350 plain-language Q&As about Ontario tax. Browse below, or search the whole library.
Your adjusted cost base (ACB) is the cost of a capital property after adjustments required by the federal Income Tax Act. For most assets, the starting…
Read the full answer →Yes, advertising and marketing expenses incurred to promote a business are generally fully deductible. This includes costs like website hosting and…
Read the full answer →If you made an error or omission on a previously filed T1 return, you can request an adjustment rather than filing a new return. The most common method…
Read the full answer →If your employer provides you with a vehicle that you can use for personal purposes, the personal-use portion is a taxable employment benefit that must…
Read the full answer →If you have reported income from a client who never paid you and the debt is now uncollectible, you can generally claim a bad debt deduction to reverse…
Read the full answer →This is an area where Canada's tax rules have been evolving. A bare trust exists when one person (the trustee) holds legal title to property for the…
Read the full answer →The basic personal amount (BPA) is a non-refundable tax credit that reduces the income tax you owe. There are two: one at the federal level under the…
Read the full answer →Yes, a corporation can accrue a bonus to an owner-manager at its fiscal year end and deduct it in that tax year, even if the bonus is not actually paid…
Read the full answer →Yes, premiums paid for business-related insurance are deductible as a business expense. This includes liability insurance for your professional…
Read the full answer →Registering a business name (a "trade name") in Ontario under the Business Names Act does not change your legal structure or how you are taxed. You…
Read the full answer →Business travel expenses are deductible when the travel is undertaken to earn income from your business and is not personal in nature. Deductible costs…
Read the full answer →There are meaningful tax differences between buying and leasing a business vehicle, though neither approach is universally better — it depends on your…
Read the full answer →The standard CRA-accepted method is to divide the square footage of your dedicated workspace by the total square footage of your home. If your home is…
Read the full answer →Canada's Income Tax Act sets a "normal reassessment period." For most individuals and Canadian-controlled private corporations, CRA generally has three…
Read the full answer →The Canada Workers Benefit (CWB) is a refundable federal tax credit designed to support low-income working individuals and families. As a refundable…
Read the full answer →When you are a tax resident of two countries simultaneously — because you have strong ties to both — the applicable tax treaty (if one exists between…
Read the full answer →Capital cost allowance (CCA) is the tax depreciation deduction available on depreciable property — including buildings used to earn rental income. Each…
Read the full answer →Capital gains in Canada are taxed on an "inclusion rate" — only a portion of the gain is added to income and taxed at your marginal rate; the rest is…
Read the full answer →In Canada, there is no separate "inheritance tax" or "estate tax." However, the federal Income Tax Act provides that on death, the deceased is deemed…
Read the full answer →When you sell a business, the structure of the deal determines the tax treatment. There are two main structures: an asset sale and a share sale. In an…
Read the full answer →A cottage or recreational property you sell for a profit triggers a capital gain under the federal Income Tax Act. The taxable portion of that gain…
Read the full answer →The Canada Revenue Agency treats cryptocurrency as a commodity, not currency, for income tax purposes. Profits from disposing of cryptocurrency can be…
Read the full answer →Whether a profit from selling raw or vacant land is taxed as a capital gain or fully taxable business income depends on your intention and the facts of…
Read the full answer →Yes. When you grant someone an option to purchase your property, the premium you receive for that option is generally a capital gain under the federal…
Read the full answer →Yes. When you sell a rental property in Ontario, any profit above your adjusted cost base is a capital gain, and the taxable portion is included in…
Read the full answer →When you sell publicly traded shares at a profit, the gain is a capital gain under federal income tax rules. The taxable portion is added to your…
Read the full answer →Yes. The federal Income Tax Act allows a taxpayer to claim a "capital gains reserve" when they sell a property but do not receive all the proceeds in…
Read the full answer →Yes. Capital gains earned inside a Canadian-controlled private corporation (CCPC) are subject to corporate tax, and the rules affecting investment…
Read the full answer →Canada's attribution rules significantly restrict the ability to split capital gains with a spouse by transferring property between them. If you give…
Read the full answer →Capital gains tax in Canada is governed by the federal Income Tax Act, not provincial law. When you sell a capital property — such as stocks,…
