Taxation Articles by Joe Truscott

Help available for businesses during COVID-19  The coronavirus has effected businesses throughout Canada The impact of COVID-19 on the economy and business in this country is certainly felt at the present time and will continue to be for the foreseeable future. How...

If you haven’t made your RRSP contributions yet, you need to make some key decisions today that could result in major tax-savings tomorrow.  Contributing to an RRSP is one of the best ways to reduce your taxes and plan for your retirement. The benefits of making...

Although the 1999 Federal Budget has attacked certain income-splitting arrangements with family trusts, a family trust can still play an important role in your tax and estate planning, especially if you are a business owner. What Is A Trust? A trust is an...

Peter thought that estate planning was something you did when you were older…too bad, he didn’t have the benefit of hindsight.  Twenty-five years ago, Peter and his brother incorporated a company to manufacture bicycle widgets.  By the time of his untimely...

Many individuals are unaware that by properly drafting their wills, they can save their beneficiaries thousands of dollars of tax each year. The major benefit of a testamentary trust is that it creates a separate taxpayer for income tax purposes. ...

1.  PERSONAL TAX – QUARTERLY INSTALMENTS Based on last year’s income and tax, you may have to make quarterly instalments. Notes: (a) No instalments are required if your tax is deducted at source from employment income. (b) If this year’s income declines, your...

This article provides an overview of various planning matters related to the use of a personal trust in the ownership of a business that is a qualified small business corporation for the purposes of the Income Tax Act.  Some popular benefits of a personal...

Most business owners are well aware of the significant income tax savings that can be achieved from having business profits taxed inside a corporation rather than at the personal level.  The 2008 corporate tax rate on business income earned inside a corporation...

The Goods and Service Tax (“GST”) has been in existence in Canada since 1991.  Generally the adherence to the GST rules included in the Excise Tax Act (“ETA”) are reasonably straight forward where the proper bookkeeping systems have been established to capture...

Why Incorporate? There are a number of significant advantages to incorporating a business, rather than operating as a sole proprietor or a partnership. 1. Opportunities to Save and Defer Tax The corporation and the individual are two separate taxpayers and are taxed...

A health and welfare trust is an arrangement that allows employers to fund a trust for the provision of certain health and welfare benefits (such as health coverage) for employees (and shareholders) on a tax-deductible basis. A payment by the health and welfare trust...

If you “do work” for a company, are you an employee or an independent contractor?  And why does it matter? For tax purposes, it matters a lot.  Generally, being an independent contractor is much preferable from a tax point of view.  If your relationship...

Introduction The Ontario government announced in its March 26, 2009 budget that it plans to harmonize the 8% Ontario retail sales tax (RST) with the 5% federal goods and services tax (GST) to form a 13% harmonized sales tax (HST), effective July 1, 2010.  With...

Under the Income Tax Act there are certain rules known as the “Taxpayer Relief Provisions” (formerly called “Fairness Provisions”), which provide the Canada Revenue Agency with the discretion to waive certain requirements of the Act.  In particular, these...

A critical question facing all homeowners is whether to pay down the mortgage or contribute to the Registered Retirement Savings Plan (RRSP). There is no definitive answer. Your decision depends primarily on your goals: Retire early and comfortably or pay off...

Introduction Taxpayers can make deductions under their registered retirement savings plans (RRSP) deduction limit for 2008 with respect to contributions they have made or are going to make in the first 60 days of 2009.  The Income Tax Act (the Act) is quite...

What is an IPP? An IPP is a registered pension plan which provides the maximum defined benefits permitted by Canada Revenue Agency.  As a retirement savings alternative to an RRSP, the IPP permits employees, including connected persons (10% + share ownership), to...

Introduction Disabled taxpayers often incur extra costs because of their disabilities and tax law offers them some relief aimed at helping to compensate for those expenses. First and perhaps foremost, is the non-refundable disability tax credit.  This is a...

Most companies that send employees to the United States on short-term assignments or business trips have the “183-day rule” ingrained in their consciousness.  Many of these companies believe that as long as their employees do not spend more than 183...

