700 plain-language Q&As about tax. Browse below, or search the whole library.
The CRA requires quarterly tax instalments if your net tax owing — federal and provincial combined — exceeds a threshold for the current and either of…
Read the full answer →Your corporation gets its RDTOH refunded by actually paying a taxable dividend to its shareholders, the refund isn't automatic just because the RDTOH…
Read the full answer →The two structures are treated differently for GST/HST purposes, so the choice matters beyond how the parties divide profits. A genuine partnership is…
Read the full answer →CRA can, though the modern approach is somewhat broader than the traditional "reasonable expectation of profit" label suggests. Rather than a strict…
Read the full answer →Ontario's recaptured input tax credit requirement was a rule that required certain larger GST/HST registrants, referred to as "specified persons," to…
Read the full answer →The CRA can ask you to support any home office deduction with documentation, so keeping organized records is important. The key records include copies…
Read the full answer →Yes. A Record of Employment (ROE) is an Employment Insurance document that you must issue whenever an employee experiences an interruption of earnings…
Read the full answer →No. Unlike RRSP contributions, contributions to a Registered Education Savings Plan (RESP) are not tax-deductible and do not reduce your income for tax…
Read the full answer →It depends on how the reimbursement is structured and how closely it's tied to actual work use, which makes this another genuinely fact-dependent area…
Read the full answer →CRA assigns a remittance frequency based on your average monthly withholding (AMW) from two years ago. Most new and small Ontario employers fall into…
Read the full answer →This is a situation worth getting dedicated advice on, because Quebec is a genuinely different case from an ordinary interprovincial Ontario payroll…
Read the full answer →If you live in Ontario, are a Canadian tax resident, and physically do your work from Ontario, Canada generally has the primary right to tax your…
Read the full answer →Potentially, yes, and this is a real risk many US employers underestimate when they hire their first Canadian remote worker. A "permanent…
Read the full answer →Renovation and repair costs incurred before a property is rented out for the first time are generally treated as capital expenses, even if the…
Read the full answer →It can, and the answer genuinely depends on how the specific arrangement is structured rather than having one blanket answer that applies to every…
Read the full answer →Replacing a broken furnace with a reasonably similar, standard replacement is often treated as a current expense, since you're restoring heating that…
Read the full answer →Rental income earned from a property in Ontario is reported as income from property on your T1 personal tax return. You include gross rents received…
Read the full answer →It depends on what you actually did, not just the fact that a roof was involved. Patching or replacing damaged shingles to fix a leak, using materials…
Read the full answer →Repainting walls and replacing worn carpet in a rental unit is almost always a current expense, fully deductible in the year you pay for it. CRA's…
Read the full answer →Yes, significantly. Renting to a relative for less than fair market rent is one of the clearest red flags CRA looks at when deciding whether to deny a…
Read the full answer →Yes. If you rent your home and operate a home office from it, you can deduct a portion of your rent equal to your home office percentage. This is often…
Read the full answer →Renting out part of your home — a basement suite, a spare bedroom, or even a short-term rental through a platform like Airbnb — can affect your…
Read the full answer →Yes. You're free to repay your Home Buyers' Plan withdrawal faster than the required minimum schedule, and doing so simply reduces your remaining…
Read the full answer →Often, no - replacing all the original windows in a rental property with a similar but slightly better modern equivalent is usually still treated as a…
Read the full answer →The residential property flipping rule is a federal Income Tax Act rule that applies to residential properties sold in 2023 and later. Where a "flipped…
Read the full answer →A restricted rental loss is a situation where CRA denies or limits a rental loss because the arrangement doesn't look like a genuine, profit-driven…
Read the full answer →Not simply by relabeling it — this is an important limit to understand before going into any severance negotiation with tax savings as a goal. Whether…
Read the full answer →A retiring allowance is a payment made in recognition of long service, or in connection with the loss of your employment — legally and tax-wise, it's…
Read the full answer →A rights or things return is an optional, separate tax return an estate can file for certain amounts the deceased had earned or become entitled to…
Read the full answer →Under Ontario's now-eliminated recaptured input tax credit rule, whether a business was a "specified person" generally depended on factors like annual…
Read the full answer →Ontario's now-repealed recaptured input tax credit rule applied to a defined, limited list of expense categories rather than to a business's spending…
Read the full answer →Not necessarily the entire amount — this is a genuinely common misunderstanding about how the retiring allowance rollover works. There is a special…
Read the full answer →A Roth IRA doesn't automatically get treated by Canada the way a TFSA is, even though the two accounts work similarly in the US and Canada…
Read the full answer →Yes. Preserving a Roth IRA's tax-free treatment once you're a Canadian resident isn't automatic, it depends on filing a specific election with CRA,…