Read the full answer →Capital gains arise when you sell a capital property — such as stocks, a rental property, or a vacation home — for more than you paid for it. In…
Read the full answer →Pre-sale planning for a significant capital property should ideally begin at least one to two years before the anticipated sale, and in complex cases…
Read the full answer →When you sell shares in a private corporation, the proceeds minus your adjusted cost base represent a capital gain under the federal Income Tax Act.…
Read the full answer →Yes. Under the federal Income Tax Act, capital losses can be applied against capital gains, which reduces the net amount included in your income. If…
Read the full answer →Yes. The federal Canada Caregiver Credit (CCC) is a non-refundable credit for individuals who support a spouse, common-law partner, or dependant with a…
Read the full answer →Capital Cost Allowance (CCA) is the CRA's system for deducting the cost of capital assets (equipment, vehicles, computers, machinery, and similar…
Read the full answer →When you stop using your home as your principal residence and start renting it out, the federal Income Tax Act treats this as a "change of use." At the…
Read the full answer →Donations to registered Canadian charities generate both a federal and an Ontario provincial non-refundable tax credit. The federal credit is…
Read the full answer →For individuals, including self-employed sole proprietors, charitable donations to registered Canadian charities are not deducted as business expenses.…
Read the full answer →Charities and certain non-profit organizations are treated as "public service bodies" under the federal Excise Tax Act and face different HST rules…
Read the full answer →Yes, the child care expense deduction is a federal deduction available to Ontario residents under the Income Tax Act. It applies to amounts paid for…
Read the full answer →Yes — child care expenses are deductible on your federal T1 return, which also covers Ontario provincial tax. The deduction reduces your net income,…
Read the full answer →Yes. Under Ontario corporate law and the Canada Business Corporations Act, dividends are declared by the board of directors. Paying a dividend without…
Read the full answer →Yes. Fees paid for a co-working space membership or desk rental used for business purposes are generally deductible as a business expense. Unlike home…
Read the full answer →Canada Pension Plan contributions are a federal obligation. When your corporation pays you a salary, both you as the employee and the corporation as…
Read the full answer →When you are self-employed, you pay CPP contributions on your net business income above the annual basic exemption amount. Unlike employees who split…
Read the full answer →The Canada Pension Plan (CPP) is a federal program, but the contribution rules apply equally to Ontario self-employed individuals. Unlike employees,…
Read the full answer →Yes. Canada Pension Plan disability benefits are taxable income at the federal and provincial level. CRA issues a T4A(P) slip each year showing the…
Read the full answer →Yes. CRA offers a facilitated dispute resolution process within the Appeals Branch that provides a more structured dialogue between the taxpayer and…
Read the full answer →After you file a Notice of Objection, CRA's Appeals Branch assigns an Appeals Officer to your file. This officer is separate from the auditor and takes…
Read the full answer →When a taxpayer fails to file a return, CRA is permitted under the Income Tax Act to issue an "arbitrary assessment" — its own estimate of the tax you…
Read the full answer →A proposal letter (sometimes called an "auditor's proposal") is not a reassessment — it is CRA's notice that it intends to make adjustments to your…
Read the full answer →CRA auditors pay close attention to expense categories where personal and business use overlap. The most commonly challenged deductions for…
Read the full answer →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. 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 →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 →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 →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 →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. 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 →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 →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 →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. 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 →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 →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 →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 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 →As an Ontario employer you match every dollar of Canada Pension Plan (CPP) contributions your employees make — so if an employee's CPP deduction is…
Read the full answer →Form T2200 (Declaration of Conditions of Employment) is signed by your employer and certifies that you were required as a condition of employment to…
Read the full answer →Employment income is the broadest category of personal income in Canada. Your employer reports your wages, salary, bonuses, commissions, and tips on a…
