Ross & Sylvestre Chartered Accountants LLP: Tax, Tips, and Traps

2018 Forth Quarter : Newsletter 124

Tax Ticklers

SOME QUICK POINTS TO CONSIDER:

A recent U.S. Supreme Court decision found that a business with no physical presence in a state may still be required to collect and remit state sales taxes. This ruling has prompted many states to begin making changes to their rules, and will likely result in a requirement for many Canadian businesses to collect tax on online U.S. sales.

Approximately 29 million personal tax returns are filed annually in Canada.

While 9% of Canadians had their taxes reassessed by CRA in 2016, that number was 13.6% for northern Canadians (13% in the Northwest Territories and Nunavut, and 15% in the Yukon.)

Retaining employment insurance (EI benefits)

As of August 12, 2018, the “Working While on Claim” program became a permanent part of the EI system. Under the new rules, a person who earns income while receiving EI benefits can keep $0.50 of their EI benefits for every dollar earned, up to 90% of their previous weekly earnings. The program is an attractive option for those on parental or maternity leave to work on a P/T basis.

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Tax on Split Income (TOSI): Can I take a salary instead of a dividend?

Due to new TOSI rules, dividends received by individuals from private corporations as of January 1, 2018 may be subject to taxation at top marginal tax rates if, in general, they are determined to be unreasonable. Salaries, however, are not specifically subject to these rules. As such, some may consider replacing potentially unreasonable dividends with large salaries or bonuses. Various factors need to be weighed when making this decision…

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Contractor vs. Employee?
Agreement on Contractor Status is not Enough

A hot debate for many…. In a May 8, 2018 case, instead of looking at an express agreement between “employee” and employer about the nature of services performed, The Court examined other relevant factors to find out if an employee was, in fact, an employee or an independent contractor. In the end, the Court ruled in favour of the “reality” of a situation vs. the “agreement” between the two parties.

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