Today’s post consists of a number of questions that had very short answers.
Gifts of Lottery Winnings
Question: If I win money in a lottery and give some of that money to another person (not a relative), Does that money have to be claimed as income by that other person?
Lottery winnings can be received free of income tax. If you were to gift part of your winnings to others, the receipt would also be free of tax.
American Working In Canada
Question: I am considering a job offer in Canada. The job will probably last a few months. Is there a form that I can file that will reduce the taxes that are withheld from my pay checks?
You may be asked to complete a TD1 but that will only be used to determine your tax credits. However, in Canada tax is withheld automatically and there is few options to reduce tax at source.
You will be required to file a Canadian T1-NR (our version of a 1040) and can claim a refund if tax withheld was too much.
Foreign Investor Tax
Question: As a Japanese citizen, what taxes would I be required to pay on investment income earned in Canada?
Assuming you are not in Canada for 183 days or more in any calendar year you would be considered a non-resident of Canada and subject only to non-resident withholding taxes. The rates withheld for those who are citizens of Japan is 10% on interest and 15% for dividends. You may be able to claim a credit or deduction in Japan for those taxes and should check with a tax advisor in Japan.
U.S. Citizen Owning Fording Coal
Question: I am a U.S. citizen who unknowingly bought shares of Fording Coal Trust on the NYSE shortly before its sale to TCK last October. About $1,900 was withheld and the entire proceeds of about $12,700 are apparently ordinary income even though my gain was small and less than the tax withheld held. What rate would I be taxed at? Do I need to file?
Assuming you held Fording outside of an IRA or 401(k), you may be able to claim the withholding tax as an itemized deduction or tax credit on your US 1040. If Fording was held inside of an IRA of 401(k) there is probably no mechanism to recover the withholding tax since income trusts are not covered under the treaty with Canada.
Capital Gains Tax
Question: My husband & I are both seniors. Our home is the main residence and we have been living in our home for 25 years. The home is worth approx. $600,000. We wish to move to an apartment or something similar. When selling our home how will we be taxed under the current Capital Gains Tax law? I appreciate hearing from you.
If the home is your current principal residence you will not have any capital gains that are taxable. This is because the gains on your principal residence are free from tax.
Paying Employees Employment Taxes
Question: If a company or business chooses to pay for the employee’s CCP & IE and taxes can this expense be applied to the company’s expenses? At the moment the company is paying the employee’s expense on behave of the employee.
With CPP and EI an employer is required to pay a portion of the premium. The amount paid by the employer is an expense to the company and reduces net income. The employee is responsible for the remaining tax and that is deducted from his or her pay.