Income Tax Act subsections 125(7) and 123.4(1) A personal services business (PSB) is a corporation that carries on business through an individual, and that individual performs services while actually acting like an employee. This is occasionally known as the incorporated employee. The Income Tax Act provides that a PSB is found where an individual who […]

Income Tax Act Subsections 124(1) and 124(4) Income Tax Regulations subsection 400(2) A permanent establishment is a fixed place of business, which allows a certain jurisdiction to tax the income being made at that fixed place of business. The typical types of permanent establishment are: A fixed place of business; A construction of project; An agency […]

Income Tax Act subsection 110.6 The Lifetime Capital Gains Exemption (LCGE) allows a taxpayer to receive $800,000 or $1,000,000 of otherwise taxable capital gains on a tax-free basis. The difference in tax-free amounts directly relates to the property that the gain relates to. The deduction is only available where: An individual owns qualified small business […]

Taxpayers are typically surprised to learn that income from illegal activities is still subject to tax here in Canada. The scenario usually plays out that someone is convicted of a crime (drug-dealing), and following this, that same individual is then audited for unreported income. It can be extremely difficult, if not impossible to lower the […]

Income Tax Act Subsection 163(2), 163(3) If you, knowingly or under circumstances amounting to gross negligence, made a false statement or omission on your tax returns, the Canada Revenue Agency (“CRA”) may charge you with a penalty. The penalty is equal to the greater of: $100; and 50% of the understated tax and/or the overstated […]

In Canada, there will be no amount of taxes due from the receipt of a gift or inheritance in most circumstances. The giver of the gift may have a taxable event occur if they are gifting capital property. The gift will be deemed to have occurred at fair market value, and the gifter will have […]

Income Tax Act Subsection 245 The General Anti-Avoidance Rule essentially states that where a transaction, or a series of transactions results in a reduction, avoidance, or deferral of taxes owing, and the transaction or the series of transactions are only being attempted for the tax benefits, the transaction or transactions themselves may be invalidated. The […]

Fiscal Arbitrators, Demara Consulting, and various other companies will tell you they know the secret to Canadian Income Tax. They will tell you they can file your returns in such a way that you will retrieve all taxes paid for the last 3, 7, or even 10 years. Should you be concerned about what your […]

Income Tax Act Subsection 227 Excise Tax Act Subsection 323 Typically in Canada, your debts are your own. However, where corporations are involved that is not always the case. The Canada Revenue Agency (“CRA”) can assess director’s of a corporation for certain kinds of corporate debts. The most common are unpaid source deductions, and GST/HST. […]