700 plain-language Q&As about tax. Browse below, or search the whole library.
Eligible SR&ED work generally requires two things together: a genuine attempt at technological advancement, going beyond what's already standard or…
Read the full answer →No, a formal, dedicated laboratory isn't required to qualify for SR&ED. Eligibility turns on the nature of the work, whether it involves genuine…
Read the full answer →SR&ED actually provides both, working together rather than as alternatives. Eligible expenditures are generally deductible against your corporation's…
Read the full answer →Yes. A start-up with no revenue yet can still claim SR&ED tax credits, provided it has genuinely eligible research and development expenditures,…
Read the full answer →Yes, an Ontario software company can qualify for the SR&ED, Scientific Research and Experimental Development, tax credit, and this program isn't…
Read the full answer →There's no single, universally mandated tracking method that CRA requires by law, but in practice, credible records of the time employees spent on…
Read the full answer →Not automatically, no. Working through a staffing or placement agency adds another party into the arrangement, but it doesn't by itself change whether…
Read the full answer →Start-up costs incurred before a business is operational are generally not deductible in the same straightforward way as ongoing business expenses. The…
Read the full answer →For most small, closely held Ontario corporations, no, this limit generally isn't a practical concern. The rule that caps how much stock option benefit…
Read the full answer →Yes, where the conditions are met, you can claim a deduction that effectively taxes a meaningful portion of your stock option benefit at a rate similar…
Read the full answer →If your company's stock options were benefiting from CCPC-style deferred taxation and the company later goes public before you've exercised or disposed…
Read the full answer →Yes, tax can become owing even though you never formally exercised your options in the ordinary sense, depending on how the buyout of your private…
Read the full answer →Canada's tax rules include several "stop-loss" provisions that restrict a taxpayer's ability to crystallize capital losses in certain circumstances.…
Read the full answer →Legitimate structuring to avoid association is possible, there are genuine ways to arrange ownership and control, such as issuing different classes of…
Read the full answer →The tuition tax credit is available at both the federal and Ontario provincial levels for eligible post-secondary education costs. Your educational…
Read the full answer →Yes, amounts paid to subcontractors for services rendered in the course of earning business income are deductible as business expenses. These would…
Read the full answer →For GST/HST purposes, a "substantial renovation" generally means a renovation so extensive that all, or substantially all, of the existing building has…
Read the full answer →Form T1161, the List of Properties by an Emigrant of Canada, is an information return you file with your tax return for the year you stop being a…
Read the full answer →Form T1243, Deemed Disposition of Property by an Emigrant of Canada, is where the actual departure-tax calculation happens. While T1161 discloses what…
Read the full answer →A trust's T3 return is generally due within 90 days after the end of the trust's tax year. Most personal trusts, including most family and testamentary…
Read the full answer →Form T3010, the Registered Charity Information Return, is the annual filing every registered charity in Canada must submit to CRA. It reports the…
Read the full answer →T4 slips summarize the employment income, CPP contributions, EI premiums, and income tax withheld for each employee during the calendar year. As an…
Read the full answer →When your corporation pays you a salary, it must issue you a T4 slip after the calendar year ends, reporting the employment income, income tax…
Read the full answer →The Tax Court of Canada hears appeals from CRA assessments. It offers two procedures, and the one that applies depends primarily on the amount in…
Read the full answer →The TFSA is a federal program available to all Canadian residents aged 18 or older with a valid Social Insurance Number, including Ontario residents.…
Read the full answer →Instalment payments are required when you owe more than a certain threshold of net tax that is not being withheld at source. This federal rule applies…
Read the full answer →The CRA processes most electronically filed returns and issues refunds within two weeks, provided there are no issues requiring manual review. Paper…
Read the full answer →Generally, no, once you've genuinely ceased to be a Canadian resident and have no further Canadian-source income and no property left that would…
Read the full answer →Unlike individuals who always have a December 31 tax year, a corporation can choose any month end as its fiscal year end when it files its first tax…
Read the full answer →If CRA successfully recharacterizes active trading inside a TFSA as carrying on a business, the resulting tax is generally assessed against the TFSA…
Read the full answer →Possibly, yes. Under the Income Tax Act's taxpayer relief provisions, CRA has discretion to cancel or waive penalties and interest in specific…
Read the full answer →Taxpayer relief for interest can generally reach back 10 years, measured from the year you make the relief request, but the important nuance is what…
Read the full answer →Yes, telephone and internet expenses are deductible to the extent they are used for business purposes. If you have a dedicated business phone line used…
Read the full answer →Not right away. A terminal loss only becomes available once you dispose of the last property remaining in a particular CCA class. If you sell one…
