Another advantage of RRSP is that all interest appreciation in the RRSP is tax-free. However, when withdrawing from the RRSP, it must be included in the income of the year. Most people's income after retirement is lower than before, so buying RRSP when the income is high in the working years can save taxes when the tax bracket is high, and withdraw it when the income is low, and pay taxes when the tax bracket is low.

As long as you have a SIN, have income, have reported taxes, have RRSP quota, and are under 71 years old, and meet these conditions, you can buy RRSP. Here, the editor would like to explain "what is income" in particular? According to Canadian tax law, income here refers to: "your salary income (T4 slip box 14), net income of self-employed persons (net income), net rental income of landlords (net rental income), government CPP/QPP disability payments, divorce alimony (spouse support), copyright income (royalty income), and non-tax residents in Canada's salary/business income". Special reminder that the income here does not include "investment income, pensions (DPSP, RRIF, OAS, CPP/QPP), retiring allowances, death benefits, taxable capital gains and limited-partnership income"

How much RRSP can be purchased? The amount of RRSP is determined by the "earned income" of the previous year and the upper limit set by the government, minus the pension adjustment (PA) given by the employer, and the lower number is the one. Purchase amount = last year's income multiplied by 18%. Every year, the government will set a "purchase limit", and the purchase limit set in 2019 is $27,230. The smaller of the two. In other words, if 18% of last year's income is greater than the upper limit set by the government, this year's amount is the upper limit of $27,230 set by the government; if it is less than the upper limit set by the government, it is calculated according to the smaller number. The calculation is too troublesome, the easiest way is to look up last year's Notice of Assessment (NOA), The amount (A) on the NOA is the amount for the next year. The amount for 2020 is marked on the 2019 NOA.

Important things should be emphasized three times: "Don't buy more than your RRSP, don't buy more than your RRSP, don't buy more than your RRSP". The CRA allows a lifetime maximum of $2,000 for over-buying. The over-buying in the current year (between $1 and $2,000) can be used to offset income in the next year. If you accidentally buy too much, there will be a 1% penalty per month for the amount exceeding $2,000.

What if you buy more than your RRSP and the amount is large? You must withdraw it as soon as possible, the sooner the better. You have to pay withholding tax when you withdraw it. At this time, please contact AOE Taxation. Our certified public accountants can help you submit a tax exemption application to the tax bureau. After the tax bureau approves it, you can withdraw the over-buying amount tax-free.

I would also like to remind everyone that you need to pay withholding tax whenever you withdraw your RRSP. This depends on the amount you withdraw.

Withdraw $5,000, the bank will automatically deduct 10%, and you will actually get $4,500;

Withdraw between $5,000 and $15,000, 20% tax will be deducted;

Withdraw more than $15,000, 30% tax will be deducted.

The RRSP you withdraw will be taxed together with your income for the year. If your personal tax bracket is higher than the withholding tax when you withdraw, you will have to pay another tax when you file your tax return. In addition, Withdrawing $5,000 from your RRSP does not mean that you have released the $5,000 RRSP quota. Don't buy an extra $5,000 RRSP next year on your own, or you will be fined. This happens all the time.

If you have RRSP quota but don’t have money to buy a house, you can save it for later use. Or if you know you may have to sell an investment property next year and get a lot of investment income, you can also save the RRSP quota for the next year.

There are a few more key points you must know

1. First-time homebuyers can use the Home Buyers’ Plan to borrow $35,000 from their RRSP tax-free to pay for the down payment; A couple can withdraw $70,000 tax-free to buy their first home for self-use – the house must be for self-use, not for investment. Part of it must be returned annually over the next 15 years (starting from the second year), otherwise it will be included in the annual income. Therefore, those who use HBP must remember to buy at least enough RRSP to repay the debt every year.
2. Students can use the Lifelong Learning Plan to borrow $10,000 from their RRSP tax-free each year, up to $20,000, to pay for their own or their spouse's (excluding children) tuition fees. The amount withdrawn must be repaid 10% each year in the next 10 years, otherwise it will be included in income.

Finally, I would like to remind everyone to make tax planning as early as possible, save taxes and defer taxes reasonably. Don't work hard for the tax bureau for a year.

If you have any tax issues, the certified public accountants of AOE Taxation can help you!

Our phone number is 289-597-1869.

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If the investment house is fully rented out, all the above expenses can be deducted from the income by 100%. If you only rent out part of your own house, you can only deduct part of all the expenses. After all, no one wants to be identified as an investment house by the tax bureau when selling the house to pay taxes.

