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Vehicle Expenses

When a vehicle is used for both personal and business purposes, it is necessary to keep a log to record the business use of the vehicle. Please see our article on keeping a vehicle log found here:   Unincorporated Business An unincorporated business may write off (deduct) all reasonable motor vehicle expenses which are on account of the business use of the vehicle. If your…

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Transfers of Property while Having a Tax Debt

Income Tax Act Subsection 160 (http://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-160.html) Excise Tax Act Subsection 325 (http://laws-lois.justice.gc.ca/eng/acts/E-15/section-325.html) Subsection 160 and subsection 325 assessments are the most powerful collection tools that the Canada Revenue Agency (“CRA”) has in their bag. If someone has a tax debt, and that person transfers money, or other property, directly or indirectly to: Their spouse, common-law partner; A person under 18 years of age; or A…

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Transfer Pricing

Income Tax Act Subsection 247 Transfer prices are the prices at which services, tangible property, and intangible property are traded across international borders between related parties. Canada’s transfer pricing legislation requires, for tax purposes, terms and conditions between related parties in their commercial or financial relations to be those that would have been expected had the parties not been related (i.e. acting at arm’s length).…

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Tax Residency

Income Tax Act Subsection 250(1) Canada allows its citizens to be residents of Canada for tax purposes, and non-residents of Canada for tax purposes. This is an important distinction as a non-resident of Canada for tax purposes will only be subject to Canadian taxation on Canadian sourced income. So income from sources outside of Canada is not subject to tax debit here. This is different…

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GST/HST Small Supplier

Excise Tax Act s. 148 A small supplier is a supplier whose worldwide annual GST/HST taxable solutions are less than $30,000, or less than $50,000 for public service bodies. The supplies include zero-rated supplies, and includes the supplies of all associates. An important piece to note is that the calculation of annual revenue is not done on a calendar year basis. Rather it is done…

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Small Business Deduction

Income Tax Act subsection 125 The small business deduction is available on active business income for a Canadian Controlled Private Corporation. It provides a reduction in the corporate tax rate up to the federal limit of $500,000. What the above means is if you are earning active business income as a CCPC then your first $500,000 of net income is taxed at a reduced rate.…

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Qualified Small Business Corporation Shares

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 to the shares are two-fold. One regarding their ownership, and…

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Qualified Fishing Property

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 be owned by an individual, the partner (spouse or common…

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Principal Residence Exemption (PRE)

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 from the sale. The gain is typically the difference between…

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Precious Metals

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 not attract GST/HST. A major issue for the sale of…

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