700 plain-language Q&As about tax. Browse below, or search the whole library.
Yes. Charitable donation claims that are disproportionately large relative to income are one of CRA's recognized audit triggers. The agency uses…
Read the full answer →Yes. CRA treats cryptocurrency as a commodity for income tax purposes, not as currency. Gains from selling, trading, or converting cryptocurrency are…
Read the full answer →Yes. Receiving an SR&ED refund doesn't mean the claim is beyond question, CRA can still review or audit the claim afterward, within the normal…
Read the full answer →Yes. CRA frequently scrutinizes farming loss claims, particularly when a taxpayer has significant income from other sources. Under the Income Tax Act,…
Read the full answer →The T1135 (Foreign Income Verification Statement) must be filed by Canadian residents who own "specified foreign property" with a total cost of more…
Read the full answer →Yes. CRA can and does examine home-office expense claims made by employees. To claim home-office expenses as an employee, you generally must have a…
Read the full answer →Yes. CRA is not limited to auditing a single tax year. When an auditor identifies an issue in one year, it is common to expand the audit to cover…
Read the full answer →Yes. CRA scrutinizes principal residence exemption (PRE) claims, particularly in markets where residential property values have risen significantly.…
Read the full answer →Canada has a Taxpayer Bill of Rights that sets out the standards of service and rights you can expect when dealing with CRA. During an audit, key…
Read the full answer →Yes. CRA operates a Leads Program that accepts tips from the public about potential tax non-compliance. Tips can come from anyone: former employees,…
Read the full answer →Employment travel expenses are deductible only when specific conditions are met under the Income Tax Act. You must have a T2200 signed by your employer…
Read the full answer →The Income Tax Act is a federal statute that generally requires you to keep records and supporting documents for at least six years from the end of the…
Read the full answer →A payroll audit by CRA (sometimes conducted by CRA's Source Deduction program) examines whether your business has correctly calculated, deducted, and…
Read the full answer →Generally, no, for debt that was actually discharged. Once you're discharged from bankruptcy, CRA generally cannot continue collecting a tax debt that…
Read the full answer →Yes, in specific circumstances. Directors of a corporation can become personally liable for the corporation's unremitted source deductions and…
Read the full answer →Yes. CRA can collect GST/HST debt using largely the same collection tools it uses for income tax debt, including requirements to pay and other…
Read the full answer →CRA generally has a defined collections limitation period, commonly described as 10 years, after which it cannot start new legal collection proceedings…
Read the full answer →Yes, for most income tax debts - this is a legal restriction, not just CRA policy. Under the Income Tax Act, CRA is barred from taking collection…
Read the full answer →Yes, and this is a distinction people commonly get wrong. RRSPs and RRIFs are generally protected from many private creditors, meaning an ordinary…
Read the full answer →Yes. CRA can issue a requirement to pay directly to your employer, effectively garnisheeing your wages to collect an unpaid tax debt, using the same…
Read the full answer →Disputing a GST/HST assessment follows a similar process to income tax disputes, but the governing legislation is the federal Excise Tax Act rather…
Read the full answer →TOSI stands for the Tax on Split Income, a federal rule in the Income Tax Act that applies to certain income received by "specified individuals" from a…
Read the full answer →Generally, CRA's collection action is suspended (stayed) once you file a Notice of Objection. CRA is not permitted to take collection action on the…
Read the full answer →Yes. CRA can register a certificate confirming a tax debt in Federal Court, and once registered, that certificate has the same effect as a court…
Read the full answer →It is common for CRA's Notice of Assessment to differ from your filed return. Sometimes the difference is minor — CRA may have a T4 or T5 slip on file…
Read the full answer →CRA My Account is a secure online portal that gives Ontario residents (and all Canadians) access to their personal tax information and a wide range of…
Read the full answer →A net worth audit (also called an indirect verification of income) is a method CRA uses when it suspects a taxpayer's reported income does not match…
Read the full answer →CRA has a long-standing administrative policy that allows certain non-cash gifts and awards from an employer to be received without creating a taxable…
Read the full answer →Generally, no. CRA is not generally required to give you personal advance notice before issuing a requirement to pay to your bank or your employer, and…
Read the full answer →Like individuals, Canadian corporations have 90 days from the date of a Notice of Assessment or Notice of Reassessment to file a Notice of Objection…
Read the full answer →A well-prepared Notice of Objection clearly identifies the assessment you are disputing (by year, date, and assessment number), states the specific…
Read the full answer →The deductibility of legal fees incurred to dispute a CRA reassessment depends on the nature of the income at issue. Under the Income Tax Act, legal…
Read the full answer →At the CRA objection stage, there is no mechanism to recover your professional fees even if CRA ultimately concedes the assessment. The objection…
