The Canadian Departure Tax Regime Under subsection 128.1(4) of the Canadian Income Tax Act, a Canadian emigrating to another jurisdiction is subject to a “deemed disposition” on qualifying property. (This deemed disposition is often referred to as Canada’s “departure tax”). Where a taxpayer is subject to departure tax, that...
A guarantor becomes the creditor when a guarantee payment is made According to the Federal Court decision in Abrametz v. The Queen, when a taxpayer makes a payment under a guarantee for a corporation’s indebtedness, it is generally regarded that the taxpayer has acquired the rights of the creditor...
Burke v. The King, 2022 TCC 158 The Canada Revenue Agency (CRA) conducted tax reassessments for the tax years 2014, 2015, and 2016, expressing doubts about the reported amounts in taxpayer Mr. Burke’s tax returns. Since Mr. Burke recorded most of his business dealings through handwritten notes and ledgers,...
What is the taxpayer relief application? When a taxpayer cannot meet tax payment deadlines or fulfill other obligations set by the Canada Revenue Agency (CRA) due to personal misfortune or uncontrollable circumstances, penalties and interest are typically imposed by the CRA. Luckily, subsection 220(3.1) of the Income Tax Act...
Non-residents of Canada for tax purposes are only taxed on their Canadian income Canadian tax residents are taxed based on their worldwide income. However, non-residents for Canadian tax purposes (which is a different test then immigration purposes) are only liable for Canadian tax on their Canadian source income such...
Introduction: The Tax Risks of Overcontributing to an RRSP A Registered Retirement Savings Plan (“RRSP”) is the first and most powerful tax planning tool for many Canadians planning for retirement. Any income that is earned on investments held in an RRSP (e.g. dividends) is not taxable in the hands...
Loss carryovers are an important tool that taxpayers can utilize to reduce their taxable income. When taxpayer incurs a loss, they can use the loss to offset income that would otherwise be taxable. The timing and nature of the loss will affect if and how the taxpayer can utilize...
In 2009, the Tax-Free Savings Account (“TFSA”) program was introduced by the federal government of Canada as a means to allow Canadian families and individuals to more responsibly plan for retirement or significant life purchases. As of 2009, Canadian tax residents over 18 years old have been entitled to...
Overview: Unique Tax Considerations for Shareholder-Employees of a Corporation It is not uncommon within incorporated family businesses or other closely-held private corporations for the shareholders of that business to also act as the employees of the corporation’s business. The concept that a person can be a shareholder, director and...
Introduction: Rectification & Its Tax Consequences Rectification is an equitable remedy. It allows parties to correct drafting errors that would otherwise render a legal instrument incompatible with the agreement that the instrument was meant to document. In these cases, the contracting parties may ask a court to rectify the...