700 plain-language Q&As about tax. Browse below, or search the whole library.
Yes. Real estate commissions in Ontario are taxable supplies. A registered real estate agent or brokerage charges 13% HST on the commission for…
Read the full answer →Generally, selling individual business assets (equipment, inventory, commercial property) is a taxable supply, and the seller must charge HST if they…
Read the full answer →No — the sale of a used residential property (a home that has been lived in) is an exempt supply under the Excise Tax Act. The seller does not charge…
Read the full answer →Yes — HST and income tax are separate obligations. As a self-employed person in Ontario who is registered for HST, you collect HST from your clients…
Read the full answer →The rate of HST (or GST) you charge depends on the "place of supply" — where the supply is considered to have taken place under the federal Excise Tax…
Read the full answer →Generally, no. The sale of a used residential property is exempt from HST under the federal Excise Tax Act. A "used" home is one that has been occupied…
Read the full answer →The CRA charges both interest and penalties for late HST filings and payments. Interest on unpaid HST is compounded daily at the prescribed rate, which…
Read the full answer →The quick method is a simplified HST accounting option available to most small businesses with annual taxable revenues (including HST) of $400,000 or…
Read the full answer →The HST Quick Method is an optional simplified remittance option available to small businesses with annual taxable revenues below a threshold set by…
Read the full answer →For most services, it's generally the customer's location, more precisely, the address connected to the supply that's obtained in the ordinary course…
Read the full answer →The self-supply rule is an HST provision that applies when a builder or developer constructs or substantially renovates a residential property and then…
Read the full answer →No - Ontario's recaptured input tax credit (RITC) rule, which used to require "specified persons" to repay the provincial portion of the ITC on…
Read the full answer →Yes. If your input tax credits (ITCs) in a reporting period exceed the HST you collected (output tax), you have a negative net tax balance — and the…
Read the full answer →Yes, you can apply to cancel your GST/HST registration once your annual taxable revenues have been below $30,000 for four consecutive calendar…
Read the full answer →Yes. Construction and trade services — general contracting, electrical, plumbing, HVAC, roofing, carpentry, and similar work — are taxable supplies in…
Read the full answer →Freelancers and self-employed individuals in Ontario are subject to the same HST rules as any other business. If your total taxable revenues from…
Read the full answer →Whether a holding company needs to register for HST depends on what it actually does. A purely passive holding company that simply holds shares in…
Read the full answer →Most core health-care services provided by licensed practitioners in Ontario are exempt supplies under the Excise Tax Act. This means that physicians,…
Read the full answer →This is primarily a federal GST/HST question governed by the federal Excise Tax Act. A non-resident business may be required to register for GST/HST in…
Read the full answer →If your online store is based in Ontario and sells tangible goods, your HST registration obligation is the same as for any other Ontario business —…
Read the full answer →Partnerships are treated as separate entities for GST/HST purposes and must register under the partnership name (not the individual partners' names)…
Read the full answer →For residential rental, the basic rule is that long-term residential rent is an exempt supply — so a landlord renting out apartments under long-term…
Read the full answer →Yes, the CRA can backdate your HST registration to the date you were first required to register. This matters because you remain legally obligated to…
Read the full answer →Yes, and unlike most other businesses, ride-sharing and taxi drivers in Ontario must register for HST from the very first dollar of revenue — the…
Read the full answer →The Voluntary Disclosures Program (VDP) is a CRA program that allows taxpayers to come forward and correct unreported or under-reported taxes —…
Read the full answer →Yes. Pension income splitting is a federal provision that allows spouses or common-law partners to allocate up to 50% of qualifying pension income from…
Read the full answer →A CRA audit is a formal review of your tax return to verify that the information you reported is accurate and complete. Audits can range from a simple…
Read the full answer →Ontario residents pay their federal and provincial income tax to the CRA (not to a separate Ontario agency), using any of the CRA's standard payment…
Read the full answer →These two terms describe the same underlying situation from two different angles. An "incorporated employee" refers to the individual, someone who…
Read the full answer →A sole proprietor pays personal income tax on all net business income in the year it is earned, at their combined federal and Ontario marginal rates.…
Read the full answer →GST/HST is a federal obligation under the Excise Tax Act and is separate from corporate income tax. Incorporating does not automatically change whether…
Read the full answer →Input tax credits (ITCs) let registered HST businesses recover the HST they paid on purchases and expenses used to make taxable supplies. The key…
Read the full answer →Yes. Whether repairs after a fire are current or capital in nature is judged the same way as any other repair, by looking at whether the work restores…
