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. […]

Deemed Disposition Where there is a change in use of property (real estate), the owner of the property is deemed to have sold the property, and to have immediately re-purchased it. This occurs whether the change in use is from personal use to income producing, or from income producing to personal use. Both the sale, […]

Income Tax Act Subsection 3(d), 38(c), 39(1)(c), 40(2)(g)(ii), and 50 An allowable business investment loss (“ABIL”) is half of a capital loss, which was incurred on the sale of shares, or a debt of a small business corporation. The importance of receiving and ABIL rather than a capital loss is that an ABIL is deductible […]

Income Tax Act subsection 125(7) A Canadian Controlled Private Corporation’s first $500,000 of active business income is taxed at a much lower rate. This is known as the small business deduction. Active business income is essentially exactly what is sounds like. Active income is typically anything other than investment income, rental income, leasing income, income […]

A Canadian Controlled Private Corporation (or “CCPC”) is a private corporation being controlled by Canadian residents. The definition strictly prohibits public companies from qualifying, and also those run by non-residents. The major benefit of being a CCPC is access to the small business deduction. Another major benefit is that the sale of CCPC shares may […]

Income Tax Act subsections 74.1(1), 74.2(1), 74.5(2) The rules of attribution come into play when income-producing property is transferred or loaned to a non-arms length party with certain exeptions (directly or indirectly or by means of a trust). The income from the property will be attributed back to the person who originally gave it to […]

Many individuals choose to categorize themselves as an independent contractor (self employed) because of the various tax advantages. The Canada Revenue Agency has its own rules regarding whether a person is in a business relationship (independent contractor), or in an employee-employer relationship. Simply because your contract states you are an independent contractor does not mean […]