Davidow & Nelson Blog

How Big of a Taxable Benefit Is It?: PERSONAL USE OF BUSINESS AIRCRAFT

A CRA communication dated March 7, 2018 provided updated commentary on taxable benefits arising from the personal use of a business aircraft.CRA categorized the types of flights into three groups, as follows: Mixed-use flights – If a shareholder or employee takes a flight which has a clear business purpose, they would not generally be subject… Read more »

After the Party: EMPLOYER-SPONSORED SOCIAL EVENTS

In an April 9, 2018 French Technical Interpretation, CRA clarified their position on taxable benefits arising from employer-sponsored social events, such as a holiday party or other event.Where the cost of the social event does not exceed $150/person (previously the limit was $100), excluding incidentals such as transportation, taxi fares and accommodations, there would be… Read more »

Are They a Taxable Benefit?: SUBSIDIZED MEALS

Do you have an employee dining room or cafeteria? In a March 21, 2018 Technical Interpretation, CRA stated that they do not consider meals subsidized by the employer to be a taxable benefit provided the employee pays a reasonable charge. This charge should be sufficient to cover the cost of the food, its preparation and… Read more »

TAX TICKLERS… some quick points to consider…

A large amendment to a T4 slip may trigger a payroll audit. Ensure that T4 slips are as accurate as possible at the outset. CRA may request taxpayer information from third-parties. A recent project using third-party data identified $86 million of unreported income and attracted over $19 million in additional taxes. CRA stated additional projects… Read more »

Tools for Individuals and Businesses: CRA MOBILE PHONE APPS

CRA provides a number of mobile phone apps that taxpayers (individuals, corporations, etc.) can use to assist with their tax obligations.CRA BizApp – An app for small businesses owners to view and pay outstanding balances, view account transactions, view expected GST/HST returns, and view the status of filed GST/HST and corporate income tax returns.CRA Business… Read more »

Risks of Tax Non-Compliance: U.S. CITIZENS

Commencing January 1, 2016, the U.S. State Department was able to deny or revoke passports to U.S. citizens having a “seriously delinquent tax debt” or no Social Security Number associated with their passport. A “seriously delinquent tax debt” is one where the taxpayer owed more than $51,000, after January 1, 2018 (indexed going forward), in… Read more »

Reporting Obligations for Subcontractors: CONSTRUCTION ACTIVITIES

A July 17, 2017 Technical Interpretation examined the conditions which would require the filing of a T5018, Statement of Contract Payments.Where a person or partnership primarily derives their business income from construction activities for a reporting period, a T5018 should be filed for any subcontractor payment or credit made relating to goods or services received… Read more »

GST/HST Claim: REASONABLE AUTOMOBILE ALLOWANCES

A travel allowance paid to an employee for the use of their personal vehicle for business purposes will be non-taxable if it is reasonable.Where such reasonable allowances are paid, an input tax credit (ITC) may be claimed by the employer.  The ITC is computed as the imputed GST/HST in the allowance, without adjustment for the… Read more »

Proposed Changes: CORPORATE PASSIVE INVESTMENT INCOME

A new passive investment tax regime for Canadian Controlled Private Corporations (CCPCs) is proposed to apply to taxation years commencing after 2018.  Passive income may include interest, rental, royalties, dividends from portfolio investments and taxable capital gains.Two significant changes are proposed. First, a limit to the small business deduction for CCPCs generating significant income from… Read more »

Can I Pay Them a Salary?: FAMILY MEMBERS

For a small business, whether operated as a corporation, proprietorship or partnership, it is quite possible that relatives of the owners or partners may be engaged as employees. Due to the closer familial relationship between employer and employee, CRA pays particular attention to ensure that the salary is truly an eligible deduction to the business.According… Read more »