Read the full answer →Generally, yes. When an employer gives you a loan at no interest, or at an interest rate below the market rate, the Income Tax Act treats the…
Read the full answer →Yes — interest income is fully taxable as income in Canada and Ontario. Unlike dividends or capital gains, interest does not benefit from any…
Read the full answer →Interest income is included in your taxable income at 100% of the amount received and taxed at your full marginal rate. Dividends from Canadian…
Read the full answer →A GST/HST registrant generally has a set number of years from the end of the reporting period in which an input tax credit could first have been…
Read the full answer →Yes. When a business buys a passenger vehicle for use in the business, the input tax credit available isn't necessarily based on the full HST paid on…
Read the full answer →Yes, generally. Certain categories of registrant that the Excise Tax Act treats as "specified" or "large," a status that depends on factors like the…
Read the full answer →Yes, leasing a passenger vehicle doesn't get around the restriction; it's applied through a comparable mechanism built around a prescribed monthly…
Read the full answer →It can, but only where the joint ownership is a genuine joint tenancy with right of survivorship, not simply two names on an account. When property is…
Read the full answer →A joint partner trust is a trust that a person 65 or older can create during their lifetime and fund with property on a tax-deferred rollover basis,…
Read the full answer →The main difference is who can benefit and when the trust can be created. A joint partner trust can only be set up by someone 65 or older, during their…
Read the full answer →A joint venture election under the Excise Tax Act lets co-venturers in a qualifying joint venture designate one participant as the "operator," who then…
Read the full answer →Generally, yes, the operator designated under a joint venture election is typically expected to be one of the actual co-venturers in the joint venture,…
Read the full answer →Under a valid joint venture election, the designated operator is the one responsible for filing the GST/HST return and accounting for tax on the…
Read the full answer →Ontario's Land Transfer Tax Act provides a rebate to first-time homebuyers to reduce the provincial land transfer tax payable on a qualifying purchase.…
Read the full answer →Ontario land transfer tax (LTT) is a provincial tax paid by the buyer when a property is conveyed under the Land Transfer Tax Act. The tax is…
Read the full answer →It depends on the scope of what you did, using the same repair-versus-improvement lens CRA applies elsewhere. Routine landscaping upkeep - mowing,…
Read the full answer →A section 156 election generally has to be filed by a specific deadline to take effect for the period intended, and missing that deadline doesn't…
Read the full answer →The late-filing penalty is set by federal law and applies to your T1 return whether you are in Ontario or any other province. If you file after the…
Read the full answer →Generally, yes. A payment made to a tenant to get vacant possession of a rental unit, essentially paying them to leave before their lease would…
Read the full answer →When you permanently leave Canada you become a part-year resident. You are taxed as a Canadian resident for the portion of the year you were here, and…
Read the full answer →Both are generally treated as current expenses, deductible in the year you pay them. Legal fees to draft or negotiate a lease are a normal cost of…
Read the full answer →When the life-interest beneficiary of a spousal trust dies, typically the surviving spouse for whom the trust was set up, the trust's tax year is…
Read the full answer →The Lifelong Learning Plan is an RRSP-based withdrawal mechanism similar in structure to the Home Buyers' Plan, but built for a different purpose:…
Read the full answer →The lifetime capital gains exemption is a federal program that allows eligible individuals to shelter a substantial amount of capital gain when they…
Read the full answer →The lifetime capital gains exemption (LCGE) is a federal tax benefit available to individual Canadian residents, including Ontario residents. It…
Read the full answer →Interest on a loan used to finance a rental property renovation is generally a current expense, deductible in the year it's paid or payable, even if…
Read the full answer →Yes. One of the significant advantages of operating as a sole proprietor is that a business loss can generally be applied against other income in the…
Read the full answer →It depends on who you are and what you're selling. Rules aimed at digital platforms generally shift the responsibility to collect and remit GST/HST…
Read the full answer →For a non-resident business without a physical presence in Canada selling to Canadian customers through a digital platform, the platform rules…
Read the full answer →It depends on whether you're the one registered and responsible for those specific sales, or whether the platform is the party the rules make…
Read the full answer →The federal Income Tax Act restricts the deduction for meals and entertainment expenses to 50 percent of the eligible amount. This applies whether you…
Read the full answer →Canada's Medical Expense Tax Credit (METC) is a non-refundable federal and provincial credit for eligible medical costs paid during the year. Ontario's…
Read the full answer →The Medical Expense Tax Credit (METC) is a federal non-refundable credit for qualifying out-of-pocket medical expenses. Qualifying expenses include…
Read the full answer →The CRA expects a mileage log that is detailed enough to verify business use of your vehicle. For each business trip, the log should record the date,…
