Davidow & Nelson Blog

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 »

Costs and Rebates: FEDERAL CARBON TAX

On December 16, 2019, the Department of Finance announced the climate action incentive payment amounts for 2020. These payments are associated with the provinces that are subject to the federal backstop legislation. The following amounts may be claimed on the 2019 personal tax returns: Category Ontario Manitoba Saskatchewan Alberta Single adult/first adult in a couple… Read more »

Loss of the Small Business Deduction?: MOBILE HOMES, RV PARKS, CAMPGROUNDS

In an August 29, 2019 Tax Court of Canada case, at issue was whether the taxpayer who operated a mobile home/RV park was eligible to claim the small business deduction for the 2012-2014 years. CRA argued that the taxpayer primarily earned its income from the rental of seasonal and extended seasonal campsites and the storage… Read more »

The 20 Hours Test: TAX ON SPLIT INCOME

The tax on split income (TOSI) can subject various income sources, with taxable private corporation dividends being the most common, to personal tax at the highest marginal rate. One of the exceptions from TOSI occurs when the income recipient is actively engaged in the business. An individual will be deemed to be actively engaged in… Read more »

Do they Trigger Payroll Audits?: CPP/EI RULINGS

In a June 7, 2019 Technical Interpretation, CRA commented on whether a CPP/EI ruling triggers follow-up assessing and review. These rulings often determine whether a worker is a contractor or employee, and therefore whether EI and/or CPP should be submitted to CRA. They also often consider whether an employee that is a family member of… Read more »

Shareholder-Employees: TRAVEL EXPENSES

For an employee to deduct travel or motor vehicle expenses against employment income, the employee must be normally required to work away from the employer’s place of business, be required to pay the travel expense under the contract of employment, and have a signed and completed T2200. Also, the employee cannot receive an allowance excluded… Read more »

Costs of an Assistant: EMPLOYMENT EXPENSES

A November 5, 2019 Tax Court of Canada case reviewed the deductibility of employment expenses by a manager overseeing the Canadian sales force and operations of a multinational manufacturer of dental instruments and products. The taxpayer’s employer had no Canadian office, and she travelled extensively to meet with sales representatives, dealers and customers throughout Canada.Expense… Read more »