700 plain-language Q&As about tax. Browse below, or search the whole library.
Yes, like the rebate available to owner-occupiers buying a newly built home, the New Residential Rental Property Rebate is structured so the benefit is…
Read the full answer →Selling shortly after claiming the New Residential Rental Property Rebate can put the rebate at risk, because it was granted on the basis that you…
Read the full answer →The Non-Resident Speculation Tax (NRST) is an Ontario provincial tax under the Land Transfer Tax Act that applies to purchases of certain residential…
Read the full answer →No, billing through a numbered company instead of a named corporation is purely a naming choice and has no bearing on whether the underlying…
Read the full answer →Missing the 90-day objection deadline is serious, but not necessarily fatal. You can apply to CRA for an extension of time to file a Notice of…
Read the full answer →Old Age Security (OAS) is a federal retirement benefit paid to Canadians 65 and older regardless of employment history. However, if your income exceeds…
Read the full answer →Yes. CCA is claimed separately by each co-owner on their own proportionate share of the property's undepreciated capital cost, so it's an individual…
Read the full answer →Amalgamation under the Ontario Business Corporations Act or Canada Business Corporations Act merges two or more corporations into one successor…
Read the full answer →When a corporation owns or leases a vehicle and makes it available to a shareholder or employee for personal use, the shareholder must include a…
Read the full answer →Yes — filing your annual T1 return is essential to receive the Ontario Child Benefit (OCB). The OCB is a monthly provincial payment to lower- and…
Read the full answer →If your corporation pays you a salary, it must deduct and remit income tax, CPP contributions, and EI premiums just as it would for any other employee.…
Read the full answer →Dividends from Canadian corporations receive preferential tax treatment in Canada compared to employment or interest income. The process involves two…
Read the full answer →The dividend tax credit is a mechanism designed to prevent double taxation when a corporation pays dividends out of after-tax profits. Canada and…
Read the full answer →Ontario's Employer Health Tax (EHT) is a provincial payroll tax on remuneration paid to Ontario employees. Unlike CPP and EI, EHT is a provincial…
Read the full answer →An estate freeze is a restructuring technique that locks in your accrued corporate value at today's amount and shifts future growth to the next…
Read the full answer →Inflation affects the salary-dividend decision in a few ways. First, RRSP contribution limits increase annually to reflect inflation. If you want to…
Read the full answer →The Ontario Health Premium is a provincial levy charged through the personal income tax system. It is calculated as a percentage of your taxable income…
Read the full answer →The Ontario Healthy Homes Renovation Tax Credit was a refundable provincial credit that helped seniors aged 65 and older (and those sharing a home with…
Read the full answer →A holding company owns shares of your operating company rather than running the business itself. One common reason to add a holding company is to…
Read the full answer →The Ontario Innovation Tax Credit is a separate, Ontario-specific refundable tax credit that operates alongside the federal SR&ED program for…
Read the full answer →A corporation can purchase and own a life insurance policy on a shareholder or key employee. On the death of the insured, the corporation receives the…
Read the full answer →Ontario has a provincial minimum tax that works alongside the federal Alternative Minimum Tax (AMT). The federal AMT was substantially revised and is…
Read the full answer →A non-refundable credit reduces the tax you owe, but cannot reduce your tax bill below zero. If you owe $500 in tax and have a $700 non-refundable…
Read the full answer →A dividend strip, sometimes called surplus stripping, is a transaction designed to convert what would be a taxable dividend into a capital gain or…
Read the full answer →Ontario residents pay both federal and provincial income tax on the same T1 return. Federal tax applies to all Canadians at the same graduated…
Read the full answer →Yes. Ontario provides a non-refundable provincial tax credit for contributions made to registered Ontario political parties, their constituency…
Read the full answer →Ontario provides property tax deferral programs for eligible homeowners, and seniors are among the primary intended beneficiaries. However, the…
Read the full answer →There is no single prescribed salary amount, but two common targets guide the calculation. The first is the amount needed to maximize your RRSP…
Read the full answer →If your corporation pays you a salary and you work from a home office, you may be able to deduct a portion of home office expenses against your…
Read the full answer →Timing is one advantage dividends have over salary. A dividend can be declared and paid at any time the board chooses, with no mandatory remittance…
Read the full answer →Retirement planning for an incorporated Ontario business owner involves three main vehicles: the corporate retained earnings pool, personal RRSP…
Read the full answer →The CRA focuses audit resources on areas of highest revenue risk. For owner-managed corporations, common audit triggers include shareholder loans that…
Read the full answer →Corporate losses and personal salary or dividends operate in separate tax systems. A non-capital loss the corporation carries forward from a prior year…
Read the full answer →A family trust owning shares in your corporation was historically used to distribute dividends to multiple family members, each of whom would pay tax…
