Cross Border Tax Consultants

Did you claim the wrong deduction on your taxes? Or, did you forget to state a job income that you had a T4 for? Mistakes can cost you a lot, especially when making mistakes in filing tax returns.   Here are some common mistakes you need to look out for a while filing your personal tax return. 1. Failing to report Principal Residence Exemption The Principal Residence Exemption provides an exemption from tax on any profit gained from the sale of property that is designated as your principal residence. The sale must be reported on your tax return along with the designation on the second page of Schedule 3. You should also fill sections related to the principal residence in Form T2091. 2. Not Reporting Foreign Properties and Income If you owned any foreign property with a total cost exceeding $100,000 at any time of the year, you are required to submit Form T1135 along with your tax return by the due date. Failure to do so will result in a hefty penalty of $25 per day, which is ...

The Voluntary Disclosure Program is intended to encourage conformity with Canada's existing tax regulations. Its goal is to encourage people to come forward voluntarily to resolve their tax issues with the CRA. It's a legitimate way to avoid understatement fines and other administrative penalties for income, sales, property, and other forms of taxes. Many people have been able to resolve their tax issues & obligations through a voluntary disclosure program. Thanks to this convenient program & a very generous way to come clean and have a fresh start! Residents of Canada, as well as non-residents in certain circumstances, are required to file tax returns. They just pay sums owed to the Canada Revenue Agency for each tax year. These tax filing and payment duties are sometimes missed or incorrectly met. It may be purposeful or accidental! When it comes to paying taxes, mistakes happen. If they aren't rectified correctly, then you or your business might face additional ...

Filing two sets of taxes as an American living in Canada might be a little daunting & overwhelming. Knowing which tax rules apply to you and tracking your tax filing options can be daunting! Filing taxes as an American residing in Canada attracts its own set of questions and concerns. Is there anything else you need to specify to the Internal Revenue Service (IRS)? How do your financial accounts in Canada influence while filing your tax return? What to do if you are a commuter from Canada to the United States? Thinking about tax procedures & filing in the United States and Canada probably makes your mind spin! Don't worry! Maroof HS CPA is here to help! Cross-border tax returns necessitate a large level of technical and professional knowledge. Over the last few years, the US tax code has undergone considerable revisions. These modifications had a significant influence while filing US tax returns by US ex-pats in Canada. Anyone attempting to file these tax returns without ...

Incorporating your business in Canada involves a couple of steps, and if you're unsure how to go about it, here are some things you must keep in mind. The first thing you should do is decide if you need to incorporate your business or not. Not all companies need to be incorporated. A self proprietorship might be right for you if you’re just starting out. The next thing is to decide if you need to incorporate your business provincially or federally. Once this is done, you need to get a name for your corporation. To ensure other corporations do not take your business name, you need to research. Search on Google, social media handles, and domain names to ensure your business name is unique. You reserve that name. The next step after getting a name is to submit the documents of articles of incorporation and the record of the first board of directors and registered office address. You need to consult a lawyer or a chartered accountant to get this done for you. Incorporating provinci...

Some taxpayers may become very fearful at the thought of having to reopen a filing or make revisions to file back taxes with the CRA (Canada Revenue Agency). But CRA’s Voluntary Disclosure Program (VDP) can benefit someone in this circumstance. The Voluntary Tax Program is worth taking benefit of if you know that you’re going to owe taxes & penalties will be appraised. But it is essential that you meet all 5 conditions set by Canada Revenue Agency to be eligible.   The Voluntary Disclosure Program isn’t part of the Income Tax Act but merely a compliance measure approved by parliament to provide CRA unrestricted powers over the upshot of your disclosure. The 5 conditions that must be met under the Voluntary Disclosure Program criteria are compulsory to use the program. To file under the VDP, you must meet all conditions: • The disclosure must be voluntary. If Canada Revenue Agency asks you for information or requests a filing before you choose to use Voluntary Disclosure Prog...

What’s the purpose of a business plan & why are business plans so critical? Here in this post, we have stated our top 10 reasons why you need a business plan in 2021. To prove that you are serious regarding your business: A formal business plan is essential to show all involved parties – investors, partners, employees, and yourself – that you’re committed to building the business. Making your plan pushes you to think through and pick the strategies that’ll impel your growth. To better analyze your competition: Preparing the business plan propels you to assess the competition. All businesses have competition in the form of either direct or indirect competitors, and it’s vital to apprehend your organization’s competitive advantages. And if you don’t have any competitive advantages at present, a business plan helps you find out what you must do to gain them. To get an in-depth customer analysis: A thorough customer analysis is indispensable to an efficient business plan & a boo...

The cryptocurrency has become a mainstream investment activity for many in recent years. Many people who held the bitcoins long ago have drastic gains when they disposed off the bitcoins at the peak in 2020. Canada Revenue Agency require all the taxpayers to report gains or losses from transactions in cryptocurrencies. During pandemic, many young investors have used their savings or benefits to buy cryptocurrencies. At end of the year, they are struggling to file taxes. Recently Canada Revenue Agency in Canada and the Internal revenue Service in the United States have joined their forces to detect the taxpayers who are hiding their income from dealings in cryptocurrencies. Taxpayers are misguided that they can hide their income from taxman if they deal in cryptos because there is no public record. That’s not true anymore. The public ledger and other sources can help taxman figure out your non compliance. Due to the cross border information exchange and tax intelligence, more and mo...

