Davidow & Nelson Blog

DOCUMENTS REQUIRED TO CLAIM A U.S. FOREIGN TAX CREDIT:

Prior to the summer of 2015, CRA often accepted copies of the U.S. tax returns, as support to claim a U.S. Foreign Tax Credit (FTC). The “Federal Account Transcript” was selected as alternative evidence the return provided to CRA was filed and assessed as filed. Some practitioners report that obtaining “transcripts” from the Federal Government,… Read more »

Distribution of Funds: REGISTERED EDUCATION SAVINGS PLAN (RESP)

Amounts paid out of an RESP may be taxable, non-taxable, or may trigger a repayment of Government support. The taxation status of a receipt depends on whether it is considered an Educational Assistance Payment, a Refund of Contributions, or an Accumulated Income Payment. Educational Assistance Payment (EAP) – An EAP is a taxable amount paid… Read more »

Ineligible Individuals Can Get Your Organization De-Registered: CHARITIES

CRA holds the authority to suspend receipting privileges and refuse or revoke the registration of a registered charitable organization when an “ineligible individual is a board member or controls or manages the organization”. On March 17, 2016 CRA Guide CG-024, Ineligible Individuals, was updated. It provides 29 pages of description and implications of having ineligible… Read more »

This Credit Is for You!: TEACHERS

The Eligible Educator School Supply Tax Credit, worth 15% on up to $1,000 of eligible supply expenses, has now become law. To mark the occasion, CRA has published a Question and Answer providing commentary on this new refundable tax credit available in 2016 and subsequent years. The credit is also referred to as the Teacher… Read more »

Taxable Transaction?: TRANSFERRING PROPERTY TO A FAMILY MEMBER

When transferring the legal title of a property to a family member, a disposition for tax purposes may not necessarily occur. The taxable event would occur when a “beneficial ownership” change happens. Usually, a beneficial change and legal change are one in the same, but not always. In a June 14, 2016 Technical Interpretation, CRA… Read more »

Corporate Class and Switch Funds: MUTUAL FUNDS

Mutual fund corporations have often been structured to permit changing funds within the group on a tax-free basis. These are commonly referred to as “switch funds” or “corporate-class funds”, and have become popular due to the ability to defer accumulated capital gains. Essentially, investors can switch funds without realizing dispositions and the related taxable capital… Read more »

Taxable?: BENEFITS PAID TO SHAREHOLDER EMPLOYEES

The CRA is aware that owner-managers have an incentive to receive benefits deductible by their corporation which are non-taxable to the owner. In essence, this can be perceived as a method to extract profits out of a corporation without paying tax on it. As such, CRA is particularly vigilant to ensure that these benefits comply… Read more »

Shareholders’ Personal Information: COMBINED AUDITS OF OWNER-MANAGED COMPANIES

In a June 18, 2015 Technical Interpretation, CRA was asked about the perceived increase in requests of personal financial information of the shareholders of Canadian corporations selected for audit. Further, questions were asked with respect to information that is requested in relation to the shareholder’s spouse, children or other related parties. In some situations, the… Read more »

Significant Changes Ahead: MULTIPLICATION OF THE SMALL BUSINESS DEDUCTION (SBD)

Measures were proposed in the 2016 Federal Budget to prevent certain corporations from multiplying access to the $500,000 SBD. Some proposals include: • Eliminating multiplication of the SBD in “complex partnership structures” where payments are sent from a partnership to non-partner corporations owned by partners, or those related to partners. Broadly speaking, this planning structure… Read more »

Who is Really Calling?: CRA SCAMMERS

Over the past while there have been numerous reports of individuals (scammers) impersonating CRA collections agents over the phone and demanding payments for alleged tax debts. The calls can be aggressive, intimidating, and may even threaten arrest by the RCMP or other officials. The scammers may also request payment via various means such as regular… Read more »