Subsection 227.1(2) of the Income Tax Act (Canada) provides that a director is not personally liable for unremitted source deductions unless (a) a certificate for the amount of the corporation’s liability referred to in that subsection has been registered in…
CRA backs off on employment expenses
It appears the CRA has backed off its employment expenses project. A colleague of mine sent a release he received from CRA Audit, which read in part as follows: Effective immediately, the Agency will stop reviewing and disallowing “other employment…
Non-competes
We all know that section 56.4 of the Income Tax Act (Canada) is a hot mess. A recent CRA technical interpretation (2017-0688301I7) (TI) illustrates well one of the reasons why.
Flipping out
You buy a vacant lot, build a home on it, move into the home for a few weeks and then you sell the home for a tidy profit very soon thereafter. You claim the principal residence exemption (the PRE) so…
New frontier
Alex Klyguine, in “Income Splitting After the New Private Corporation Proposals: Salaries Paid to Family Members” 8:1 Canadian Tax Focus (February 2018), discusses Gabco Limited v MNR, 68 DTC 5210 (Ex. Ct.)), and suggests that “the boundaries of the reasonableness test…
SBD limit assignment headaches
A CCPC might want to assign a portion of is small business deduction limit to another corporation because of the specified corporate income rules. The assignment will be problematic, however, if the assignor’s year-end occurs before that of the assignee.…
Pipeline death watch?
Finance is not proceeding with the July, 2017, proposals to amend 84.1 and introduce new 246.1. Also, Finance has said that it will focus on developing the passive income proposals. Finance has also said, however, that it believes post-mortem gains…
“May deduct”
Using “a textual, contextual and purposive analysis”, the Tax Court in Zhang v R, 2017 TCC 258 (informal procedure), concluded that “may deduct” in ‘D’ in the formula in 118.61(1) meant “is entitled to deduct” rather than “chooses to deduct”.
CDA timing
A corporate-recipient of a capital dividend is entitled to add the amount of the dividend to its capital dividend account at the time the dividend is received even where the relevant election is late-filed. CRA technical interpretation 2017-0718311E5.
Project for employees
The CRA has a new ‘project’ underway. This time the target is employees who deduct employment expenses under section 8 of the Income Tax Act. The CRA seems to be on the lookout for employees who are also shareholders of…