April 17,2017-IRS reinstates foreign certified acceptance agents

Posted by on Apr 18, 2017 in 2017 Articles | 0 comments

Certification of IRS Form W-7  ITIN application form

Effective  April 17, 2017, the IRS reinstated  foreign  or non-U.S. certified acceptance agents that were disbanded  on January 1, 2017. Therefore I can certify or alternatively  review your W-7 to ensure it is complete and accurate.  You will need to submit your original passport or obtain a certified copy of the passport from Passport Canada if you wish to self-prepare the W-7 without my certification. With certification, we just…

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Self-prepared returns

Posted by on Mar 23, 2017 in 2017 Articles | 0 comments

Often taxpayers, weather Canadian or U.S. tax filers are self-preparing their own returns with tax preparation software packages purchased in the market place. Problems arise numerous times in that the taxpayer not being aware of tax law, has omitted to file various required annual foreign information returns. This is likely due to the fact the software is not a professional version and/or the taxpayer-preparer is not reading any of the software return’s diagnostics.

From the U.S. perspective, foreign financial accounts requiring the…

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Canada/Israel Income Tax Treaty

Posted by on Mar 2, 2017 in 2017 Articles | 0 comments

A new treaty was signed on September 21,2016. When it comes into force, it will allow a reduced rate of non-resident withholding tax levied by the source country, on dividends, interest and royalties that is different from the 1975 convention. Source countries may require a waiver form or some certification of residency from the income recipient.

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Act immediately in filing your Notice of Objection

Posted by on Mar 2, 2017 in 2017 Articles | 0 comments

Taxpayer’s who do not agree with their notice of assessments or reassessments can file a notice of objection, appealing the Minister’s decision. Generally, one would first to go the appeals division as opposed immediately to Tax Court. Sometimes we file a T1 adjustment form where the Ministers’ adjustments are simply based on incorrect information. However, where there is a misinterpretation of the facts or it is a grey area, the appeals process is the…

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Borrowing to redeem shares or pay dividends

Posted by on Mar 2, 2017 in 2017 Articles | 0 comments

It is my understanding that CRA has not changed it’s position on the deductibility on interest incurred on borrowing to fund the redemption of shares or the payment of dividends.

Subparagraph 20(1)(c) (i) of the Income Tax Act (“ACT”) requires that the borrowed funds be used for earning income from business or property. The exception to the direct use of borrowed funds, is premised on the basis…

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U.S. Expatriation

Posted by on Mar 2, 2017 in 2017 Articles | 0 comments

Renunciation of U.S. citizenship is an expatriation event requiring the filing of IRS Form 8854 with your tax return for year of expatriation. Renunciation has a fee of US$2,350.

Renunciation is voluntary and requires an appointment for receiving a certificate of loss of nationality. In March 2016, all renunciation applications go to the American Citizen Services Unit in Vancouver for screening and review before an appointment is set at one of the U.S. consulates. It…

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Personal services provided by U.S. person coming to Canada

Posted by on Feb 25, 2017 in 2017 Articles | 0 comments

Similar to the U.S. rules, Canada may tax personal services provided in Canada by U.S. persons who are not residents of Canada income tax purposes. The provisions governing this are regulations 102, 105 and section 115 of the Income Tax Act (‘ITA”).
The treaty-employment income
Article XV of the Canada/U.S. tax treaty may exempt from Canadian taxation, personal services that is employment income where the income is not more than $10K earned in the source country…

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Changes to the principal residence exemption

Posted by on Feb 22, 2017 in 2017 Articles | 0 comments

On October 3, 2016 changes were announced to the computation of the available principal residence exemption. Changes were made to properties held by individuals and to properties held by trusts. Discussion below is limited to the changes affecting individuals. Changes to trust is more complex and may be addressed in another BLOG.

Simply put, the PRE is a formula that exempts all or a portion of the otherwise computed gain on the disposition. The numerator…

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Changes to principal residence reporting

Posted by on Feb 22, 2017 in 2017 Articles | 0 comments

Prior to 2016, it was CRA’s administrative practice that the disposition of your principal residence was not reportable where the entire gain is exempt. There have been a few court cases where the administrative practice was not upheld because CRA Form T2091 was not filed.

Effective for the 2016 taxation year, all dispositions of a principal residence need to be reported even though the entire gain may be exempt from taxation. Schedule 3 of the…

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Refundable tax rates for charitable donations

Posted by on Feb 22, 2017 in 2017 Articles | 0 comments

For donations of $200 or less, the federal refundable tax credit is 15%. For donations more than $200, the federal refundable tax credit is representative of the top marginal tax rate of 29% even if you were not in that marginal tax bracket.

With the introduction of the top federal marginal rate of 33% on taxable income over $200,000, it was presumed that the refundable tax rate on donations more than $200 would be 33%.

The…

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