General Tax Flashcards
What is the purpose of tax treaties?
It is an agreement between two countries for the purposes of avoiding double taxation and preventing evasion.
To the extent that a taxpayer is subject to tax in Canada and also in another jurisdiction, the provisions of the treaty between these two jurisdictions are used to determine the tax liability. Typically, the terms of the treaty take precedence over the provisions of the ITA.
Who are the individuals that requires to pay tax in Canada?
- Factual full-time residents: Taxed on worldwide income for the year.
- Factual part-year residents: Taxed on worldwide income for the part of the year they are resident in Canada.
- Deemed full-time residents: Taxed on worldwide income for the year.
- Non-residents: taxed on canadian-source income
- employed in canada
- carried business in canada at a permanent location in canada
- disposed of taxable canadian property
How does CRA determine residency for full-time and part-time residents?
Primary Residential Ties
- Dwelling in Canada maintained for taxpayer’s use
- Spouse / Common Law of taxpayer
- Dependent of taxpayer
Secondary Residential Ties
- Personal Properties kept in Canada (ie. car, clothes, furnitures)
- Social Ties (ie. club membership)
- Economic Ties (ie. employment, canadian business, bank accounts & credit cards, savings plan)
- Other Ties (ie. cottage, DL, passport, part of professional org / union)
None of the secondary residential ties alone are sufficient to establish Canadian residency. The CRA would consider a combination of secondary ties together with primary residential ties in determining whether an individual is a Canadian resident under common law.
What are deemed residents?
- an individual who sojourns* in Canada for a total of 183 days or more in the year (for the purposes of this rule, part days are considered full days)
- a member of the Canadian armed forces
- an ambassador, minister, high commissioner, officer or servant of Canada or a province, if the individual was resident in Canada prior to his or her appointment
*A sojourner is an individual who travels in and out of Canada in a year and, because of those travels, is in Canada for a total of at least 183 days in the year. Sojourners are taxed in Canada on their worldwide income for the year.
For part-year residents, what is the CRA rule determine the date in which they become non-resident?
the later of:
- the date the individual leaves Canada
- the date the individual’s spouse and/or dependants leave Canada
- the date the individual becomes a resident of the new country he or she has emigrated to
Corporations - how are the deemed resident of Canada?
What about non-resident corporations?
- The corporation was incorporated in Canada before April 27, 1965, and it either carried on business in Canada or was resident under common law at any time after April 26, 1965.
- The corporation was incorporated in Canada after April 26, 1965.
- A corporation that was not incorporated in Canada may still be considered a Canadian resident under common-law principle if its central management and control is located in Canada. Central management and control is located where the Board of Directors of the company meets to make decisions on how the corporation is to be run.
- If a non-resident corporation carries on business in Canada, it is subject to tax in Canada on its Canadian-source business income.
A corporation is generally considered to be carrying on business in Canada if the business is run through a permanent establishment located in Canada.
What are the tax filing deadlines? For: Individual Deceased Corporation
Individual
- April 30
- June 15 if taxpayer or spouse carried a business
Deceased - later of…
- regular deadline OR
- 6 month from date of death
Corporation
- 6 months after year end
What are the balance owing due dates?
Individual
- Apr 30
Corporations
- 2 months after year end OR
- 3 months after year end for certain CCPCs
