Canadian Tax Forums And Websites

by Tax Guy - Burlington Accountant on June 24, 2009 Print This Post Print This Post

I enjoy writing on this blog and participating in discussion group about income tax and financial planning. I have the opportunity to discuss what I find interesting and hopefully you find this interesting as well.

Quest For Four Pillars posted a short list of financial discussion forums the other day that got me thinking. What forums or other sites do I follow and or participate in?

Here is the list of the websites and forums I frequent.

1. DT Max Knowledge Base (No longer available) – This is a the on-line help site for the Dr. Tax software. It is also a good general reference for income tax topics. The sites’ Government Documentation section provides line by line descriptions of each line on your income tax return.

2. BDO Dunwoody’s Tax Bulletins – Once or twice a month, BDO puts out some timely tax articles on a variety of general subjects. Their site also has tax articles and tax fact sections that are useful as well.

3. Intuit’s Communities – These are on-line forums for users of Quicken,
TurboTax and QuickBooks Canada. You don’t need to own the software to participate and many of these sites are loaded with professionals.

4. Red Flag Deals – RFD has a financial forum where people ask tons of questions. I periodically look through to get ideas for my articles. Be warded that there is a lot of poor advice on this board when it comes to tax.

What forums or discussion groups do you find helpful or participate in?

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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{ 30 comments }

Norma February 14, 2012 at 10:18 am

I have an income tax question. I am 66 years old. I receive OAS & CPP and I have income tax decuded from both of those. I also work at a 13.00/hour job and have an extra 30.00 in tax taken off my cheque each pay (bi-weekly). I now discover that even with all the taxes I have taken off my cheques I still owe the freakin gov’t over 1500.00 How can this possibly be? I pay all this to ensure owing nothing and was hoping for a refund. I am so upset you have no idea.

Tax Guy February 15, 2012 at 8:29 pm

The tax system is tiered but since the tax system is tiered the tax deducted is based on the assumtion it will be he only source of income. You will have to file an amended TD1X with your employer to have extra tax taken off.

prelogic April 6, 2012 at 3:57 am

My company has a corporate year-end of Dec 30, 2010 and a
profit of $16,000.00 , there is a shareholder, the shareholder issued a management bonus of $16,000.00 to reduce corporate taxable income to zero on its 2010 tax return.
Within 179 days of the year-end date the shareholder have been recieved the total gross income of $16,200.00 which includes wages and bonus

Can I say the bonus paid out within 179 days and the accrual is accepted

Tax Guy April 6, 2012 at 3:36 pm

Prelogic,
If you didn’t pay the bonus within the 180 days, then it must be added back to the corporate income and an amendment must be filed. So the answer is yes.

Sinnead June 10, 2012 at 6:40 pm

I run a forum, and we were going to raise money to help other members with medical treatment for their pets, and donate any excess at year’s end to a shelter. None of the moneys come to me at all. I’ve set up a paypal account specifically for this purpose. All moneys go through this account, and this one only. I’ve been told if I do this, I have to declare the moneys in that account as personal income even though it doesn’t come anywhere near me.
I live in Alberta Canada, but donations are made from around the world. The amount would likely not go over $1000 a year.
Can someone help clarify the laws concerning this for me? Thank you 🙂

Tax Guy June 14, 2012 at 5:04 pm

Although the amounts are small, they are still income and taxable as income in your hands. Since this does not appear to be a business, the ability to claim deductions would be severely limited.

The only exempt entities are charities and not-for-profit corporations. Both of which have some high operating costs relative to the amounts you are collecting.

I suggest you work with a charity to effect your goal.

Amazed June 15, 2012 at 11:09 am

Was the tax planning/evasion question purposely deleted?

Tax Guy June 15, 2012 at 11:13 am

Yes. The question was deleted because the exact same question was asked and answered on another page on the previous day. Given the questions were exactly the same, the duplicated was removed. You can see the response here.

Monique V August 14, 2012 at 6:14 pm

I am a high income earner with the Canadian Military is it wiser for me to raise my taxes by 100.00?moth for a total of 1200.00, or make a contribution to my RRSP by a max of 1200.00? I am not sure which would give me the larger tax return. As a military member I am entitled to a pension so an RRSP
is not absolutely necessary.

Burlington Accountant August 15, 2012 at 8:56 am

Hi Monique,

The way we look at the tax savings between two options is to look at the marginal tax implication of each scenario (marginal referring to the tax rates on the last dollar earned).

If your annual income is over $132,407, the marginal tax rate is 48.22% in Quebec.

If you contribute $1,200 to an RRSP, you save $578.64 in income tax now. When you retire and start drawing on the RRSP, you will have an ultimate savings if your total income in the future will be less than $132,407, you will have realized total tax savings. If it will be more, you will be no better or worse off.

Contributing to the RRSP means you put $1,200 away now and defer the tax until later.