There is another question that our accountants are often asked: A rents out a house to his children, but the rent is very low, so the house is losing money every year. A wants to use the loss of the house to offset his T4 income.

According to the tax bureau's regulations, if the loss of renting out to relatives is lower than the market price, it cannot be used to offset other income, and these losses can only be borne by oneself.

Of course, there are several special expenses that can be used to offset the income from renting out a house, such as car expenses and gift expenses. The deduction rules for these expenses are relatively complicated, so I won't go into details here. If you have any questions, you can add our WeChat account for consultation, or call us for consultation.

Our phone number is 289-597-1869.

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According to CRA regulations, each of the above fees has a specific calculation method based on the work performed by the self-employed. Due to limited space, I will not explain it here. If you have specific questions, please call us for consultation. Our phone number is 289-597-1869

Do you need to withhold and pay on your behalf?

Usually, self-employed people do not have to pay the federal unemployment insurance program (Employment Insurance) EI. However, based on their income, self-employed people must pay income tax and double CPP in advance or after filing tax returns. However, since January 2010, self-employed persons can apply for the federal unemployment insurance program (Employment Insurance) EI. Like employed persons, they can receive employment insurance benefits during maternity leave, sick leave, staying at home to take care of children, and receiving care. This is especially applicable to self-employed expectant mothers who are preparing to have a baby.

Do I need to keep receipts?

The longest prosecution period of CRA is 6 years, and all receipts need to be kept for at least 6 years. Special reminder: It is best to copy or scan receipts made of thermal paper to prevent the ink from falling off.

Do I need to apply for an HST account?

If the income from self-employment exceeds 30,000 Canadian dollars, you must apply for an HST/GST account and declare it as required. If your self-employed income is less than 30,000 Canadian dollars, you do not need to open an HST/GST account. However, UBER drivers and real estate agents must apply for an HST/GST account and declare it. Otherwise, CRA will impose a fine and interest, which is a result that no one wants to see.

In recent years, CRA has increased its tax inspection efforts, especially for self-employed people. Customers often ask how to deal with tax bureau audits. Here, AOE's certified public accountants remind everyone that in order to avoid or reduce the possibility of being investigated, the most important thing is to declare the expenses correctly and the relevant expenses must be reasonable. If you want to know what expenses can be declared and how much is reasonable, please contact us.

Our phone number is 289-597-1869.

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1. Funds held outside Canada Funds held outside Canada

·      Funds held in foreign bank accounts

·      Funds held in other foreign institutions

·      Prepayments on debit or credit cards, promissory notes, bills of exchange and other cashable instruments.

2. Shares of non-resident corporation (other than foreign affiliates)

·      Shares of non-resident corporation (other than foreign affiliates)

·      Shares of non-resident corporation refer to shares held by the individual and related persons that are less than the proportion of foreign affiliates

·      Shares of foreign affiliate refer to shares held by the individual at least 1%, plus 10% or more held alone or together with related parties

·      regardless of whether the actual holding is in Canada

3. Indebtedness owed by non-residents Debts owed by non-tax residents to tax residents

·      Does not include debts owed by overseas subsidiaries;

·      Whether held at home or abroad; issued by non-residents;

·      Commercial bills, commercial bills, bank unsecured bonds, loans, mortgages, etc.;

·      Time deposits, government bonds, etc.

4. Interests in non-resident trusts Interests in non-resident trusts

·      Do not include non-resident trusts in overseas subsidiaries

·      If there is additional investment, trust distribution received, and loans obtained from the trust, please report T1141/T1142

5. Real property outside Canada Properties outside Canada

·      Does not include private properties (mainly used for personal family living)

·      Does not include properties for business purposes (factories, warehouses, office buildings, etc.)

·      Rental properties need to be declared

6. Other property outside Canada  Other assets outside Canada

·      Holding Canadian company shares overseas

·      Holding overseas assets through a partnership system, but the partnership structure does not need to report T1135, individual reporting

·      Life insurance that meets the definition of special overseas assets

·      Rare metals or gold and silver coins held overseas

·      Commodity or futures contracts, options or financial derivatives related to the above-mentioned overseas assets

·      Any rights that may lead to the ownership, acquisition, and possession of interests in overseas assets

7. Property held in an account with a Canadian registered securities dealer or a Canadian trust company

·      Assets held by Canadian securities companies or trust companies

·      All assets held by one of the above companies should be aggregated by country name;

·      Can be aggregated under the country name in different accounts;

·      The highest market value during the year can adopt the highest end-of-month market value;

D Which overseas assets do not need to be reported?

