Sunday, 29 June 2014

Are You Immigrating to Canada? Be advised of Tax Compliance Demands

Once you settle in Canada  you are resident for tax purposes and would have to comply with the following.

You have to declare annually your world wide income and capital gains and file annual income tax returns. 
  • You have to report annually details of your foreign assets -other than personal use assets -if their total cost or their market value at the date when you took up Canadian residency exceed $100,000 any time during the year. See form T1135 and its guide.
http://www.cra-arc.gc.ca/E/pbg/tf/t1135/t1135-11-13e.pdf
  • You have to report details of foreign corporations which you or together with related persons have 10% or more ownership.  There may be other situations which requires you to file the details of foreign corporations which you have an interest in.   See form T1134 and its guide.
http://www.cra-arc.gc.ca/formspubs/frms/rft1134-eng.html
  • You should also be mindful of income generated in a foreign corporation which you have control.  Control for this purpose is defined differently from its common understanding.  Control includes control with a related group or even control with three other Canadian residents.  You may have to include this income in your personal taxable income. This kind of income is called foreign accrued property income or FAPI and it generally arises if you have income from activities that are considered not-active as defined by the Income Tax Act for this purpose.  There are other situations which FAPI income may have to be declared.
for more information on taxation visit my website.

www.tavana.ca


This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter



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Wednesday, 11 June 2014

Canada Revenue Agenciy is Looking into Your Net Worth!! Did you report all your taxable income?

Canada Revenue Agency has recently started looking at the wealth of Canadian residents.  Although this tool was always available to CRA, but has now become standard procedure. This method is used to identify unreported income.  What they do is ask you to report the cost of all your assets and liabilities at a base year say 2010 and then at the end of 2013.  If there is an increase you should be able to substantiate it by showing that your net income after tax and living expenses + capital gains increased by the same amount or you should provide other proof as to how your net worth at the end of 2013 increased.  Common sources of increase in net  worth other than after tax incomeare as follows:


1)  Gain on the sale of your principle residence.
2)  Inheritance.
3)  Gift from relatives.

This is a complicated area and every individual should be prepared. I suggest that one should perform this exercise and be prepared to account for unreported appreciation in wealth.  If you are concerned and worried consult with a professional and seriously consider a voluntary disclosure.

See my newsletter on the subject of voluntary disclosure.

http://www.tavana.ca/sites/default/files/voluntarydisclosure.pdf


for more information on taxation visit my website.

www.tavana.ca


This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter


Non-residents of Canada Avoid the $2,500 Penalty when Selling your Real Estate in Canada!!

We have noticed that some non-resident landlords that have been filing Canadian tax returns under ITA216 have unknowingly declared themselves as resident of Canada when selling their property. This unfortunately results in a penalty of up to $2,500 which could have been avoided. This is happening more often with Canadian citizens who are no longer residents. In order to comply with Canadian tax law and avoid the penalty one should declare one's non-residency and file the required government forms. See my news letter and blog on this subject.



http://www.tavana.ca/newsletters/sale-canadian-real-estate-non-resident-november-2012


This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter

Tuesday, 10 June 2014

Appeal your Income Tax Notice of Assessment (filing a Notice of Objection) or Reassessment

If you have been reassessed and you do not agree with the Canada Revenue Agency's (CRA) assessment you should file a Notice of Objection.  A senior officer of CRA will review your case and ask you to make representations and either rejects the appeal, accepts it or allows part of the appeal. The appeal process is informal and you don't even have to present your arguments at when making the appeal.  The appeal can be done by yourself or your representative. What you should be mindful is the deadline for making the appeal.  The deadlines are as follows:

Individuals within 90 days from the issuance of the Notice of Assessment/ Reassessment or
up to the filing due date of the next fiscal year which ever is later.

So if you are appealing CRA's notice of assessment for 2013 which you received on 15 the of May 2014.  Your appeal date is the later of 15th of May +90 days (13th of August) or 30th of April 2015 whichever is later.  Therefore you have until 30th of April 2015 to submit your objection.

The case for corporation is only 90 days after the receipt of Notice of Assessment/ Reassessment.


for more information on taxation visit my website.

www.tavana.ca


This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter

Friday, 23 May 2014

Time is on the Taxpayers' Side! When is it too Late for CRA to Reassess Your Return?

If CRA audits you or your corporation for a particular fiscal year  it has to submit its reassessment requesting additional taxes within three (for corporations that are NOT Canadian Controlled Private Corporations limit is four years) years of the date CRA first issued a notice of assessment or reassessment for that year (ITA 142(3.1), otherwise the reassessment of that year's taxes becomes statute barred.  In other words it must be accepted as filed unless, a misrepresentation was made and that misrepresentation was due to, NEGLECT, CARELESSNESS, WILFUL DEFAULT or FRAUD.  (ITA 152(4.01))


for more information on taxation visit my website.

www.tavana.ca


This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter







Friday, 2 May 2014

Ontario 2014 Budget Puts Income Above $220,000 into the 49% Tax Bracket

New Ontario budget reduced the tax threshold subject to 49.13% tax from $514,090 to $220,000 and also introduced a new band between $150,000 and $220,000 which is now subject to 47.77% tax as opposed to 46.41% tax previously.   Just to get an idea of amount of tax an individual earning $514,090 in 2014 would have paid about $9,000 less tax before the new rates.

 Incorporating your business or investment portfolio makes more sense now.  If you and your spouse can live on $440,000 less tax per year you should incorporate and invest your funds through your corporation.  The top rate applicable to a corporation earning investment income is 46.17% in Ontario and the top tax rate of a corporation earning business income is 26.5% in Ontario, while the first $500,000 of business income in a corporation is taxed at 15.5% in Ontario. 

Check the link below to our website and read our Q&A on benefits of incorporating.

http://www.tavana.ca/newsletters/holding-portfolio-investment-corporation-january-2014



This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter

Thursday, 1 May 2014

Real Estate Agents! Are You or is Your Corporation Paying too Much HST? Quick Method Might be the Answer!

If your taxable supplies per your fiscal year or your corporation's fiscal year does not exceed $400,000 and you are not one of the exceptions (see link below) you can do away with the tedious task of calculating your input tax credits and HST collected.  You may also be entitled to a $300 credit (1% of your first $30,000 of sales).  The question is whether it is beneficial for you to select the quick methed.  Rule of thumb calculation shows that if you are providing a service and your expenses subject to HST is less than 24% of your revenue you should elect to use the the quick method.  The election form is GST74

As invariably real estate agents' expenses subject to HST is less than 24% of their revenue they can benefit.  Other businesses may also benefit.

For more information on this option click on the link below.

http://www.cra-arc.gc.ca/E/pub/gp/rc4058/rc4058-03-13e.pdf

for more information on taxation visit my website.

www.tavana.ca


This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter