How are holdbacks treated for tax purposes?
The construction industry has special tax rules relating to when the income is recognized for tax purposes.
A holdback amount on each invoice (i.e. 10% of the progress billing) is a typical billing method in the construction industry. The customer does not pay this amount until they have approved the work as 100% completed and without deficiencies. Read More
The United States is “making noises” about “tax reform”. Senator Orrin Hatch requested submissions from “stake holders” on what should be included in tax reform. He has clearly received (as did the Ways and Means Committee in 2013 and the Senate Finance Committee in 2015) many suggestions advocating the repeal of “citizenship-based taxation”.
As noted at a site compiling the submissions of those affected by U.S. extra-territorial taxation: Read More
Why is the United States imposing full U.S. taxation on the Canadian incomes of Canadian citizens living in Canada?
The Internal Revenue Code mandates that ALL “individuals”, EXCEPT “non-resident aliens”, are subject to full taxation, on their WORLDWIDE income, under the Internal Revenue Code. The word “individuals” includes U.S. citizens regardless of where they live and regardless of whether they are citizens and residents of other countries where they also pay tax. This means that, by its plain terms, the United States imposes full taxation on the citizens and residents of other nations, because they are also (according to U.S. definitions) U.S. citizens. The United States is the only country in the world that has a definition of “tax residency that mandates full taxation based ONLY on citizenship. Read More
A Canadian man pleaded guilty today in Rochester, New York to conspiring to defraud the United States and stealing government funds, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney James P. Kennedy Jr. for the Western District of New York. Read More
Why should I be concerned about participating and non-participating shares in my company?
Shares in a corporation can be participating or non-participating, among other features. Participating shares are eligible to “participate” in the equity growth of the company and be permitted to receive dividends. Non-participating shares do not benefit from the equity growth of the company. This can potentially impact the valuation of shares. Read More
How do I determine if my new vehicle is a Class 10 or Class 10.1 asset and what are the tax implications?
Any vehicle with a purchase cost of over $30,000 can be classed as a luxury vehicle (a 10.1 asset). This classification restricts the amount of depreciation that can be deducted from income which reduces your corporate expenses and increases your corporate tax. It also limits the amount of GST that can be recovered. The determining factor is whether the vehicle is a passenger vehicle or a motor vehicle by CRA’s definitions. Read More
The importance of income tax treaties should not be underestimated when considering the U.S. tax implications of living abroad. U.S. and foreign tax laws often fall short of ensuring that U.S. expats are on equal tax footing with their non-expat counterparts. In such case, a relevant tax treaty may be available to pick up the slack. Read More
What is a T106 information return of non-arm’s length transactions with non-residents?
Facts:
A T106 is an annual information return where a corporation reports its non-arm’s length activities with non-residents. Non-arm’s length transactions are generally transactions where the parties are considered to be related. Read More
(This is a continuation from the article posted yesterday. Click here to read it.)
In 1986, Congress added the PFIC rules to the Internal Revenue Code because of concerns that American taxpayers investing in passive assets indirectly through a foreign investment company have an inappropriate tax benefit compared to direct investments in these assets. The purpose of the PFIC rules was to eliminate this advantage. Read More
Why are PFIC rules important for holders of Canadian mutual fund?
Many American citizens living or working in Canada have invested in Canadian mutual funds – likewise, many Canadians who subsequently moved to the United States retained their Canadian mutual funds holdings. They likely are unaware of the PFIC rules. Consequently many American taxpayers holding Canadian PFIC have not met their reporting obligations. Not only that but PFIC investments are to be avoided since its taxation (with the exception of the QEF regime) is designed to be punitive. Read More
How is GST (Goods and Services Tax) reported and paid on the purchase of taxable Real Property?
For tax purposes, Real Property refers to land and anything permanently affixed to the land that can be purchased or leased including mobile homes, commercial buildings, apartments, homes and offices. Generally speaking, GST is charged on the sale or lease of Real Property.
What is a schedule 97 as part of a T2 corporate tax return?
Schedule 97 is an additional information schedule for non-resident corporations that must file a Canadian tax return.
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