Read the full answer →Yes — an estate that earns income after the date of death is itself a taxpayer in Canada. The estate is treated as a trust and must file a T3 Trust…
Read the full answer →During a CRA audit of business expenses, you will be expected to provide receipts, invoices, or other documentation showing the amount paid, the date,…
Read the full answer →CRA uses a "residential ties" analysis to determine factual residency. There is no single bright-line test — CRA weighs all your connections to Canada…
Read the full answer →Yes. Canadian corporations pay both federal income tax and provincial income tax. Ontario administers its own corporate income tax, and the two rates…
Read the full answer →When someone dies, their legal representative (executor, estate trustee, or administrator) is responsible for filing a final (terminal) T1 return…
Read the full answer →Yes. The First-Time Home Buyers' Tax Credit (HBTC) is a federal non-refundable credit for qualifying first-time buyers who purchase a qualifying home…
Read the full answer →If you buy a property and sell it quickly at a profit — commonly called "house flipping" — there is a strong likelihood that the CRA will characterize…
Read the full answer →Yes — Ontario residents, like all Canadian tax residents, are taxed on their worldwide income. This means foreign employment income, foreign investment…
Read the full answer →As a Canadian resident, you are generally taxed on your worldwide income, which includes foreign pension payments. The full amount is reported on your…
Read the full answer →Yes, the cost of fuel is a deductible vehicle operating expense for self-employed individuals, limited to the business-use portion. If you use your…
Read the full answer →Yes, in most cases. Under the federal Income Tax Act, a gift of capital property — including real estate, shares, or a cottage — is treated as a…
Read the full answer →Yes — income earned through gig economy platforms (such as rideshare driving, delivery services, freelance marketplaces, or short-term rentals) is…
Read the full answer →Rideshare drivers in Ontario are generally treated as self-employed individuals for income tax purposes. You must report all earnings from the platform…
Read the full answer →In Ontario, HST (Harmonized Sales Tax) is the provincial sales tax system, combining the federal GST and Ontario's provincial portion. If you are…
Read the full answer →The GST/HST credit is a federal refundable tax credit paid quarterly to lower-income Canadians to offset the goods and services/harmonized sales tax…
Read the full answer →Yes. The Home Accessibility Tax Credit (HATC) is a federal non-refundable credit for eligible renovation expenses on a qualifying home. It applies to…
Read the full answer →Yes. Home office expenses and general business expenses are separate categories on Form T2125, and you can claim both. General business expenses cover…
Read the full answer →Self-employed individuals can deduct home office expenses if the workspace is used exclusively or principally for business. There are two tests: the…
Read the full answer →Employees who work from home may be able to deduct home-office expenses on their T1 return, but the rules are more restrictive than for self-employed…
Read the full answer →Ontario employees who work from home can potentially deduct home office expenses from employment income, but the rules are strict. You must be required…
Read the full answer →Yes, the rules are meaningfully different. Employees claiming home office expenses use Form T777 and must have their employer complete Form T2200…
Read the full answer →If you use your home internet primarily for business, you have two options. First, you can claim the business-use portion of your monthly internet bill…
Read the full answer →Maintenance and repairs that relate to the home as a whole — like furnace servicing, roof repairs, or general exterior maintenance — are deductible at…
Read the full answer →For most self-employed individuals who claim home office deductions, claiming a portion of the home as a business workspace does not eliminate the…
Read the full answer →Yes, a prorated share of home utility costs — including electricity, heating, and water — is deductible as part of your home office expense for…
Read the full answer →The Income Tax Act is a federal statute that sets a "normal reassessment period." For most individuals and Canadian-controlled private corporations,…
Read the full answer →The length of a CRA audit depends heavily on its type and complexity. A simple correspondence audit — where CRA asks you to mail in receipts supporting…
Read the full answer →Your HST filing frequency depends on your annual taxable revenues. The CRA sets the default filing periods based on revenue tiers, though you can…
Read the full answer →If you disagree with MPAC's assessment of your property, the first step is to file a Request for Reconsideration (RfR) directly with MPAC. The deadline…
Read the full answer →A Notice of Objection is the formal way to dispute a CRA assessment or reassessment under the Income Tax Act. You must file it within 90 days of the…
Read the full answer →Ontario residents file their personal income tax return (T1) using the CRA's NETFILE service, which allows you to submit your return electronically…
