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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 […]

If you use the same vehicle for business and pleasure, a logbook should be kept to identify the business, and personal use. If you are able to deduct vehicle expenses, then only the business portion can be deducted from income. If a business is providing you with a vehicle, a logbook must be kept to […]

Income Tax Act Subsection 110.6(1), 110.6(1.3), 110.6(2) In 2015, the amount increased that a taxpayer can claim for the lifetime capital gains exemption as it relates to qualified farm property. The amount is now $1,000,000. The definition of qualified farm property comes from Subsection 110.6(1) of the Income Tax Act. The farm property must be […]

You do not have to report certain amounts in your income, including the following: Any GST/HST credit or Canada child tax benefit payments, as well as those from related provincial and territorial programs; Child assistance payments and the supplement for handicapped children paid by the province of Quebec; Compensation received from a province or territory if […]