Canada taxes cryptocurrencies such as Bitcoin as a commodity. Depending on our circumstances, the resulting income is taxed as a business income or capital gain on your personal income tax return. If you hold bitcoin or other cryptocurrencies as a Capital asset, the result is going to be a Capital gain or loss. Such a gain or loss is included only half in your income. If you are running a crypto business such as trading as a day trader and have huge volumes of transactions, CRA will say it’s a business income. Soits important to consult some tax professional to determine if you are running a business or holding capital assets. If you are a cryptocurrency miner you are definitely running a business and you can treat income as a business income. Business income can be offset against other business losses as well, even your employment income. When you are running a business, you are entitled to all the deductions a business will be ordinarily allowed. Some of these transactions can ...

If you are a U.S. person and shareholder of a Canadian corporation, especially Canadian controlled private corporation (CCPC) or professional corporation, you might be struggling around GILTI. What is GILTI? How is GILTI calculated? How to avoid GILTI? If you are having all these questions, you are not alone! Let’s simplify the GILTI for you. If you need a more detailed but simplified understanding of GILTI and how it affects the U.S. shareholders of Canadian corporations, read here . GILTI is a complex tax topic and ideally should be dealt by a cross border tax accountant in Toronto. However, you can avoid the GILTI altogether by one simple decision – Pay yourself Salary from your Canadian corporation! Yes, by paying yourself salary you can remove the earnings from the corporation. The income is reported as an employment income on your Canadian income tax return. Foreign tax credit against the income tax credits paid in Canada are available to apply against US income tax liabi...

In Canada, every year many taxpayers go to file their individual income tax returns and are shocked to find that a tax return has already been filed for them! Some innocent Canadians, additionally, get fake calls from cybercriminals who impersonate as tax officials. Sadly, Tax frauds are increasing in number everyday. According to the Canadian Anti-fraud Centre, about 45,000 people became victims of cybercrimes and lost around $96 million in 2019. Even then, a big number of Canadians still take this easy and ignore certain facts about e-filing tax returns. CRA has deactivated 800,000 accounts in order to protect the information of the taxpayers whose credentials are for sale on the dark web. The cybercriminals make all these efforts for taking benefits’ payments and refunds of targeted taxpayers. They are making impersonation scams, malware, and phishing schemes. They are striving to steal the confidential information of many Canadians and Residents. If you don’t want to suffer whil...

  Americans have been moving to Canada like never before, especially in 2020. This is really important that as a U.S. Citizen you familiarize yourself with tax obligations. The U.S. taxes its citizens and permanent residents on world-wide income no matter wherever they reside. Canada taxes its residents (not citizens) on their worldwide income. Therefore, Americans in Canada must file both U.S. and Canadian income tax returns. Filing income tax returns in both countries result in some double taxation issues. Fortunately, the U.S. Canada tax treaty provides relief from the double taxation. As the tax rates are higher in Canada it results in the lower to no taxes owing in the U.S. This is important to know that U.S. citizens are subject to two important foreign assets reporting regime: FATCA and FBAR. If you meet certain thresholds you must file FINCEN 114 and 8938 to ensure compliance. If you fail, penalties are outrageously steep. TFSAs and RESPs are not taxable in Canada however...

Property flipping is a business and taxed as a business income in Canada. Canada Revenue Agency is cracking down to ensure compliance.  Many factors decide whether you earned a capital gain from the sale of your house or it is a business. 1. What is the nature of the property? 2. How long you held the property? 3. How many real estate transactions you made? 4. How much effort did you put into renovating the property? 5. What were your original intentions when you purchased the property? 6. Under what circumstances you sold the property? A great post by a professional income tax accountant in Canada discusses the different income tax and excise tax issues related to flipping houses in Canada . In this comprehensive and easy to understand the post, Maroof Hussain Sabri, a CPA in Ontario discusses how case law provides the decisive factors to determine if the real estate transactions result in a business income or capital gain. Capital gains are included 50% only in the...

Canada needs immigrants! Immigration plays a critical role in the Canadian economy. That is why there are multiple immigration programs by different provinces and territories in Canada. Each of these programs have their own requirements based on their local needs. Almost always, business immigration to Canada needs a business concept and business plan. Some of the programs require you to submit business concept in the first stage and a business plan in the second stage. The province evaluates the business concept and business plan and assign a score based on the pre-established criteria. Such a criteria is already published by them. Therefore, it is critical that you read all those guidelines so that you can get the maximum score. A valuable post written by Maroof HS CPA Professional Corporation on how to write a killer business plan for immigration can be found here . They also provide a comprehensive business plan writing service for immigration to Canada. As explained by the pro...