The following are some of the more important material required. This list is not all inclusive. Prior 3 years income tax returnsFamily data including:name of spousepartnerdate of birthsocial insurance numbercitizenshipNames of children including:dates of birthsocial...

If there is one sector of the economy that is doing well these days, it is the outplacement industry.  Those who provide career counselling to employees given the pink slip or an early retirement offer have seldom been busier.  And, of course, these...

Introduction Commencing from the beginning of 2009 new Canadian tax rules came into effect in respect of the sale of property by non-residents.  Whenever a non-resident is involved in a transaction, withholding tax requirements can arise.  The new...

One positive to take out of the current economic downturn will be the lowering of the prescribed rate to 1% between April 1 and June 30, 2009.  This presents opportunities for higher income earners to income split with their spouse, children, or grandchildren....

Just when we think the personal tax season is behind us, we start to hear from those clients who habitually file their returns late.  Often, their rationale is, “I always get a refund, so there is no sense being in a hurry.”  Many of us remind these...

Statistics Canada estimates that by 2019, the total cost of a four-year university education in most provinces will be $74,000, including tuition, rent, food, books and additional fees. So it is no surprise that parents are looking for efficient ways to finance their...

Every Canadian resident individual is eligible for the capital gains exemption under the Income Tax Act.  The exemption allows you to realize up to $750,000 of capital gains during your lifetime, tax-free, from dispositions of certain types of property. ...

What do you do if the Canada Revenue Agency issues you an income tax or GST Notice of Assessment (or Reassessment), and you believe the Agency is wrong and that you should not be paying so much? The Canada Revenue Agency’s Role As you may know, the Canada Revenue...

The Voluntary Disclosures Program The “Canada Revenue Agency Guidelines for the cancellation and waiver of interest and penalties” outline that penalties and interest may be waived or cancelled in whole or in part in order to facilitate collection where: They result...

In the Ontario provincial Budget, the government announced its intention to harmonize its retail sales (RST) with the federal GST effective July 1, 2010.  The new harmonized sales tax rate would include the 5% GST and 8% RST for a combined Ontario HST rate of...

Canadians must file a tax return and pay taxes in the United States even if they are residents of Canada if they meet certain criteria that is determined by American tax law and by the Canada-U.S. Income Tax Convention, a treaty that generally deals with citizens of...

When it comes to U.S. real estate properties, there are tax, financing and insurance issues that should be considered. Here is a brief list of some of the issues you should consider carefully before you purchase a condo or rental income property in the U.S.: Decide...

In 2007, Canada Revenue Agency (CRA) issued a comprehensive Information Circular IC 07-1 to advise tax-payers of when and how they can ask for relief from the normal collection, re-filing or refund provisions of the Income Tax Act. Knowledge of these rules can be...

We are pleased to offer a publication called Estate Planning, prepared by RBC Dominion Securities and my associate, Mr. Trevor C. Cooper. Under the table of contents on page 2, there is an excellent outline of the key areas of this publication including the...

You might think the Canada Revenue Agency would keep silent about what triggers an audit, but the agency is actually quite candid about why it chooses certain tax returns. For example, the Canada Revenue Agency publishes newsletters, technical...

General Overview Mr. Paul Dube has been named by order in counsel as the Taxpayers’ Ombudsman for a 3 year term. The Minister of National Revenue announced the appointment of Canada’s first Taxpayers’ Ombudsman on February 21, 2008. The position of the Taxpayers’...

On April 30, 2010 Finance Minister Flaherty unveiled Draft Legislation and Explanatory Notes related to changes in the TFSA effective after October 16, 2009. Highlights of the changes are as follows: New Penalties for TFSA Abusers Although Tax-Free Savings...

Over the last few years, the U.S. has significantly increased compliance requirements and penalties for U.S. persons who have foreign (non-U.S.) assets.  A “U.S. person” includes a U.S. citizen, Green Card Holder or U.S. resident. The Hiring Incentives to...

Introduction It is often very difficult to cope after the death of a spouse.  In addition to the many personal struggles, you have to manage the finances in order to ensure that your spouse’s estate is properly administered and to protect your financial...

February is the one month every year when most Canadians think about how to invest their hard-earned money.  For many years, the big question has been, “Should I contribute to my RRSP or pay down my mortgage?”  Now, there’s an added flavour in the mix – the...