Read the full answer →Not in the deepest sense - both RRSP and RRIF withdrawals are included in your taxable income when you receive them, so converting doesn't change the…
Read the full answer →A RRIF has a minimum amount that must be withdrawn and included in your income every year, calculated using an age-based formula that applies an…
Read the full answer →Yes. A RRIF holder can generally elect to calculate the mandatory minimum withdrawal using a younger spouse's or common-law partner's age instead of…
Read the full answer →No. A RRIF withdrawal is taxable income - you do have to report it and pay tax on it - but it's not the specific type of "earned income" that generates…
Read the full answer →An RRSP can roll over on a tax-deferred basis to a financially dependent child or grandchild, not just to a spouse, though the mechanics and result…
Read the full answer →Once you stop being a Canadian resident, you generally stop accumulating new RRSP contribution room, since that room is earned based on Canadian earned…
Read the full answer →Yes, this is one of the most important practical differences between salary and dividends for Ontario owner-managers. RRSP contribution room is…
Read the full answer →Contributing to a Registered Retirement Savings Plan (RRSP) gives you a deduction (not a credit) against your income — each dollar contributed reduces…
Read the full answer →Not identical, but a related risk exists. RRSPs are structured differently from TFSAs and have their own anti-avoidance and "advantage" rules aimed at…
Read the full answer →An RRSP (Registered Retirement Savings Plan) contribution gives you a deduction that reduces your net income on your T1 return. Because Ontario…
Read the full answer →Without a surviving spouse, common-law partner, or financially dependent child or grandchild to roll it over to, your RRSP is generally treated as…
Read the full answer →Not automatically tax-free, but it can be tax-deferred if it's set up correctly. When you die, your RRSP or RRIF is normally treated as if it were…
Read the full answer →Yes, a salary paid to a shareholder-employee is generally deductible as a business expense for the corporation, reducing its taxable income. This is…
Read the full answer →The "closely related" test for the section 156 election generally looks at ownership: corporations are typically closely related where one owns all or…
Read the full answer →Not automatically, a holding company and its operating company are a classic example of the kind of structure the section 156 election is designed for,…
Read the full answer →A section 156 election is a joint election under the Excise Tax Act that lets qualifying closely related corporations, and certain partnerships, treat…
Read the full answer →Once the corporations involved stop meeting the closely related test, because of a share sale, new investor, corporate reorganization, or any change…
Read the full answer →Yes, section 160 can extend beyond a straightforward transfer of property to reach certain payments, including a bonus, made by a corporation with an…
Read the full answer →Yes. Section 160 isn't limited to formal transactions like a corporate distribution, it applies to any transfer between non-arm's-length persons, which…
Read the full answer →Section 160 assessments aren't confined by the ordinary reassessment period that applies to a regular reassessment of the original taxpayer's own…
Read the full answer →Section 160 of the Income Tax Act makes a person who receives property from someone they don't deal with at arm's length, for less than the property's…
Read the full answer →Yes. If your corporation owes CRA back taxes and, while that debt exists, transfers property or pays you an amount worth more than what you gave the…
Read the full answer →Yes. Spouses are treated as non-arm's-length persons for section 160 purposes, so if you owe CRA money and transfer property to your spouse for less…
Read the full answer →Yes. The section 167 election is a joint election, which means both the purchaser and the vendor have to complete and sign the prescribed election form…
Read the full answer →It depends on whether the rental building is genuinely part of the business being sold, or a separate asset that happens to be owned alongside it. The…
Read the full answer →The section 167 election generally doesn't have to be filed with the CRA at the time of the sale, it's typically completed and kept on file by both…
Read the full answer →Potentially, yes, the section 167 election isn't limited to selling an entire business; it can apply to the sale of just part of a business, as long as…
Read the full answer →A section 167 election is a joint election available under the Excise Tax Act that lets a purchaser and vendor treat the sale of a business, or part of…
Read the full answer →The core requirement for the section 167 election is that the purchaser is acquiring ownership, possession, or use of all, or substantially all, of the…
Read the full answer →A section 216 election is made on a year-by-year basis, not as a one-time, permanent choice that automatically applies to every future year once you've…
Read the full answer →Filing a section 216 return itself doesn't legally require you to have a Canadian agent, but in practice, most non-resident landlords end up needing…
Read the full answer →There is a filing deadline after the end of the tax year for making a section 216 election, and missing it can mean losing the ability to file that way…
Read the full answer →A section 216 election lets a non-resident who owns Canadian rental property choose to be taxed on the net rental income, rent minus allowable…