Canada is a top immigration destination for people across the world; both from developing and developed countries. There are many positive sides to immigrating to Canada. One of the areas where all the new immigrants dread while coming to Canada is “Income Taxes”! Yes, individual income taxes or personal income taxes, are extremely high in Canada as compared to the neighbouring United States. This is even higher for those coming from the middle eastern countries with no income taxes at all. So if you are moving from a country where there are no income taxes such as the United Arab Emirates or other gulf countries, you must prepare yourself to start paying income taxes. You can take a couple of steps before immigrating to Canada such as: 1. Establish your date of change of residency. Tax residency and immigration residency are two different things. 2. Try to realize Capital gains before the date of immigration. If not, arrange for the fair market value of all of your assets as of...

 Not sure where to set up your research centre? Canada might be your go-to. For a while, Silicon Valley in the United States has been a Research and Development hub in the World. But, it may no more be the same. Bloomberg's September 2020 report emphasizes the problems with R&D incentives in the States and why businesses are moving their R&D centres to Canada. But why are foreign businesses setting up their R&D centres in Canada? Canada offers generous R&D Tax Incentives. As a young entrepreneur, setting up a business is no easy feat, but if it's in Canada, you're in for plenty of benefits. By international standards, Canada provides the most attractive R&D treatment. Though the U.S. is one of the top tech hubs since the tax systems are not so generous as that of Canada, there is a drastic shift and a new trend in the way businesses are setting up their R&D centres. Factors such as high business taxes, corporate culture, cost of living, and vari...

 Are you looking to expand your business internationally? Investing in Canada is one of the easiest and the best place. If you're planning to start a business or looking to expand internationally? Here is what you need to know. There is a multitude of opportunities in Canada, right from political stability to urban infrastructure. Fortune 500 companies plan to expand their businesses to Canada, which shows Canada is the best country to invest in. Canada has the soundest banking system among the G7 countries and ranks sixth out of 141 countries. Did you know Canada has the lowest tax rate on new business investments out of the G7 countries? as reported by the Finance Canada Calculations and OECD Tax Database, November 2019. Whether you're an entrepreneur planning to set up your start-up or an existing business trying to expand by setting up an R&D centre, Canada is the right country for you. It offers tons of perks and also provides various opportunities to grow. The G...

    No doubt, Canada is one of the top destinations for business immigration. There are many reasons for businesses to move to Canada. Whether you are looking for a politically and economically stable country, proximity to the United States, an OECD country or the next generation global leader in Research and Development – Canada is the place to be! Canada’s attractiveness makes it an ideal immigration destination for individuals who are running successful businesses in their home countries. Here comes the challenging part: How to immigrate to Canada under a business or investor visa? Well, the immigration process is not that simple and you will be needing a licensed immigration consultant in Canada. (We can recommend the one, but we do not prefer to mention here). In the application process, usually, most of the provinces require to submit the business concept and later on a detailed business plan. This is where a lot of entrepreneurs and investors lose their chances desp...

    The United States uses a Substantial Presence Test (SPT) to determine if an individual needs to report its income to the IRS. When you spend so much time, even without undertaking any economic activity. Substantial presence test (SPT) uses a specified formula to determine the number of days in current and two preceding years. Add the below and if the result is equal to or more than 183 days, you need to file a U.S. income tax return. 1. Total number of days in the current year – 1X 2. Total number of days in the first preceding year – 1/3X 3. Total number of days in the second preceding year – 1/6X If you spend a minimum of 31 days in the current year and the result of the above formula is equal to or more than 183, you have met the SPT. For Canadians spending winter in the United States, it's very easy to meet this substantial presence test and become subject to U.S. income tax. Relief for Canadian Snowbirds from U.S. Taxes If you spend less than 183 days in th...

What is “notice to reader financial statements”? Financial statements of a business show the financial position and performance of that business over a certain period. Generally, there are three financial statements: 1. Balance sheet: Also knows a statement of financial position 2. Income Statement: Also knows as a statement of financial performance 3. Cash flow statement Notes are often attached with these financial statements, however, if you are a small business the management may decide to not prepare them. In all cases, a balance sheet and an income statement must be attached. Notice-to-reader refers to a notice, signed by a registered CPA firm, cautions the readers of these financial statements about the level of involvement of the professional accounting firm. Further, you can use either Accounting standards for private enterprises (ASPE), or International Financial Reporting Standards (IFRS) in Canada. Read more about Notice-to-Reader Financial Statements here . Who ...

As per the income tax laws and rules in Canada, tax residents of Canada must report their worldwide income. Often, taxpayers miss reporting their income or assets. Such non-compliance can be either intentional or unintentional. Taxpayers who have not reported their income in Canada when they should have, are always on the hook for penalties. If the amounts involved are not substantial, normal penalties apply. However, when the tax omissions cross certain thresholds or are intentional, there are gross negligence penalties and even criminal prosecution.     CRA Voluntary Disclosure Program Luckily, CRA runs a program called the Voluntary Disclosure Program a.k.a. VDP. Under the voluntary disclosure program, taxpayers are granted relief from the penalties and the criminal prosecution. In some cases, interest amounts are reduced as well. VDP Application Requirements For an application to qualify under the CRA VDP program, it must meet the following five conditions. 1. The app...