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Dear contractor, beware of the dire consequences of being classified as a PSB by the CRA! You may be subject to the highest corporate tax rate while being denied most expenses allowed to other corporations besides interest and penalties.
Under current tax laws of Canada, only a portion of the capital gain is included in taxable income, while business income is included 100%. Therefore, business benefit from classifying income as capital gain, while the taxman (CRA) would like to classify it as business income.
Before filing your personal tax return, it is important to assess your tax situation and understand what options (deduction, credits and tax planning tools) will reduce your tax bill or increase a refund.
Transferring property from personal ownership or one corporation to another in Canada can trigger capital gains tax on the perceived sale to the corporation at fair market value. Section 85 of the Income Tax Act offers a solution by enabling property transfers to Canadian corporations without immediate taxable gains.
Foreign Income Verification –All taxpayers (individuals, corporations, partnerships, and trusts) who, at any time during the year, owned specified foreign property with a total exceeding cost of $100,000 (Canadian) must file Form T1135- Failure to file results in punitive penalties; therefore, it is essential to understand the requirements to file Form T1135.
Self-employed physicians, medical professionals, pharmacy owners, clinics, etc., can claim an array of expenses compared to “employed” professionals. This article discusses various expenses that medical professionals can claim in their tax returns.
The lifetime capital gain exemption limit permits owners of ‘qualified’ Canadian corporations to sell their shares and qualify for an exemption of up to $971,190 on the capital gain. To be eligible for this exemption, certain conditions need to be fulfilled. In cases where these conditions are not met, there exist ‘purification’ techniques that could potentially render you eligible to claim the exemption.
When a corporation realizes a capital gain, 50% of that gain is included in the corporation’s taxable income and is subject to tax. The remaining 50% can be distributed to the corporation’s shareholders tax-free through a special account known as the Capital Dividend Account (CDA). Here we explain how it works.
Explore top bookkeeping software for Canadian SMEs. Compare QuickBooks, Xero, Sage, FreshBooks, and Wave. Learn how a CPA complements these tools.
Is a holding company structure only beneficial for big businesses? The answer is no. Holding companies can offer various advantages and tax planning opportunities to businesses of all kinds and sizes.