Read the full answer →Yes, potentially. The associated corporation rules aren't limited to situations involving majority or controlling ownership, specific provisions can…
Read the full answer →Missing the deadline to convert or otherwise mature your RRSP by the mandatory age has serious consequences, and it's genuinely a trap worth taking…
Read the full answer →If you miss a scheduled Home Buyers' Plan repayment, the missed amount isn't simply added onto next year's repayment or allowed to quietly carry…
Read the full answer →Yes. A missed Lifelong Learning Plan repayment has the same basic consequence as a missed Home Buyers' Plan repayment: the shortfall gets added to your…
Read the full answer →Generally, no. Unlike the United States, Canada does not allow homeowners to deduct mortgage interest on a personal residence from their income. The…
Read the full answer →The CRA distinguishes between "automobiles" and "motor vehicles" because different rules and CCA classes apply to each. An automobile is defined in the…
Read the full answer →It depends on how the allowance is structured and what it's actually covering. A moving or relocation allowance can be tax-free to the extent it…
Read the full answer →Yes. The federal moving expense deduction under the Income Tax Act allows you to deduct eligible moving costs if you moved at least 40 kilometres…
Read the full answer →Moving expenses may be deductible under the federal Income Tax Act if you move at least 40 kilometres closer (measured by the shortest usual public…
Read the full answer →No — Ontario provincial tax applies only for the period you were resident in Ontario. Canada's income tax rules use your province of residence on…
Read the full answer →Not for the tax-splitting reason people used to use it. Before 2016, each testamentary trust created by a will was taxed on its own graduated brackets,…
Read the full answer →A multiple-wills strategy splits your estate into two or more separate wills — typically one covering assets that require a certificate of appointment…
Read the full answer →It can, but it depends on how the trust is structured and how the designation is made. If you name a trust, such as one set up for a disabled child or…
Read the full answer →Yes. A natural disaster or a serious personal illness are both recognized categories of circumstances CRA considers under the Income Tax Act's taxpayer…
Read the full answer →Yes, a qualifying buyer can generally assign the federal GST/HST New Housing Rebate directly to the builder as part of closing, rather than paying the…
Read the full answer →Generally, no - new appliances like a fridge, stove, washer, or dryer are treated as capital property, not a current expense, so you can't deduct the…
Read the full answer →The New Residential Rental Property Rebate, or NRRP rebate, refunds a portion of the GST/HST paid on a newly built or substantially renovated…
Read the full answer →In the year you arrive in Canada, you are a part-year resident. You pay Canadian income tax on worldwide income only from the date you became a…
Read the full answer →If your corporation has no taxable income, paying yourself a salary in a loss year is still worth considering for specific personal goals —…
Read the full answer →Generally, yes, more so than an accountable, receipted arrangement. A non-accountable travel allowance is a flat amount your employer pays you without…
Read the full answer →Generally, yes. When a Canadian resident trust pays or credits income to a beneficiary who lives outside Canada, the trust typically has to withhold…
Read the full answer →Yes. Non-residents of Canada who sell real property in Ontario are subject to Canadian income tax on the capital gain under the federal Income Tax Act.…
Read the full answer →When a non-resident sells real property in Ontario, the federal Income Tax Act requires the buyer to withhold a portion of the purchase price and remit…
Read the full answer →Possibly, even if the trust is set up and administered entirely outside Canada. A trust's residency for Canadian tax purposes generally follows where…
Read the full answer →Non-residents who earn rental income from Canadian property are subject to Part XIII withholding tax under the federal Income Tax Act. The standard…
Read the full answer →To a point, yes — having some surplus or a reasonable reserve doesn't automatically disqualify an NPO from its tax-exempt status. Building up a…
Read the full answer →Yes. An NPO that started out organized for a general non-profit purpose can apply to become a registered charity later, provided its actual purposes…
Read the full answer →This is one of the more genuinely tricky corners of NPO taxation, and the honest answer is: it depends. An NPO's general tax exemption is not unlimited…
Read the full answer →An NR6 form lets a non-resident landlord ask CRA for permission to have withholding calculated on estimated net rental income during the year, instead…
Read the full answer →Form NR73, Determination of Residency Status (Leaving Canada), is a form you can voluntarily submit to CRA asking for its opinion on whether you've…
Read the full answer →Yes, the New Residential Rental Property Rebate has to be applied for within a set filing window measured from when the relevant event happens,…
Read the full answer →Generally, yes, where a newly built rental property is owned by more than one person, the New Residential Rental Property Rebate is typically claimed…
Read the full answer →Not exactly, what matters for the New Residential Rental Property Rebate is that the unit is actually used, or genuinely intended to be used, as a…
Read the full answer →Links go to the official consolidated text. Legislation changes — confirm you are reading the current version.
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