Having $100 per month deducted from your cheque offers no tax savings at all (your purposely overpaying your taxes and extending the government a tax-free loan). What you should consider in the alternative is to put the $100 per month into a TFSA and invest it there. The tax implications are likely to be quite the same with the TFSA option but you’ll grow the money rather than pay it out and get it back with no interest.

Frank October 24, 2012 at 11:56 pm

Tax implications for Corporation

Hi, I have a question regarding the potential tax implications for a Canadian company (Company C) on the investment of an foreign company (Company F). First of all, Company C is a family controlled private company which made an investment in a Company F, which is also controlled by the family, years ago. Now, Company F wants to issue new shares to a family member at nominal value (a non-resident of Canada). Our concerns relate to the tax implications for Company C. Specifically, upon issuing the new shares to the family member, Company C’s shareholdings in Company F will be diluted. What would be the tax implications for Company C? What would be the most tax effective way to carry out such a transaction from a Canadian Tax perspective.

Tax Guy - Burlington Accountant October 25, 2012 at 9:06 am

Frank,

From what I understand, Company F is owned by the family and Company C and Company C is also owned by the family. Company F is to add a new family shareholder. I agree that the share ownership becomes diluted.

I’m not sure this is a tax issue because the price the shareholder pays to subscribe to the shares of the company affect the paid-up capital and subject to restrictions in corporate law, this can be distributed back to shareholders tax-free. If we assume the subscription prices are nominal, then there is no tax issues.

Sounds like you are more concerned with the dilution of ownership, which is a legal issue. I am not a lawyer and this question should be posed to one, but it may be possible to create a new class of shares that restricts voting, caps value, limits dividends etc. that can offset the impact of a dilution of common shares.

Nigel November 27, 2012 at 4:41 am

My question relates to deemed residents of Canada. I understand the 183 day soujourning S250 test, but somewhere at the back of my mind I also thought there is a 90/91 day four year moving average days soujourning test. Am I mistaken? Was there ever one? did it get repealed? I’m planning on quite a lot of visiting to Canada over the next while and obviously the existence, or non-existence, of a 90/91 day test would have an imporftant bearing. Thank you.

Burlington Accountant November 27, 2012 at 9:10 am

The rule is if you are in Canada 183 days in a calendar year you are a resident. The moving average rule is a US test.

Nigel November 27, 2012 at 12:12 pm

Thx very much. FYI under the current UK tax regime there is a 91 day moving average test too BUT that will eventually change when the new statutary definition of UK tax residence is clarifed and adopted.

John January 16, 2013 at 10:47 am

Hi Dean,

I was hoping you could help me with a tax question.

This question referes to taxes upon my death. ( Hopefully not too soon)

I have a small business corporation which I am the only shareholder. I have retained earnings and cash say a value of 1 million. I also pay tax at the highest marginal rate, say 45% for simplicity. If I die, and leave my shares to my son, what are the tax implications? Presume my share cost was zero, and all assets in the corporation are in the bank. Also presume, everyone has to pay tax at the highest marginal rate, and that my shares do not qualify for the 750K exemption.

Does the estate pay capital gains tax on the fair market value of my share at 1 million x (1 – highest div rate) so 690K??? In otherwords what really is the fair market value of the shares??

Thankyou,

John

Tax Guy - Burlington Accountant January 16, 2013 at 11:25 am

Hi John,

On your death, the shares of the corporation are deemed sold at fair market value. There is a capital gain and half of that gain is taxable on your final tax return. In your example, the company has a value of $1.0M and $0 ACB, the taxable gain is $500,000.

The value of the company is the FMV of it’s assets when the corporation is an investment company. So, yes the value of its shares.

Also, an investment company would not qualify for the capital gains exemption at all.

John January 16, 2013 at 11:31 am

Thankyou for your quick reply. I guess however is what the actual FMV of the shares is since money is in the corpoartion and that is not as valueable outside the corporation, because to get it out one has to pay dividends (31% tax or so) Hence I would think that the value of the shares is worth investments in minus the dividend s that would have to be paid when taking it out. Does that make sense. I agree with everything else you said.

John

Tax Guy - Burlington Accountant January 16, 2013 at 12:05 pm

The shareholder may choose to sell their shares of the corporation and incur a taxable capital gain or, if the company were wound down, they could take a taxable dividend, which could be an eligible dividend or an ineligible dividend. If you follow that logic, what rate of personal tax would you use (capital gains, eligible, ineligible)? If that same logic is applied to a public company, Bell for example, whose personal tax rate do we use to value Bell?

A company and it’s shareholders are separate and distinct entities regardless of it’s a private or public company. The shareholder’s tax rate affects their own after-tax proceeds but this has no bearing on the value of the investment.

The corporation’s tax rate will impact value in so far as the company pays tax on its gains and income.

The value of the corporation is the value of it’s investments less any outstanding obligations (such as any corporate tax that may be payable).