Read the full answer →Incorporating mid-year creates a transition from sole proprietorship income to corporate income. For the months you operated as a sole proprietor,…
Read the full answer →When a corporation forgives or cancels a loan owed by a shareholder, the forgiven amount is generally treated as a benefit conferred on the shareholder…
Read the full answer →EI maternity and parental benefits are federal programs available to employees with insurable employment. As discussed in the context of EI coverage…
Read the full answer →With multiple shareholders, the salary-versus-dividend decision becomes more complex because dividends must generally be paid proportionately to all…
Read the full answer →Dividends paid by a Canadian corporation to a non-resident shareholder are subject to Canadian withholding tax. This is a federal tax obligation. The…
Read the full answer →Employment insurance is a federal program. An owner-manager who controls more than 40% of the voting shares of the corporation is excluded from…
Read the full answer →When corporate profits are modest, the salary-versus-dividend question shifts. If the corporation has little income to protect with the small business…
Read the full answer →Ontario's combined federal-provincial top marginal rate on employment income applies at relatively modest income levels by global standards. At the top…
Read the full answer →Ontario has two main supports for senior homeowners that reduce property tax costs. First, the Ontario Energy and Property Tax Credit (OEPTC) is a…
Read the full answer →Yes. Both the federal Income Tax Act and Ontario's provincial tax law provide an age amount — a non-refundable credit available to taxpayers who are 65…
Read the full answer →Ontario previously had a Seniors' Public Transit Tax Credit under provincial law, which allowed eligible seniors to claim a credit for public transit…
Read the full answer →Yes. Both the federal government and Ontario provide a small business deduction that reduces the tax rate on the "active business income" of…
Read the full answer →Tax integration is the principle that income earned through a corporation and then distributed to a shareholder should bear roughly the same total tax…
Read the full answer →Ontario's Non-Resident Speculation Tax (NRST) applies to foreign nationals and foreign corporations who purchase certain residential properties in…
Read the full answer →Ontario introduced the Ontario Staycation Tax Credit as a temporary measure for 2022 to encourage residents to explore Ontario following the pandemic.…
Read the full answer →Ontario's provincial surtax is an additional layer of tax applied on top of your basic Ontario personal income tax when your Ontario tax payable…
Read the full answer →The Ontario Trillium Benefit (OTB) is a monthly provincial payment that combines three credits: the Ontario Energy and Property Tax Credit (OEPTC), the…
Read the full answer →The Ontario Trillium Benefit (OTB) is a provincial benefit that combines three credits: the Ontario Energy and Property Tax Credit (OEPTC), the…
Read the full answer →Yes. The federal Volunteer Firefighters Tax Credit and the Search and Rescue Volunteers Tax Credit are non-refundable federal credits for individuals…
Read the full answer →When you wind up a corporation and distribute its remaining assets to shareholders, the distribution is treated as a deemed dividend to the extent it…
Read the full answer →Yes. An estate can elect out of the automatic spousal rollover on a property-by-property basis, choosing instead to report the deemed disposition at…
Read the full answer →Business parking costs are generally deductible. If you park at a client's location, a court, a supplier's premises, or any other business destination,…
Read the full answer →Generally, yes, for both — though for slightly different reasons. Employer-provided parking is usually treated as a taxable benefit added to your…
Read the full answer →Yes, it can, and this is a real trap worth knowing about before you make any payment on an old CRA debt. Making a partial payment, or certain other…
Read the full answer →When a property qualifies as your principal residence for only some of the years you owned it — for example, because you rented it out for part of your…
Read the full answer →Investment income — interest, rent, capital gains, and most dividends from unrelated companies — earned inside a private corporation is not active…
Read the full answer →Generally, you do not withhold CPP or EI from payments to a true independent contractor — those obligations apply only to employees. The problem is…
Read the full answer →Not automatically, as a guaranteed legal stay. Setting up a payment plan with CRA doesn't, by itself, guarantee that all collections enforcement action…
Read the full answer →Before your corporation makes its first payroll payment, it must register a payroll deductions program account with the CRA. You register online…
Read the full answer →The key concept here is "province of employment," which for payroll purposes generally follows where the employee physically reports to work, not…
Read the full answer →Missing these forms exposes you to a penalty for late or missing information returns, separate from and in addition to any interest and penalties that…
Read the full answer →Yes — Canadian tax law allows eligible pension income to be split between spouses or common-law partners for tax purposes. Up to 50% of eligible…
Read the full answer →Most pension income received by Ontario residents is fully taxable. This includes Canada Pension Plan (CPP) payments, Old Age Security (OAS), private…
