Davidow & Nelson Blog

Voluntary Departure: EMPLOYMENT INSURANCE (EI)

In a June 5, 2020 Federal Court of Appeal case, the Court reviewed Service Canada’s decision to deny EI benefits on the basis that the individual left his employment voluntarily. The individual argued that although it was his decision to leave, he had just cause (which would allow him to receive EI). To have just… Read more »

Fully or Partially Taxable?: UNREASONABLE ALLOWANCES

In a May 15, 2020 Federal Court of Appeal case, the Court reviewed whether various allowances paid to employees of the taxpayer were subject to CPP and EI. This required determining whether the allowances were taxable. The Tax Court of Canada had previously ruled that some of the allowances were partially taxable, while others were… Read more »

Undoing an Application: OAS DEFERRAL

As of July 1, 2013, where receipt of Old Age Security (OAS) is delayed, the monthly pension is increased by a factor of 0.6% for each month deferred, to a maximum increase of 36% (60 months, commencing receipt at age 70). In a March 25, 2020 Federal Court case, the Court reviewed Service Canada’s decision… Read more »

Income Splitting Tool: LOANS FOR VALUE

Special attribution rules prevent the shifting of income between certain related people (including a spouse, parent, grandparent, sibling, uncle or aunt). Consider the situation where high-earning Spouse A gives investments to low- earning Spouse B so that investment income can be taxed at Spouse B’s lower tax rate. The attribution rules prevent this by requiring… Read more »

Watch Out!: REAL ESTATE PROJECTS

General CRA activity Over the last few years, CRA has focused on purchases and sales within the real estate sector. They are reviewing transactions for several items, such as: – property flips on account of income; – ineligible principal residence claims; – commissions on sales; – pre-sale condo assignments; and – eligibility for the GST/HST… Read more »

Reimbursing Employees for Technology Costs: WORKING FROM HOME

In an April 14, 2020 French Technical Interpretation, CRA was asked whether amounts paid to an employee for costs of equipment for working remotely would be a taxable benefit. Generally, a reimbursement for a personal purchase of equipment used for working remotely would be a taxable benefit. However, CRA noted that in the context of… Read more »

TAX TICKLERS… some quick points to consider…

– As of August 9, 2020, the Government has approved 813,570 Canada Emergency Wage Subsidies (CEWS), with a total value exceeding $26 billion. – To estimate your CEWS entitlement, consider using the CEWS 2.0 Estimator at WageSubsidyCalculator.ca, or CRA’s more complete calculator at https://www.canada.ca/en/revenue- agency/services/subsidy/emergency-wage-subsidy.html. – The Government has launched a webpage, https://www.canada.ca/en/services/business/maintaining-your- business.html, to… Read more »

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 »