Introduction Estate planning involves much more than the preparation and periodic update of your will.  It is a multifaceted, lifelong event requiring reflection and expansion as you reach milestones in your life and your career. What is an Estate Plan? An estate...

During tough economic times, it may be difficult to envision a possible sale of your business.  However, it is likely an appropriate time to start positioning your business so that it will be attractive to a wider range of possible purchasers when...

The federal government’s planned changes to the Canada Pension Plan (CPP) have two goals, dealing with an increasingly aging population and making it easier for people to work longer if they wish. The revisions highlight two issues that you will want to discuss with...

To gather information for law enforcement, particularly drugs and organized crime, Congress has long required U.S. persons owing or having signatory authority over foreign financial accounts to file a report with the Department of the Treasury...

If you are a Canadian resident (but not a U.S. citizen) who spends significant amounts of time in the U.S. for either work or leisure, you may be required to file U.S. federal income tax returns.  That’s because, under U.S. law, you may be considered a...

Purpose of Voluntary Disclosure The Canada Revenue Agency’s Voluntary Disclosures Program is a fairness initiative that gives taxpayers the opportunity to come forward and to correct inaccurate or incomplete information, or to disclose...

It is very common for owner/managers to have life insurance policies issued to cover various cash requirements that would arise in the event of an untimely death.  These cash needs may include the repayment of business loans and payables, providing cash...

Overview Recently, Canada Revenue Agency introduced special legislation under Section 152.01 of the Employment Insurance Act for a self-employed person to claim Special Benefits under the Employment Insurance Act. Special Rules...

Introduction The Income Tax Act requires each person who carries on a business to maintain complete books and records.  Your records should be up-to-date.  You should have invoices to support all of your expenses and your revenue.  Generally you need to...

The Tax-Free Savings Account was introduced in Canada to allow qualified individuals (essentially Canadian residents over the age of 18 who have a valid Social Insurance Number ) to be able to earn income, tax-free, on cumulative contributions of up...

Overview This article discusses the Internal Revenue Service requirements that non-residents of the United States apply for, and the various steps required to successfully obtain, an Individual Taxpayer Identification Number (“ITIN”) The Form W-7,...

use or common-law partner.  On the death of that spouse, Canada Revenue Agency (CRA) will consider the entire value of the RRSP or RRIF to be taxable income.Spousal TrustsThese trusts, which fall under the category of testamentary trusts and work extremely well...

Overview The following is a list of many of the questions and issues that should be addressed in the preparation of your personal Will. We have assisted clients for over 30 years in working with their situation in the proper preparation of their final Wills. Your...

Introduction The growth of a business brings about many important changes. Among the many factors to consider is the operating structure of your organization. A business can operate under any one of a number of different structures, including a sole...

When a purchase or sale of an incorporated business is contemplated, there are two options to consider.  The buyer and seller can negotiate a transaction on the assets used to carry on the business of the corporation or they can negotiate a...

Overview of Voluntary Disclosure Program The Canada Revenue Agency’s “Voluntary Disclosure Program” (the “VDP”) encourages taxpayers to voluntarily disclose unreported income.  The Voluntary Disclosures Program promises that a taxpayer who voluntarily discloses...

Introduction There may come a time when opening a joint bank account or investment account with a parent, or conversely a child, will make a lot of sense. There are a variety of reasons why one might consider going in this direction and we will address these...

Introduction The Employee Profit Sharing Plan has become an increasingly popular structure for owner-mangers in recent years. An Employee Profit Sharing Plan is defined as a plan under which an employer sets aside a portion of its annual profits in trust for...

Overview The health and welfare trust (HWT) is a benefit plan that allows its corporate sponsors to write off all contributions and provide key employees benefits for medical, long-term care and insurance. A health and welfare trust can be structured to...

Introduction Unlike most other countries, including Canada, the United States requires U.S. citizens, dual citizens and green card holders, irrespective of their place of residence, to not only file an income tax return, but also to annually report...

The attached are the 2011 Income Tax Rates for Individuals in the United States. The rates are outlined for the following: Single TaxpayersMarried Taxpayers Filing Joint Returns & Surviving SpousesMarried Taxpayers Filing Separate ReturnsHeads of...

