions we'll claim it there.

Straight T4 returns are out of luck.

Cheers,
-Serdic
by Serdic
20 Mar 2013 11:01
Forum: Taxing Situations
Topic: Can someone please check my math/logic? Borrowing to invest
Replies: 35
Views: 2548

Re: Can someone please check my math/logic? Borrowing to inv

MaxwellMcGee wrote:Wait...so to paraphrase, is this saying that interest paid on a loan for investment purposes is only tax deductible if the investment is income producing? Or stated differently, an investment that returns only capital gains would not qualify to make the loan interest tax deductible?
Yes.