Read the full answer →Generally, no — a per diem meal allowance paid while you're genuinely travelling for work is generally not treated as a taxable benefit, as long as the…
Read the full answer →For most Ontario residents, the deadline to file your T1 personal income tax return is April 30 of the following year. For example, your 2025 return is…
Read the full answer →A personal services business, often shortened to PSB, is a specific label the Income Tax Act applies to a corporation set up by someone who provides…
Read the full answer →No, not the full amount for a full year, in the year you emigrate, you're filing as a part-year resident, and certain personal, non-refundable tax…
Read the full answer →When a vehicle is used for both personal and business purposes, only the business-use portion of operating expenses and depreciation (CCA) can be…
Read the full answer →If a PIER review finds that your business under-remitted CPP or EI deductions, your business becomes responsible for making up that shortfall, and in…
Read the full answer →A PIER review is triggered by a specific kind of discrepancy: CRA's system flags a mismatch between the earnings your business reported for employees…
Read the full answer →PIER stands for Pensionable and Insurable Earnings Review, and it's a specific program CRA runs to check that the CPP and EI deductions your business…
Read the full answer →When a client has addresses in more than one province and it isn't clear which one the supply relates to, the GST/HST place-of-supply rules include…
Read the full answer →For a supply sold to customers across different provinces, the GST/HST place-of-supply rules generally require looking at each customer individually,…
Read the full answer →For most services, the GST/HST place-of-supply rules generally look to the recipient's address that's obtained in the ordinary course of business, most…
Read the full answer →A preferred beneficiary election is a joint election a trust and an eligible beneficiary can file that lets trust income be taxed in the beneficiary's…
Read the full answer →The Income Tax Act's attribution rules generally apply when you give or lend property to a family trust for free, or below a market rate of interest,…
Read the full answer →The principal residence exemption (PRE) is a federal income tax rule that shelters the capital gain on the sale of a home from tax, either partially or…
Read the full answer →The principal residence exemption shelters capital gains on the sale of a home that you designated as your principal residence. A non-resident can…
Read the full answer →The principal residence exemption (PRE) allows Canadians to shelter all or part of the capital gain on the sale of their home from income tax. If the…
Read the full answer →A trust can claim the principal residence exemption, but the rules are more restrictive than for individuals. Under the federal Income Tax Act, only a…
Read the full answer →No. If the flipping rule applies to a sale, the principal residence exemption simply isn't available for that sale, even if the home genuinely was used…
Read the full answer →When you move out of your home and begin renting it to tenants, you are changing the use of the property from personal to income-producing under the…
Read the full answer →Renting your home on a short-term rental platform like Airbnb while you continue to live there does not automatically disqualify the entire home from…
Read the full answer →Many regulated professionals in Ontario — including lawyers, doctors, accountants, engineers, and others — can incorporate through their governing…
Read the full answer →Training and professional development costs are generally deductible as business expenses if the education or course maintains or improves skills…
Read the full answer →Yes. Professional services — including legal services, accounting, consulting, engineering, architecture, and most similar professional work — are…
Read the full answer →Property taxes in Ontario are levied by municipalities based on the assessed value of your property as determined by the Municipal Property Assessment…
Read the full answer →In Ontario, a transfer of real property — even a gift within a family — generally triggers land transfer tax based on the value of the consideration.…
Read the full answer →The most reliable protection is making sure any transfer between people who don't deal with each other at arm's length happens for genuine, properly…
Read the full answer →If your corporation is classified as a personal services business, it loses access to the small business tax rate entirely, so its income is taxed at a…
Read the full answer →Yes. Personal services business status isn't a one-time determination fixed at the moment you incorporated, it depends on the ongoing substance of your…
Read the full answer →Yes, this hypothetical question is central to the whole analysis, not just one factor among many. The Income Tax Act's definition of a personal…
Read the full answer →CRA applies the same substance-over-form factors used for any employee-versus-contractor question, control over how and when the work is done, who owns…
Read the full answer →Yes. Qualified disability trust status isn't a one-time designation that automatically continues once granted — it's a joint election the trust and the…
Read the full answer →A qualified disability trust, or QDT, is a testamentary trust that's allowed to keep using graduated tax brackets instead of being taxed at the top…
Read the full answer →A qualified donee is an organization that a registered charity is permitted to give money or resources to, in a way that still counts toward the giving…
Read the full answer →Links go to the official consolidated text. Legislation changes — confirm you are reading the current version.
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