Read the full answer →A terminal loss happens when you sell, or your property is otherwise disposed of, for less than its remaining undepreciated capital cost, or UCC, and…
Read the full answer →Not necessarily, and this is an important trap to know about. Selling a rental property to a family member below its actual market value doesn't let…
Read the full answer →Not anymore, for most trusts. Before 2016, a testamentary trust (one created by a will, on death) benefited from the same graduated tax brackets an…
Read the full answer →No, there is no published bright-line dollar amount or transaction-count threshold that automatically triggers CRA reviewing a TFSA for day-trading…
Read the full answer →CRA charges a monthly penalty tax calculated on the amount of your excess TFSA contribution, for every month, or part of a month, that the excess…
Read the full answer →It can, and this is one of the most common ways people accidentally over-contribute to a TFSA. Withdrawal room isn't added back to your TFSA…
Read the full answer →No — withdrawals from a Tax-Free Savings Account (TFSA) are completely tax-free in Canada, including for Ontario residents. Unlike RRSP withdrawals,…
Read the full answer →Generally, the person who actually bears the economic risk and reward of ownership - meaning who funded the purchase, pays the expenses, and keeps the…
Read the full answer →No, they're two completely separate taxes, and mixing them up is a common and costly mistake. Toronto's vacant home tax is a municipal levy passed…
Read the full answer →The tax on split income rules, known as TOSI, significantly restrict the ability to split dividend income with family members through a private…
Read the full answer →Yes. Canada and the US have a bilateral social security agreement, often called a totalization agreement, designed to prevent someone from having to…
Read the full answer →Transferring real property you own personally into a corporation you control is a disposition for tax purposes. Under the federal Income Tax Act, the…
Read the full answer →A treaty-based return is a tax return filed specifically to take the position that a tax treaty overrides what would otherwise be your tax obligation…
Read the full answer →The Canada-US tax treaty caps the rate of US withholding tax that can be applied to pension payments, including lump-sum payments, made to a Canadian…
Read the full answer →The Income Tax Act contains attribution rules specifically designed to stop income splitting through a trust when you transfer or loan property to a…
Read the full answer →Generally no — if a family trust actually pays or makes payable a capital gain to a beneficiary in the same year it's realized, and makes the proper…
Read the full answer →For most express trusts, yes — since expanded federal trust reporting rules took effect, a trust filing a T3 Trust Income Tax and Information Return…
Read the full answer →Yes. Compensation paid to an estate trustee, or executor, or a trustee of a family trust for administering the estate or trust is taxable income to…
Read the full answer →Yes. The federal tuition tax credit is a non-refundable credit for eligible tuition fees paid to a qualifying post-secondary institution in Canada or,…
Read the full answer →No. Under the federal Income Tax Act, a family unit — generally meaning spouses or common-law partners and their minor children — can only designate…
Read the full answer →When a rental property is destroyed by fire, the insurance proceeds you receive are treated as the proceeds of disposition for CCA purposes,…
Read the full answer →The Underused Housing Tax (UHT) is a federal annual tax of 1% on the assessed or fair market value of certain "underused" residential properties in…
Read the full answer →Yes. Annual union dues and professional membership fees required to maintain a professional status recognized by statute are deductible from employment…
Read the full answer →Failing to report all self-employment income is a serious matter. The CRA can reassess your tax returns and impose penalties plus arrears interest on…
Read the full answer →If a corporation is wound up with unused RDTOH still sitting in the account, that balance is at real risk of being lost, since the refund mechanism is…
Read the full answer →Yes — unused RRSP contribution room carries forward indefinitely. If you did not contribute the maximum amount allowed in previous years, the unused…
Read the full answer →No, not under the normal treaty-based treatment. The growth inside a US 401(k), investment income, capital appreciation, and so on accumulating within…
Read the full answer →The Canada-US tax treaty extends broadly similar tax deferral to US retirement accounts like a 401(k) or an IRA that Canada gives its own RRSPs, so…
Read the full answer →Once you're a Canadian resident, a withdrawal from your US 401(k) generally becomes taxable in Canada as income, in much the same way an RRSP or RRIF…
Read the full answer →Yes. The United States taxes its citizens on worldwide income regardless of where they live — a policy distinct from most countries, including Canada.…
Read the full answer →No, generally not, if you're a Canadian resident performing all your work physically in Ontario, your US employer generally shouldn't be withholding US…
Read the full answer →No, not correctly, an employee who lives and physically performs all their work in Ontario generally needs to be paid through a properly set up…
Read the full answer →Yes, but the treaty changes how much of it Canada actually taxes. Under the Canada-US tax treaty, US Social Security benefits paid to a Canadian…