Assets used for personal use overseas do not need to be reported, such as self-occupied homes, cars, jewelry, paintings and other collections.

Any overseas investments held in all registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs).

If you have any questions about the declaration of overseas assets, please contact us. We will provide you with the most professional and comprehensive tax advice,

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·       The expenses of the landlord placing rental advertisements in various media can be deducted.

4. Property management fee

·       Condo management fee (Condo Fee)

·       Ask the property management company or real estate agent to manage it.

·       The trusteeship fee for helping to find tenants can be deducted in one lump sum in the current year.

·       Landlords with many houses hire full-time workers to manage the rental houses. The wages paid to the workers, CPP, EI, insurance and other expenses can also be deducted.

5. Office supplies

·       Small office supplies consumed for handling rental business, such as pens, pencils, printing paper, staples, and stamps when signing documents (Lease) can be used to deduct rental income.

6. Property Tax (Property Tax)

·       Only the property tax during the rental period can be deducted. Here it is the property tax, not the land transfer tax (Land transfer tax). The land transfer tax is the cost of buying a house.

7. House Maintenance

·       The labor and material costs incurred in repairing the house, clearing the drains, changing the stove, changing the toilet, etc. can be deducted.

·       If the landlord does the repairs himself, only the material cost can be deducted, and the landlord’s own labor cannot be counted.

8. Professional fees

·       The attorney fees incurred for asking a lawyer to write a lease or collect rent, as well as the fees for asking an accountant to keep accounts, assist in audits, and report rental property taxes are all professional fees and can be deducted from the rent. The attorney fees for buying and selling a house are the cost of selling the house and cannot be deducted from the rent.

9. Utility fees(Utility)

10. Vehicle fees

·       For landlords who have only one rental house: The landlord must do the maintenance work of the rental house himself, and the vehicle fees are incurred for transporting maintenance tools and materials. For landlords who have only one rental house, the vehicle fees incurred for collecting rent cannot be deducted.

·       If you have more than two rental houses: In addition to the above-mentioned deductions, you can also add the landlord's car expenses for collecting rent and the landlord's travel expenses for supervising (the rental house and the landlord's own home may not be in the same area).

·       Note: The amount of vehicle expenses should be as reasonable and conservative as possible. There must be a driving record (automobile log) to record the date, purpose, and mileage of each trip.

11.Other expenses

Can all expenses be deducted from taxes?

If the investment property is fully rented out, all the above expenses can be deducted 100% of the income. If you only rent out part of your own house, you can only deduct part of all the expenses. After all, no one wants to be identified as an investment property by the tax bureau when selling the house.

What should I do if I lose money by renting it out to my family?

There is another question that our accountants are often asked: A rents out the house to his children, but the rent is very low, so the house is losing money every year. A wants to use the loss of the house to deduct his T4 income.

According to the regulations of the tax bureau, if the loss of renting out to relatives at a price lower than the market price cannot be used to deduct other income, these losses can only be borne by yourself.

If you have any questions about rental income, please contact us. We will provide you with the most professional and comprehensive tax consultation,

Please call: 289-597-1869 or

Welcome to add our WeChat customer service number for detailed consultation:

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The tax law stipulates that ordinary residential properties can be amortized for up to 5 years, and farms or fisheries can be amortized for up to 10 years.

Last time, it was calculated that if Lao Yang's house was sold at the market price, Lao Yang would have to pay $96,000 in personal tax. Using capital gain reserve, the proceeds from the sale of the house can be amortized over 5 years, and 20% of the house price can be collected each year. In 2019, the year of the sale, Lao Yang only needs to declare 20% of the increase in value, that is, 500,000*20% = 100,000, and the remaining 400,000 will be kept for the next year. In this way, Lao Yang's taxable increase in value in 2019 is only 100,000*50% = 50,000, and he only needs to pay $8,700 in tax.

In the second year, the same 20% is reported, and 100,000 is added to the taxable income. The remaining 300,000 (60% of the appreciation) is retained in the next year;

In the third year, the 20% is still reported, and 100,000 is added to the taxable income. The remaining 200,000 (40% of the appreciation) is retained in the next year;

In the fourth year, the 20% is still reported, 100,000 is added to the taxable income, and the remaining 100,000 (20% of the appreciation) is retained in the next year;

In the last year of the fifth year, 100,000 is added to the taxable income, and the Capital gain reserve is used up in this year.