Logic January 16, 2013 at 12:20 pm

Hi There
I have a private canadian corporation, it has $15,000 profit at end of my tax year 2012, and I m going to pay corportion tax base on $15,000 profit however I gave one of
My employee a vacation package as an apprictiation and hard working gift which cost $3,000, I don’t want to claim it as business expense , can I pay it from corportion profit ?
Or should I consider as a bonus and add up to my employee payroll

Tax Guy - Burlington Accountant January 16, 2013 at 12:23 pm

The vacation is a taxable benefit to the employee. The corporation takes a deduction and you add it to the their T4 income.

Logic January 16, 2013 at 1:12 pm

Thx Tax Man
the vacation is purchased in Nov 2012, and I didn’t calculate it as a bones in my employee monthly payroll deduction for Nov 2012, should I adjust Nov 2012 payroll deduction or can I adjust when I make a T4 for my employee, if I wait to adjust it on T4 , should I pay penalty or intrest , thx

Tax Guy - Burlington Accountant January 16, 2013 at 1:54 pm

The $3k should be added to the T4.

In terms of reporting on the income statement, you could report it as either benefits, bonus, or salary. The money had to come from somewhere so I’m not sure how it’s possible not to count it as an expense … The only other possibility would be it being a taxable dividend in your hands by way of a corporate expropriation.

Kenny January 28, 2013 at 10:51 am

I am currently looking at purchasing a business.
So I am preparing so called proforma income statement (IS) to predict my future cash flows, based on the business’s 2012 income statement.

I understand that I should be deducting depreciation & amortization (D&A) of tangible assets as an expense to come up with net income on my income statement.

1. Does this mean that the more appreciable assets and more D&A expense I have the less tax I will pay? or D&A will be added back to net income from IS to come up with “net income for tax purposes” in Schedule 1, therefore no effect on the tax I pay?

2. Depreciation is not paid out of income like other expenses. So the business’s bank account will not show a deduction equal to D&A expense. but the net income and RE that I calculate on IS does show this deduction.
How do I reconcile calculated RE on IS and my bank account balance?

Burlington Accountant January 28, 2013 at 1:48 pm

Hi Kenny,

The higher your fixed asset values, yes the more CCA you can claim. Keep in mind that everything is based on original cost. The amortization will affect taxes and should be included in the calculation thereon, but it should not be included in the cash flow analysis.

Your bank account will show cash payments and nothing else. When you buy an asset you credit cash and debit the asset account on the balance sheet. To take depreciation you would debit the expense on the income statement and credit the asset (or its sub account for accumulated depreciation).

Hemendra January 31, 2013 at 12:16 pm

Hi
I am have an oncome tax question.

i left a job where i was on contract to stay 3 years otherwise i have to pay employer some money back which i get as a part of relocation and housing subsidy. I already paid income tax on those allowance
since i left the firm,Now i own them a big chuck of money.
i get to know from accounting department of that company that i can pay them in few years and they will issue me a letter each year in Feb stating how much i paid last in last year.

My question is , can i use that money to enter in Line 229 ( as a negative income) of tax filing and can i do that for few years till i am done with paying everything back.

Please advise.

Thanks
Hemendra

Burlington Accountant January 31, 2013 at 1:16 pm

Possibly. If you received the payments directly then you may be able to. If they were paid directly, you can’t deduct them. If you could deduct the it would be on line 232.

Hemendra January 31, 2013 at 2:51 pm

Thanks for your reply. but i think it will be line 232.
Please see this :
Do not deduct the following amounts on line 232:

an old age security (OAS) repayment for 2011. Tax may have been withheld from your OAS benefits in 2012. The amount deducted is included in box 22 of your T4(OAS) slip for 2012. Claim this amount on line 437;
repayment of income tax refund interest. See line 221;
repayment of employment income. See line 229;
payment of legal fees to collect or establish a right to salary or wages. See line 229; and
repayment under a court order of support payments that you included on line 128. Deduct the repayment on line 220.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/232/menu-eng.html

Ehdi Khan February 10, 2013 at 9:22 pm

Hi,

I’ve been working as a full time empoyee at this firm for the past 5yrs and My company expenses any travel related expenses if that’re incurred by me. I’ve been filing my taxes through this tax person who has put deductibles under ‘other employment expenses’ which I didn’t know. Now I received a review letter from revenue canada asking for receipts for those expenses. I’m not sure how to handle it.
I do have my gas expenses and not sure if I can provide those; I don’t like to seek professional firms that deal with these kind of things since I don’t trust them. This is the 1st time I’m facing such a thing and I’m not sure what to do; please help.

Thanks,
Ehdi

Tax Guy - Burlington Accountant February 10, 2013 at 11:32 pm

Hi Ehdi,

Over the last couple of years, the CRA has been asking for proof from more and more taxpayers and it’s no shock to hear you have been asked to submit your receipts.

If the company reimbursed you, it is possible to add the reimbursement your income and deduct the actual expenses. Sometimes it works into your favour. It all depends on the nature of the reimbursement and expenses.

Was the preparer as professional accountant with a CGA, CMA or CA/CPA designation? If so, ask them if they can explain what happened and why. They may be able to assist (ask about fees).

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