Read the full answer →Before you issue your first paycheque you need a CRA payroll deductions account (RP account). This is a federal registration — there is no separate…
Read the full answer →Not always, and this is genuinely fact-dependent rather than a simple always-first-in-line rule. CRA has strong priority for certain specific…
Read the full answer →A shareholder benefit reassessment means CRA has concluded that your corporation conferred a taxable benefit on you as a shareholder that was not…
Read the full answer →Yes, CRA can reassess the income tax returns of a deceased person. The legal representative of the estate — typically the executor or administrator —…
Read the full answer →Yes. HST and GST are governed by the federal Excise Tax Act, which is separate legislation from the Income Tax Act. CRA administers both, but…
Read the full answer →When CRA issues a reassessment and determines you owe additional taxes, it also charges arrears interest on the unpaid amount. This interest is…
Read the full answer →If CRA has included in your reassessment investment income you believed was sheltered — for example, inside an RRSP, TFSA, or RDSP — start by…
Read the full answer →CRA can add several categories of civil penalties to a reassessment, depending on the nature of the error or omission. The most common are: Late-filing…
Read the full answer →If CRA has added rental income to your reassessment, it believes you received rental income that was not reported on your return. CRA learns about…
Read the full answer →RRSP over-contributions are subject to a 1% per month penalty tax on the excess amount above the $2,000 cumulative lifetime buffer. This penalty is…
Read the full answer →Canada's income attribution rules in the Income Tax Act are federal provisions designed to prevent income splitting between spouses or with minors. If…
Read the full answer →A CRA reassessment means the CRA has reviewed your original tax return and made changes to it — either increasing or decreasing the tax you owe. You…
Read the full answer →Yes. If CRA reclassifies your corporation as a personal services business, typically after an audit or review of prior years, it can reassess those…
Read the full answer →Yes. If CRA rejects a taxpayer relief request, you can generally ask for a second-level review of that decision, which is a further discretionary…
Read the full answer →Yes. A requirement to pay, often called an RTP, is a formal demand CRA can issue directly to a third party, including your bank, requiring them to…
Read the full answer →Possibly, and this is a genuinely fact-sensitive question rather than one with a simple yes-or-no answer. A joint bank account shared with a spouse can…
Read the full answer →Yes, and this is a genuinely common way charities lose their registration — not a rare, worst-case scenario. Filing the annual T3010 return on time is…
Read the full answer →Yes, in appropriate circumstances. Once CRA has registered a certificate confirming a tax debt, which has the same effect as a court judgment, as…
Read the full answer →Yes. TFSA growth and withdrawals are normally not taxable, but CRA can and does treat frequent, active trading inside a TFSA as carrying on a business,…
Read the full answer →Yes. The taxpayer relief provisions in the federal Income Tax Act allow CRA to cancel or waive interest and penalties when certain conditions are met.…
Read the full answer →A taxpayer relief application (historically called a "fairness application") asks CRA to use its discretionary authority under the Income Tax Act to…
Read the full answer →CRA uses a handful of practical factors rather than one bright-line rule. It asks whether the expense provides a lasting benefit to the property,…
Read the full answer →Under the federal Income Tax Act, CRA has broad powers to obtain information from third parties such as banks, financial institutions, and other…
Read the full answer →Yes. The Income Tax Act contains transfer pricing rules requiring that transactions between related parties in different countries be priced at…
Read the full answer →Possibly, yes, but it isn't automatic. CRA can, in appropriate circumstances, waive or cancel the TFSA over-contribution penalty tax where the excess…
Read the full answer →If you live in Ontario and commute daily to a job physically performed in the US, you're taxed by both countries on the same income, though the treaty…
Read the full answer →The CRA treats cryptocurrency as a commodity for income tax purposes, not as currency. This means gains and losses from buying and selling crypto are…
Read the full answer →When a homeowner dies, the Income Tax Act deems them to have disposed of all their capital property — including their home — at fair market value…
Read the full answer →Self-employed individuals can deduct expenses that are incurred to earn business or professional income, as long as those expenses are reasonable.…
Read the full answer →Deemed disposition is the Income Tax Act's rule that treats you as having sold all of your capital property — investments, real estate other than an…
Read the full answer →Canadian residency for income tax is primarily a factual question, but the Income Tax Act also creates "deemed resident" status for certain people…
Read the full answer →Yes. To claim the treaty-based deferral of Canadian tax on the growth inside a US retirement account like a 401(k) or IRA, you generally need to make a…
Read the full answer →It can, in the right circumstances. Demolishing a building is treated as a form of disposition for CCA purposes, and if it's the last property in its…
Read the full answer →For property that was actually subject to the deemed disposition, yes, being deemed to sell and immediately reacquire it at fair market value on your…