Read the full answer →Generally, no, simply having a US-based employer doesn't, by itself, create a US tax filing obligation for someone who is a Canadian resident, not a US…
Read the full answer →Generally, yes. Using the Home Buyers' Plan once doesn't permanently disqualify you from using it again later, provided you fully repaid your earlier…
Read the full answer →Yes. Toronto requires an annual occupancy status declaration for every residential property, regardless of whether it seems obvious to you that the…
Read the full answer →Yes, generally. Both Toronto's and Ottawa's municipal vacant home tax programs provide a defined exemption category for situations where the owner is…
Read the full answer →Yes, both cities generally provide a renovation exemption category, but it usually requires more than simply telling the city the property is being…
Read the full answer →Generally, no - a property isn't automatically treated as vacant just because a family member lives there rent-free rather than paying rent. Occupation…
Read the full answer →Generally, no. Vacant land held for future rental development, but not yet earning any rental income, generally can't generate a deductible loss for…
Read the full answer →It's treated as regular wages, not as a retiring allowance — and this is a common point of confusion worth clearing up directly. A lump-sum vacation…
Read the full answer →For a passenger vehicle used partly for business, the Capital Cost Allowance (CCA) calculation involves two steps: first, apply the half-year rule and…
Read the full answer →Self-employed individuals can deduct vehicle expenses to the extent the vehicle is used for business purposes. The deductible portion is based on the…
Read the full answer →Yes. The CRA accepts a "simplified logbook" method for taxpayers who have established their vehicle's business-use percentage in a full base-year…
Read the full answer →CRA's Voluntary Disclosures Program (VDP) lets taxpayers come forward to correct past errors or omissions in their tax filings, whether or not CRA has…
Read the full answer →The main advantage of voluntary HST registration is the ability to claim input tax credits (ITCs) — refunds of the HST you pay on business inputs like…
Read the full answer →Your corporation can pay a salary to your spouse if your spouse actually performs services for the business. The salary must be reasonable — comparable…
Read the full answer →Often, yes — using a wellness spending account for gym equipment rather than genuinely eligible medical expenses tends to get less favourable tax…
Read the full answer →Payroll source deductions are amounts you must withhold from an employee's pay on each paycheque and remit to the Canada Revenue Agency (CRA). This is…
Read the full answer →Capital property under the federal Income Tax Act is broadly defined as any asset you hold to generate income or to appreciate in value, rather than to…
Read the full answer →Whether a property counts as "vacant" generally turns on whether it's used as a principal residence, or actually lived in for a set portion of the…
Read the full answer →The $30,000 small-supplier threshold is measured against your total worldwide taxable supplies — meaning the revenues from most goods and services you…
Read the full answer →If CRA determines during an audit that you did not report income, it will reassess you for the taxes owing on that income, plus interest. Interest runs…
Read the full answer →When you file a tax return, CRA reviews it and issues a Notice of Assessment — its initial calculation of the tax you owe or the refund you are owed. A…
Read the full answer →A Notice of Confirmation is CRA's formal response to your Notice of Objection when the Appeals Officer has reviewed the matter and decided to uphold…
Read the full answer →GRIP stands for General Rate Income Pool, and it's a notional account tracking how much of your corporation's income has already been taxed at the…
Read the full answer →Net income (also called net income for tax purposes, or "line 23600" on your T1) is your total income minus specific deductions such as RRSP…
Read the full answer →Net tax is the core calculation on every HST return: it is the HST you collected from your customers (your "output tax") minus the HST you paid on…
Read the full answer →RDTOH stands for Refundable Dividend Tax on Hand, and it's a notional tax account the Income Tax Act requires a private corporation to track,…
Read the full answer →The basic personal amount is a non-refundable tax credit available to every Canadian resident. It works by allowing you to earn a certain amount of…
Read the full answer →The Canada Revenue Agency selects files for audit using a mix of automated risk scoring and manual review. Certain patterns reliably raise the odds:…
Read the full answer →Generally, grant itself isn't a taxable event, receiving the option doesn't trigger tax on its own. For options from a company that isn't a CCPC, such…
Read the full answer →The due date for your HST payment (and return filing) depends on your filing frequency. Monthly filers must file and pay by the last day of the month…
Read the full answer →Your HST registration effective date is the date you are required to start collecting and remitting HST — and it may not be the date you apply. The CRA…
Read the full answer →You must report the sale of your principal residence on your federal income tax return for the year the sale occurred, even if the entire gain is fully…
Read the full answer →When you earn business income as a sole proprietor, every dollar is taxed at your personal marginal rate, which as of mid-2026 can exceed 50% in…
Read the full answer →Links go to the official consolidated text. Legislation changes — confirm you are reading the current version.
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