Davidow & Nelson Blog

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 »

Employment Insurance Issues: WORKING BUT NOT PAYING YOURSELF

After leaving a job, an individual may incorporate a business, or invest more time in one that they already operate. The individual may then decide to leave all the money in the corporation, taking no wages. Or, perhaps, the business is unable to pay a salary as it is not making sufficient revenues. Since the… Read more »

Employer’s Responsibilities to Withhold CPP and EI: TIPS AND GRATUITIES

Gratuities or tips received by employees are income earned from employment. However, it must be determined whether these tips are pensionable and/or insurable, that is, whether the employer should be withholding CPP and/or EI. This depends on whether the tips are considered to have been paid by the employer. Administratively, CRA looks at whether the… Read more »

Related Employee: INSURABLE EARNINGS

Consider the situation where Persons A and B are a married couple and own 60% and 40% respectively of Corporation A (A Co.). They are also both employed by A Co. and, therefore, receive a salary. Will the salaries that they receive be considered insurable for Employment Insurance (EI) purposes? That is, would EI withholdings… Read more »

My Account Update: CRA ONLINE SERVICES

In early 2016, CRA updated the “My Account” online service (intended for the individual taxpayer’s exclusive use). This service allows individuals to: view CRA correspondence, assessments, and balances; view some income slips for the current and previous years (T4, T5, T3, etc.); view certain personal limits like RRSP and TFSA contribution room available; change CRA correspondence options to… Read more »