You see, with the same 500,000 appreciation, using the Capital gain reserve, Lao Yang paid a total of $8,700 *5 = $43,500 in taxes in five years. Compared with the normal house transfer, Lao Yang paid $96,000 in taxes, and the Capital Gains Reserve helped Lao Yang save $50,000 in taxes.

Special reminder

1. Transfers between family members must be sold at market prices.

2. The transferee must issue an installment payment contract to the seller, stating that the amount owed will be paid off in 5 years, with 20% paid each year. It is best to have the contract notarized and signed by a lawyer.

3. T2017 is required to declare Capital gains reserve.

Capital gain reserves are not only applicable to real estate sales, but also to company equity transfers. Please contact your accountant for specific circumstances.

For tax services, please look for CPA

In this special period, you only need to calmly protect the physical and mental health of yourself and your family, and the remaining tax issues will be completed by our AOE CPA team.

Let's work together to get through this difficult time.

If you have any questions about taxation, please contact us. We will provide you with the most professional and comprehensive taxation advice.

Please call: 289-597-1869  or

Welcome to add our WeChat customer service number for detailed consultation:

AOE Taxation customer service number - aoetaxation

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Rental: 2011 to 2015, 4 years

Owned: 2015 to 2019, 4 years

Holding: 2011 to 2019, 8 years

Total value-added: 120-40=800,000

Owned housing tax-free: (4+1)/8*80=500,000

Rental housing is not tax-free: 800,000-500=300,000

Taxable value-added: 30*50%=150,000

Mr. Wang’s income in 2019 was $70,000, and he had to pay $13,684 in taxes. Adding the $150,000 from the sale of the house, his total taxable income was $220,000, and he had to pay $79,844 in taxes. Mr. Wang would have to pay an additional $66,160 in taxes for the increased value from the sale of the house.

If Mr. Wang did not do tax planning, he would have to pay an additional $66,160 in taxes. However, Mr. Wang had a reliable accountant who made a 45 (3) election when filing his 2019 tax return, stating that the deemed disposition from renting out the house to living in it did not exist, and designated the four years from 2011 to 2015 as self-occupied housing. In this way, the house was owned from 2011 to 2019, and the $800,000 in increased value was completely tax-free.

Let me remind you again that a couple can only designate one property as their own residence each year. It is recommended that you consult your accountant on how to report your property investment income to achieve tax optimization.

Next, let's talk about the tax issues of property transfer.

Mr. Yang is going to transfer his investment house to his daughter, Xiao Yang. In order to pay less investment income and land transfer tax, Mr. Yang wants to sell the house to Xiao Yang for $1. Xiao Yang thinks it's better to listen to the advice of tax experts, so the father and daughter discuss and come to Accounting Firm. The certified public accountant of Accounting Firm helped Mr. Yang and Xiao Yang to calculate the accounts.

1. Tax treatment of Mr. Yang's sale of investment houseAccording to CRA regulations, if you transfer or sell a house to anyone other than your spouse, the selling price of the house should be the market price rather than a price below the market price. That is to say, although the contract states that the house was sold to Xiao Yang for $1, CRA still believes that the house was sold at the market price, which is $1 million, and Lao Yang bought it for $500,000. That is to say, half of the investment income of $500,000, $250,000, is included in Lao Yang's income for the year. If Lao Yang has no other income, Lao Yang needs to pay $96,911 in tax. 2. Tax treatment of Xiao Yang's investment house

Xiao Yang spent $1 to buy the investment house, and the cost of the investment house is $1. If Xiao Yang sells the house at the market price of $1 million, then Xiao Yang's investment income is $999,999, half of which is included in Xiao Yang's income for the year. If Xiao Yang has no other income, Xiao Yang needs to pay $230,735 in tax.

That is to say, the income from this investment property is 500,000 yuan, and they will eventually pay $327,646 in taxes for this $1 transaction, with a marginal tax rate of 65.53%.   

Lao Yang and Xiao Yang's $1 transaction not only did not save taxes, but also paid taxes repeatedly. Now, Lao Yang and Xiao Yang are depressed.

Is there any way to help the father and daughter? We will explain to you next week - installment declaration of investment income.