Read the full answer →HST registration in Ontario is handled by the Canada Revenue Agency (CRA), not the province, because HST is a federal-provincial combined tax…
Read the full answer →A GST/HST audit by the CRA is an examination of your HST records to verify that you correctly reported and remitted the tax you owe and that your ITC…
Read the full answer →The CRA requires HST registrants to keep adequate records to support both the HST they collected and the ITCs they claimed. For ITC claims, the minimum…
Read the full answer →Collecting HST and not remitting it to the CRA is treated seriously. The HST you collect from customers is held in trust for the CRA — it is the…
Read the full answer →Yes. Under the federal Excise Tax Act, directors of a corporation can be held personally liable for the corporation's failure to remit net tax (HST).…
Read the full answer →Both exempt and zero-rated supplies are sold without charging HST to the customer, but the business-side treatment is very different. Zero-rated…
Read the full answer →When you register for HST with the CRA, your filing frequency depends on your annual taxable revenues. Businesses with taxable revenues under a lower…
Read the full answer →If you are registered for HST, you can claim input tax credits (ITCs) to recover the HST you paid on business purchases and expenses. This is one of…
Read the full answer →Yes, most annual HST filers are required to make quarterly installment payments to the CRA during the year, even though they only file a single return…
Read the full answer →There are two new housing HST rebates available in Ontario — a federal rebate under the Excise Tax Act and a provincial rebate under the New Harmonized…
Read the full answer →When you purchase a newly built home in Ontario, HST (13%) applies to the purchase price. This can add a significant amount to the cost of a new home.…
Read the full answer →Yes. Once you are registered for HST, you are required to show your GST/HST registration number on invoices for taxable supplies. The CRA's rules…
Read the full answer →Yes, but with important restrictions depending on the type of vehicle. For vehicles used exclusively or primarily (more than 50%) for business…
Read the full answer →Yes. Commercial rent — rent for office space, retail premises, industrial buildings, and most other non-residential tenancies — is a taxable supply in…
Read the full answer →Construction services in Ontario are taxable supplies, so contractors charge 13% HST on both labour and materials included in their invoices. The party…
Read the full answer →When you buy digital services — software-as-a-service (SaaS), streaming subscriptions, cloud storage, online courses — from foreign (non-Canadian)…
Read the full answer →For many employee benefits, HST rules mirror the income tax treatment of taxable benefits. If you provide an employee with a taxable benefit under the…
Read the full answer →Yes. When an Ontario employer reimburses an employee for expenses the employee incurred on the employer's behalf — business travel, office supplies,…
Read the full answer →Yes. Importing goods into Canada triggers GST/HST at the border, collected by the Canada Border Services Agency (CBSA) at the time of importation. For…
Read the full answer →Yes. Legal services are taxable supplies in Ontario, meaning that lawyers (and paralegals providing regulated legal services) charge 13% HST on their…
Read the full answer →No. Meals and entertainment expenses are subject to a 50% restriction under both the Income Tax Act (for the expense deduction) and the Excise Tax Act…
Read the full answer →When you purchase property — a vehicle, a home office, equipment — that you use for both business (commercial) and personal purposes, you can only…
Read the full answer →Yes, in most cases. The Canada Revenue Agency has clarified that assignment sales of pre-construction residential properties are generally subject to…
Read the full answer →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 →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 →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 →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 — 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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 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 →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 →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 →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 →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, 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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 →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 before CRA initiates…
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 →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 →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 →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 →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 →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 can exceed 50% in Ontario once federal…
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