Read the full answer →Yes. You don't have to pay the tax on your deemed capital gains the moment you leave — the Income Tax Act lets you elect to defer payment until you…
Read the full answer →Not everything you own is swept into the deemed disposition when you leave Canada. Canadian real estate, including a house you keep after you go,…
Read the full answer →It can, but the answer depends on exactly what you hold. Being a discretionary beneficiary of a family trust, someone who might receive a distribution…
Read the full answer →No. Canadian real estate is one of the categories specifically excluded from the departure-tax deemed disposition, so keeping your house in Canada when…
Read the full answer →Private company shares get caught by the same deemed disposition rule as any other capital property, but they're harder to deal with in practice…
Read the full answer →Potentially, yes, if you still own the same property, or something that stands in its place, when you come back. The Income Tax Act includes a…
Read the full answer →Departure tax is reported through your regular T1 return for the year you emigrate, not through some entirely separate tax filing outside the ordinary…
Read the full answer →Sometimes, but not always. If you elect to defer paying the tax on your deemed capital gains until you actually sell the property, CRA can require you…
Read the full answer →Yes. If you were resident in Canada for only a short period before you left, a specific exemption can remove certain property from the departure-tax…
Read the full answer →No — your TFSA is one of the registered accounts excluded from the deemed disposition rule, so you don't owe departure tax on the investments held…
Read the full answer →Stock options you haven't exercised get different treatment than most of your other property under the departure tax rules, rather than being valued…
Read the full answer →No, a departure-tax valuation isn't locked in permanently just because you reported it on your T1243 and moved on. Like any other figure on a tax…
Read the full answer →"Departure tax" isn't a separate tax with its own line on your return — it's the shorthand for what the Income Tax Act does the moment you stop being a…
Read the full answer →Yes. The Income Tax Act and the Employment Insurance Act both create personal liability for directors of a corporation that fails to remit source…
Read the full answer →The Disability Tax Credit (DTC) is a federal non-refundable credit for individuals with a severe and prolonged mental or physical impairment that…
Read the full answer →The Disability Tax Credit (DTC) is a non-refundable federal credit for people with severe and prolonged physical or mental impairments that markedly…
Read the full answer →Yes, a dividend in kind involves the corporation distributing property — real estate, a vehicle, equipment, or investments — to a shareholder rather…
Read the full answer →Yes, a corporation classified as a personal services business can still legally pay dividends to its shareholder out of its after-tax income, PSB…
Read the full answer →When your corporation pays you a salary, it is a deductible business expense that reduces the corporation's taxable income. You receive employment…
Read the full answer →Even with no income, filing a federal tax return can still benefit you. Canada's income tax system is federal — the CRA administers returns for Ontario…
Read the full answer →In Ontario, you are generally required to register for HST — which combines the federal GST and Ontario's provincial component — once your total…
Read the full answer →Federal GST/HST registration is mandatory once your total taxable revenues (worldwide, from all commercial activities) exceed $30,000 in a single…
Read the full answer →Possibly, and the platform collecting tax at checkout doesn't automatically mean you don't. Your own obligation to register for GST/HST generally…
Read the full answer →Yes. A condominium in Ontario can qualify as a principal residence for the purposes of the federal principal residence exemption. The exemption applies…
Read the full answer →Yes, donating publicly traded securities directly to a registered charity, instead of selling them first and donating the cash, generally produces a…
Read the full answer →Donations to registered charities earn non-refundable tax credits at both the federal and Ontario provincial levels. The federal donation tax credit…
Read the full answer →Not necessarily, if the arrangement qualifies under the Excise Tax Act's drop-shipment rules. These rules are built for exactly this kind of situation,…
Read the full answer →Generally, no — Ontario's Estate Administration Tax is calculated on the value of the estate for which an Ontario certificate of appointment is sought,…
Read the full answer →Yes. Ontario's Estate Administration Tax is paid at the time you apply for a certificate of appointment of estate trustee, commonly called probate —…
Read the full answer →Yes — Ontario's Estate Administration Tax is initially paid based on the estate trustee's own estimate of the estate's value at the time the…
Read the full answer →No, a corporation shouldn't designate a dividend as "eligible" beyond what its available GRIP balance actually supports. Doing so triggers a specific…
Read the full answer →Not all dividends from a Canadian private corporation are taxed the same way. The distinction between eligible and non-eligible (also called ordinary)…
Read the full answer →RDTOH is actually split into two separate pools: eligible RDTOH and non-eligible RDTOH, and which one gets refunded depends on the type of dividend…
Read the full answer →Links go to the official consolidated text. Legislation changes — confirm you are reading the current version.
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