Davidow & Nelson Blog

Risks of Tax Non-Compliance: U.S. CITIZENS

Commencing January 1, 2016, the U.S. State Department was able to deny or revoke passports to U.S. citizens having a “seriously delinquent tax debt” or no Social Security Number associated with their passport. A “seriously delinquent tax debt” is one where the taxpayer owed more than $51,000, after January 1, 2018 (indexed going forward), in… Read more »

Reporting Obligations for Subcontractors: CONSTRUCTION ACTIVITIES

A July 17, 2017 Technical Interpretation examined the conditions which would require the filing of a T5018, Statement of Contract Payments.Where a person or partnership primarily derives their business income from construction activities for a reporting period, a T5018 should be filed for any subcontractor payment or credit made relating to goods or services received… Read more »

GST/HST Claim: REASONABLE AUTOMOBILE ALLOWANCES

A travel allowance paid to an employee for the use of their personal vehicle for business purposes will be non-taxable if it is reasonable.Where such reasonable allowances are paid, an input tax credit (ITC) may be claimed by the employer.  The ITC is computed as the imputed GST/HST in the allowance, without adjustment for the… Read more »

Proposed Changes: CORPORATE PASSIVE INVESTMENT INCOME

A new passive investment tax regime for Canadian Controlled Private Corporations (CCPCs) is proposed to apply to taxation years commencing after 2018.  Passive income may include interest, rental, royalties, dividends from portfolio investments and taxable capital gains.Two significant changes are proposed. First, a limit to the small business deduction for CCPCs generating significant income from… Read more »

Can I Pay Them a Salary?: FAMILY MEMBERS

For a small business, whether operated as a corporation, proprietorship or partnership, it is quite possible that relatives of the owners or partners may be engaged as employees. Due to the closer familial relationship between employer and employee, CRA pays particular attention to ensure that the salary is truly an eligible deduction to the business.According… Read more »

Basics And Tax Implications: DIGITAL CURRENCY

What is Digital Currency (DC)? DC is essentially electronic money. It’s not available as bills or coins. Cryptocurrency is a type of DC created using computer algorithms with the most popular being bitcoin.No single organization, such as a central bank, creates DC. DC is based on a decentralized, peer-to-peer network. The “peers” in this network… Read more »

TAX TICKLERS… some quick points to consider…

CRA has required PayPal to disclose sales and other transaction records for Business Account Holders from January 1, 2014 to November 10, 2017. It is expected CRA will review records for unreported sales. Employers can now provide a tax-free party or social event to employees where the cost per person is $150 or less (the… Read more »

Any Issues?: COMMISSION PAID TO A CORPORATION

Consider the successful real estate or insurance agent, the financial product vendor, the area sales representative, or any other person earning commission income. One day they are asked, if they ever considered running their activities through a corporation as opposed to providing the services personally. There are definitely some valuable possibilities, but there are dangers… Read more »

Personal Liability for Corporate Tax Debt: BUSINESS FAILURE

There are special laws which hold a director personally liable for certain amounts that their corporation fails to deduct, withhold, remit, or pay. Most commonly, these amounts include federal sales tax (GST/HST) and payroll withholdings (income tax, EI and CPP). It does not generally include normal corporate income tax liabilities.In a June 22, 2017 Tax… Read more »

What Happens When It Goes Bad?: LOANS TO A RELATIVE’S BUSINESS

You’ve loaned money to a family member’s corporation. Perhaps it was an investment, maybe it was a favor, or both. Or, perhaps, it was made for a completely separate reason. Regardless, sometimes the loan may go bad and you are not able to collect on the debt. What happens from a tax perspective when this… Read more »