Introduction If you have income tax debts owing to the Canada Revenue Agency, you may want to look into filing an application under the Taxpayer Relief Provisions.  Section 220 of the Income Tax Act allows Canadians with tax liabilities...

The purpose of this document is to make you aware of disclosure requirements if you own certain property outside of Canada. It is important that you advise us if you do own such property since there are significant penalties for failing to report such...

JANUARY * 15th – Stock Option Benefits – Last day for employees to file/revoke designations to defer stock option benefits on options exercised in 2011– US taxes B Estimated tax payments for individuals *  30th – Deadline to pay interest for previous year on a...

On June 26, 2012, the Internal Revenue Service announced new “catch up” filing compliance procedures for non-resident U.S. taxpayers.   The release of these procedures appears to be in response to various requests for the Internal Revenue Service to provide...

Introduction When it comes to U.S. real estate properties, there are 3 basic considerations including tax, financing and insurance issues that require very careful consideration. This is a simple list of issues you should consider carefully before you buy that winter...

Introduction The end of the calendar year of 2012 is in sight and you should be starting to think about how you can maximize tax breaks to lower your business’s 2012 taxes. The following is a list of tax-saving ideas to assist you in minimizing your income taxes...

Introduction There are many changes coming for retirees tapping into CPP, so now is a great time to update your knowledge and plan for some tax efficient retirement income planning strategies. Service Canada has produced a detailed fact sheet, Changes to the Canada...

Introduction In this global society, it is common to seek pastures further afield. Many people purchase property in the US either as a holiday home or as an investment. When doing so, very little regard is often given to the international taxation implications of the...

Overview The Canada Revenue Agency (CRA) wants to make sure you are paying the correct amount of taxes-not too much and not too little. Each year, more taxpayers file their income tax and benefit returns online using NETFILE or EFILE. Although electronic filers do not...

Commonly Used Strategies To Reduce Probate Fees Include The Following: Holding property in joint name with right of survivorship (outside of Quebec).NOTE: Be aware that there are numerous problems associated with this strategy, especially where the joint owner is not...

Introduction This article explains the need for a clearance certificate issued under the Income Tax Act. To request a clearance certificate, complete Form TX19, Asking for a Clearance Certificate . Also, provide the documents required for on Form TX19....

Introduction You’ve known Glen for a long time, way back to when he and Mary moved down the street from you. Your families got to know each other through school plays and sports outings. Good neighbors became good friends, and eventually clients. After Glen passed...

Introduction In planning for corporate restructurings, we often advise our clients on the need to ensure that they receive the full current value of their shareholdings before issuing new shares to family members. A transfer of future growth is easily...

Overview No two family scenarios are the same, and this is especially true when it comes to moderate or very wealthy families. Your wealth may come from a successful business, an inheritance, a wise investment or other sources. You may have children or others, who...

Introduction In the Province of Ontario, if you are an employer, you can be sure to have a visit from a field auditor from the Workplace Safety and Insurance Board (WSIB). The WSIB has made it part of its initiative to audit most business organizations to ensure that...

Introduction Retiring allowances, which have nothing to do with retirement, but can assist individuals losing their jobs to shelter much of their severance payments. They can also play a powerful tax-planning role in business succession planning...

Introduction In an effort to boost hiring in trades, the federal government and some provinces offer apprenticeship-related tax credits and grants to qualified businesses and individuals. Comments Ottawa, for example, offers to businesses...

Introduction “Certain alterations to a home or incremental construction costs may be eligible for Medical Expense Tax Credit treatment” Comments The types of expenses that may be eligible for the Medical Expense Tax Credit might surprise you. The...

Top 10 Questions to Help Assess the Effectiveness of your Succession and/or Estate Plan An effective succession or estate plan is the only way to ensure that your wealth and business transition objectives are realized in a practical and tax efficient manner. The...

Introduction Once the Canada Revenue Agency completes an audit of a taxpayer’s taxation year, the Canada Revenue Agency may change the amount of the income tax liability of the taxpayer and may also assess penalties and interest. Once the Minister of...