Income Tax Act Subsection 110.6(1) and 110.6(2.1) In order to claim the lifetime capital gains exemption on a share sale, the shares must meet certain conditions to qualify for the special treatment. If the shares qualify, then the seller would be able to use his or her LCGE, and receive $800,000 tax-free. The rules pertaining […]

Income Tax Act Subsection 110.6(1), 110.6(1.2), and 110.6(2.2) In 2015, the amount increased that a taxpayer can claim for the lifetime capital gains exemption as it relates to qualified fishing property. The amount is now $1,000,000. The definition of qualified fishing property comes from Subsection 110.6(1) of the Income Tax Act. The fishing property must […]

Income Tax Act s. 40(2)(b) The benefit of the principal residence exemption is obvious. The gain is not subject to tax if the property has been the individual’s principal residence for the entire time it has been owned by that individual. When you normally sell a property, you are subject to tax on the gain […]

Income Tax Act subsection 123(1) A “precious metal” is a bar, ingot, coin or wafer of gold, platinum or silver that is refined to a purity level of at least: 5% in the case of gold and platinum; and 9% in the case of silver. If a “precious metal” is sold, then the sale does […]

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 […]