Read the full answer →The default rule for a non-resident who earns Canadian rental income is a flat withholding tax collected on the gross rent, the full amount received,…
Read the full answer →Yes, it can. A section 217 election isn't automatically a tax break, it changes how your Canadian pension-type income is taxed, from a flat withholding…
Read the full answer →Often, yes. If your only Canadian-source income is CPP and Old Age Security, your total income is likely modest, and a section 217 election lets that…
Read the full answer →Not exactly, in the sense of a built-in floor that automatically limits how much a section 217 election can cost you. The real protection is that the…
Read the full answer →A section 217 election lets a non-resident who receives certain types of Canadian-source pension and retirement-type income, things like CPP, Old Age…
Read the full answer →When you transfer appreciated property — such as goodwill, equipment, or real estate — into a corporation, the Income Tax Act deems the transfer to…
Read the full answer →Generally, yes. Under the Excise Tax Act's self-supply rules, someone who builds or substantially renovates their own home and then, instead of selling…
Read the full answer →Potentially, yes. Long-term residential rentals are generally exempt from GST/HST, while short-term accommodation, commonly understood as rentals of…
Read the full answer →It depends on the specific change, but converting a commercial property to a different use can trigger an HST self-assessment obligation under the…
Read the full answer →Yes. The Disability Tax Credit (DTC) is a federal non-refundable tax credit available to eligible individuals regardless of their employment status.…
Read the full answer →Self-employment income from a sole proprietorship or freelance work is reported on your personal T1 return, not a corporate tax return. You report…
Read the full answer →Self-employed Canadians can access Employment Insurance (EI) special benefits — including maternity, parental, sickness, and compassionate care…
Read the full answer →The Canada Revenue Agency uses several factors to determine whether a working relationship is employment or self-employment. No single factor is…
Read the full answer →A sale of the matrimonial home following separation can raise both family law and tax issues. On the tax side, the principal residence exemption is the…
Read the full answer →Selling an investment inside your corporation can add to its RDTOH balance, since a resulting capital gain is taxed as investment income and generates…
Read the full answer →Often, but not automatically every time — these two concepts are closely related for tax purposes, and many severance payments do legally qualify as a…
Read the full answer →It can, depending on the specific transaction. Severing joint ownership of a rental property, for example converting a joint tenancy into a tenancy in…
Read the full answer →If a corporation lends money to a shareholder and the loan is not repaid within one year after the end of the corporate tax year in which it was made,…
Read the full answer →Corporations controlled by siblings can be deemed associated under the related-persons provisions built into the associated corporation rules, meaning…
Read the full answer →Not in the end — a signing bonus is ultimately taxed at exactly the same marginal tax rates as your regular salary, once your full year's income is…
Read the full answer →The small business deduction is a federal tax credit that reduces the corporate income tax rate on a portion of active business income earned by a…
Read the full answer →Possibly. The US has its own residency test — the Substantial Presence Test — which counts the days you spend in the US over a rolling three-year…
Read the full answer →If you operate a business or practise a profession as a sole proprietor, you report your self-employment income on CRA Form T2125 (Statement of…
Read the full answer →Several Ontario municipalities have introduced vacant home tax programs, and the Province of Ontario applies a Speculation Tax on certain non-resident…
Read the full answer →Yes. CRA allows a reasonable apportionment of a single large repair bill between current and capital treatment where part of the work genuinely…
Read the full answer →By default, yes for most capital property — when you leave property to your surviving spouse or common-law partner, or to a qualifying spousal trust…
Read the full answer →A spousal RRSP is a registered account owned by one spouse but funded by contributions from the other spouse, who gets the tax deduction. The…
Read the full answer →The tax treatment of spousal support (also called alimony or support payments) under Canadian law is straightforward: periodic spousal support payments…
Read the full answer →Your surviving spouse's death doesn't reset the spousal trust's 21-year clock — the two events are handled separately under the Income Tax Act. When…
Read the full answer →A spousal trust set up through your will lets property pass to a trust for your surviving spouse or common-law partner's benefit on the same…
Read the full answer →Yes. An FHSA is an individual account, not a joint one, so each spouse or partner who qualifies as a first-time home buyer can open their own separate…
Read the full answer →Potentially, yes. The associated corporation rules include specific provisions dealing with related persons, and spouses are treated as related for…
Read the full answer →Yes, generally. Employers can use CRA's payroll withholding methods for irregular or lump-sum payments to average or spread the withholding calculation…
Read the full answer →Links go to the official consolidated text. Legislation changes — confirm you are reading the current version.
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