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Support of Refugees: Tax and Filing Requirements

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Make Voluntary Disclosures Before March 2018

The CRA has extended the deadline for taxpayers to access the current Voluntary Disclosures Program (VDP) before new, more restrictive changes take effect.
If you are considering making a voluntary disclosure for unintentional omissions in a prior return for income, GST/HST, source deductions, and other indirect taxes, you will now have until February 28, 2018 to file under the current rules (instead of December 31, 2017).
In addition to extending the deadline, the CRA has announced that in the final VDP guidelines there will be further changes that will be effective March 1, 2018. Some of these changes, which apply to income tax, GST/HST, and other indirect taxes, state that the CRA will no longer allow no-name disclosures, among other things.
To read this edition of TaxNewsFlash-Canada, go to TaxNewsFlash-Canada. Or read more on theCRA website about Voluntary Disclosures

Dying Without a Will: Who Can Manage the Deceased's Tax Affairs?

Where a family member of a deceased individual would like to be recognized by CRA as the person or persons who will manage the tax affairs of the person who died without a last will and testament, they can now do so by completing a CRA Form (Affidavit for intestate situation, Forms RC549 to RC561, with no form for Quebec, and no RC554).
Only certain people can register to manage these affairs. The form lists the priority order for those that may apply to be the representative. If another person ranks higher than the applicant, consent and a signature must be obtained from the higher ranking person(s). The priority order is generally:
Spouse or common-law partnerAdult childrenParentsSiblingsGrandparents CRA aims to process the application within four weeks.


This new procedure comes as welcome relief. Previously, when a person died without a will, the applicant would normally have to go to Court to be appointed as the Administrator. The costs of this process could cause hardship…

Operating a Business in the United States: The IRS is Targeting Smaller Foreign Entities

The IRS has recently noted that they are rolling out campaigns to focus on entities below the "big fish" that have historically been targeted. Such campaigns include:

Related party transaction campaign – a redefined focus on mid-market entities to determine compliance with U.S. transfer pricing requirements. Inbound distributor campaign – reviewing whether U.S. affiliates distributing imports from other countries are realizing adequate returns based on their assets, risks assumed, and functions performed. Form 1120-F non-filer campaign – targeting corporations (the IRS believes there are many) with a U.S. permanent establishment or branch which have not filed U.S. income tax returns. The IRS indicates external data sources will be used to identify these companies, commencing with a "soft letter outreach". There is no indication of any amnesty, meaning penalties and interest are likely for Canadian corporations which have not complied with any U.S. fili…

Use Government Money for Your Child's Education

The following article is from CPA Canada

The Government of Canada wants to help you save for your child’s post-secondary education. The money could be used for CEGEP, an apprenticeship program, trade school, college or university.  

When you open and deposit money into a Registered Education Savings Plan (RESP) the Government of Canada will add at least 20 cents for every dollar saved; this is the Canada Education Savings Grant.
With $2 a day, or about $700 a year, saved in an RESP for a child’s post-secondary education, the Government of Canada will add at least 20 percent, or $140 a year, to the RESP to help the savings grow faster. The Government of Canada will keep adding the Canada Education Savings Grant to the contributions in an RESP until the child is 17, up to a lifetime limit of $7,200. At $2 a day for 17 years, the savings grow to well over $15,000 when you also include the accumulated interest.
If you think money is too tight to start saving in an RESP, consider this:
With th…

Business Loss or Personal Venture: Can You Deduct Losses Against Other Income?

In order for an individual to apply their business loss (where reasonable expenses exceed revenues) to another source of income such as employment earnings (thereby reducing the overall tax liability), the taxpayer must be able to prove that they are truly running a business. That is, they have to show that the undertaking was in the pursuit of profit.

An April 28, 2017 Tax Court of Canada case considered whether a practicing lawyer had a source of business income in respect of her law practice for the 2011–2014 years.

The taxpayer incurred losses in all of the years in question ranging from $4,014 to $12,613 and reported annual revenues ranging from $0 to $3,850. The taxpayer reported that the time she spent on the proprietorship was diverse, however, on average she worked about 5 to 10 hours per week. The taxpayer testified that she did no pro bono or volunteer work, but rather, charged clients depending on their circumstances. In some cases, the clients did not end up pa…

Underground Economy: Contractors, Online Sales, Farmers Markets …

In recent years, CRA has particularly focused on tracking underground economy activities. One way they are doing this is by obtaining information from key 3rd parties.

For example, recently CRA obtained details from contractor credit applications submitted to Rona. Consider the type of information that Rona would have: name, address, and other specifics that would help determine whether credit should be given. Presumably CRA could compare information reported on a credit application to the contractors' tax returns.

CRA has also recently obtained information from Square Canada. Many smaller vendors accept payment by swiping the customer's credit card through a little square plastic device connected to the audio jack of a phone or IPad. Square Canada provides this payment processing device, a Square Reader. Through a Federal Court Order issued to Square Canada, CRA obtained identifying vendor information and sale details associated with individuals or entities using t…