Davidow & Nelson Blog

Making Them Valuable: UNCOLLECTIBLE ACCOUNTS

Tax Possibilities – Bad Debt Write-off As many businesses are struggling to collect outstanding amounts, it may be worthwhile to identify any receivables which have previously been included in income that can be written off as bad debts. This allows for a deductible expense to reduce taxes. A number of factors should be considered, including:… Read more »

Eligible Expenses: BUSINESS USE OF THE HOME

A November 27, 2019 French Tax Court of Canada case reviewed various deductions claimed against the taxpayer’s business income derived from engineering and arbitration services related to the business use of his home. The taxpayer and CRA had agreed that 35.83% of the home, mainly the basement which was used as a business office, was… Read more »

Home Office Expenses: WORKING FROM HOME DURING COVID-19

In order for home office expenses to be deductible against employment income, the employee must be required by contract to incur such expenses, and one of the following has to be met: The home is where the employee principally (more than 50% of the time) does their work. The employee uses the space exclusively to… Read more »

Increase in Home Value?: HOME ACCESSIBILITY RENOVATION CREDIT

When applying for the home accessibility tax credit (HATC), valued at 15% of up to $10,000 in expenditures per year, does it matter if the renovation increases the value of my home? Yes, and No.In a December 12, 2019 Tax Court of Canada case, at issue was whether the taxpayer was eligible for a HATC… Read more »

Tax Implications: CONTRIBUTIONS OF GOODS OR SERVICES TO AN NPO

In a January 6, 2020 Technical Interpretation, CRA considered whether a deduction was available to suppliers who contributed in-kind goods or services to an NPO with the expectation that they would benefit from word of mouth advertising and promotion.Where the supplier is providing goods or services to an NPO in exchange for advertising and/or promotional… Read more »

Taxable or not?: REAL ESTATE SALES

In general, gains are fully taxable where the taxpayer buys a property with the intention to sell for a profit (sold on “account of income”). In other cases, half the gain is taxable (sold on “account of capital”). When a sale on “account of capital” involves the sale of a principal residence, the tax may… Read more »

Reporting Issues: TIPS

Tips received by servers and other individuals in the service industry are taxable. However, since tips do not show up on T4 slips, some taxpayers are under the false understanding that they are either not taxable, or only partially taxable.In a February 3, 2020 Federal Court of Appeal case, the Court upheld the Tax Court… Read more »

Can I collect EI?: STARTING A BUSINESS AND NOT GETTING PAID

In a January 10, 2020 Federal Court of Appeal case, the Court conducted a judicial review of the denial of the taxpayer’s EI benefits. While receiving benefits in 2010 and 2011, the taxpayer had incorporated a corporation and engaged in preliminary work to set up its business. In early 2015, the Canada Employment Insurance Commission (CEIC) was advised by CRA that the taxpayer had applied for a business registration number while… Read more »

TAX TICKLERS… some quick points to consider…

Canadian controlled private corporations accounted for 54% of all corporate tax paid. The 1% of Canadianswho earned income in the top federal tax bracket paid 26% of the total personal taxes. Of the8 million individual taxfilers, 36% were non-taxable. The home buyers’ plan maximumwithdrawal increased from $25,000 to $35,000 for withdrawals made after March 19, 2019. Also, it is now available for… Read more »

New Relief Procedures: U.S. EXPATRIATES

On September 6, 2019, the IRS announced Relief Procedures for Certain Former Citizens, a new process to facilitate eligible individuals in becoming compliant with their U.S. tax obligations, in conjunction with renouncing their U.S. citizenship (IR-2019-151). There was no announced specified termination date; however, a closing date will be announced in the future.Eligible individuals will… Read more »