If you have any questions about the tax on house sales, please contact us. We will provide you with the most professional and comprehensive tax consultation,

Please call: 289-597-1869 or

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Investment income = selling price - adjusted cost - costs incurred when selling a house

Let's explain in detail what adjustment costs and selling costs are

a. Adjusted cost

Adjusted cost is the purchase price plus the cost of buying a house, such as agent commissions and attorney fees. If there are capital expenditures during the holding period of the house, they should also be included in the adjustment cost. However, current expenses such as maintenance costs cannot be included in the adjustment cost. Which expenses are capital expenditures and which expenses are current expenses are different for each house. For details, you can consult our accountants.

b. All expenses incurred when selling a house

The costs of selling a house include agent commissions, attorney fees, advertising fees, transfer taxes/fees, etc.

3. Selling a self-occupied/rental house

The question is, if a property was previously occupied and later rented out; or previously rented out and later occupied; how should the investment income be reported?

Let's take an example:

Lao Wang bought a 400,000 yuan self-occupied house in 2011. In 2015, Lao Wang changed to a larger house and rented out the smaller house, reporting the rental income every year. In 2019, he sold it for 1.2 million yuan. Therefore, Mr. Wang filed taxes like this in 2019:

Owned: 2011 to 2015, 4 years

Rented: 2015 to 2019, 4 years

Holding: 2011 to 2019, 8 years

Total value-added: 120-40=800,000

Owned housing tax-free: (4+1)/8*80=500,000

Rented housing is not tax-free: 800-50=300,000

Taxable value-added: 30*50%=150,000

Mr. Wang's income in 2019 was 70,000, and he needed to pay $13,684 in taxes; plus the 150,000 from the sale of the house, a total of 220,000 taxable income, and a tax of $79,844. Mr. Wang had to pay an additional $66,160 in taxes for the value-added gains from the sale of the house.

If Mr. Wang did not do tax planning, he would have to pay an additional tax of $66,160. However, Mr. Wang has a reliable accountant who made a 45 (2) election when filing his 2015 tax return, extending the years of self-occupancy (up to 4 years), designating the 4 years from 2015 to 2019 as the self-occupancy period, and all the appreciation of $800,000 is tax-free.

A reminder once again, a couple can only designate one property as a self-occupation each year. It is recommended that you consult your accountant on how to report real estate investment income to achieve tax optimization.

We will continue to explain the tax issues of house sales next week (2/2)

If you have any questions about house sales taxes, please contact us. We will provide you with the most professional and comprehensive tax advice,

Please call: 289-597-1869 or

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The subsidy is equal to 10% of your compensation from March 18, 2020 to June 20, 2020, up to a maximum of $1,375 per employee and $25,000 per employer.

The associated CCPC will not share the $25,000 maximum subsidy per employer.

For example, if you have 5 employees, the maximum subsidy you can receive is $6,875 ($1,375 x 5 employees), even though the maximum limit per employer is $25,000.

4. How is the subsidy calculated?

The subsidy must be calculated manually.

For example, if you have 5 employees with a monthly salary of $4,100 and a total monthly salary of $20,500, the subsidy is 10% of $20,500 or $2,050.

5. How do I get the subsidy?

After calculating the subsidy, you can reduce the amount of income tax you have to pay by the subsidy.

Important: You cannot reduce your Canada Pension Plan contributions and unemployment insurance contributions.

For example, if you have a subsidy of $2,050, you can reduce your income tax by $2,050. You can continue to reduce your income tax by up to $25,000 for all remuneration paid before June 20, 2020.

6. When can you start reducing your payments?

You can start reducing your income tax payments in the first payment period, which includes remuneration paid between March 18, 2020 and June 20, 2020.

For example, if your company makes quarterly payments, the payment to the CRA on April 15, 2020 can include the subsidy.

7. What if the subsidy exceeds the tax you owe?

If the income tax you owe is not enough to offset the subsidy amount for a particular period, the balance can be used to reduce the income tax you owe in the future. This includes reducing remittances that may extend beyond the wage subsidy application period (after June 20, 2020).

For example: If you calculated a subsidy of $2,050 for wages paid between March 18, 2020 and June 20, 2020, but only deducted income tax for $1,050 from employees, you can reduce your future income tax remittance by $1,000, even if the remittance is for wages paid after June 20, 2020.

8. Does the subsidy affect employee deductions?

No. You will continue to deduct income tax, Canada Pension Plan contributions, and unemployment insurance benefits from wages, bonuses, or other remuneration paid to employees, just as you currently do. The subsidy is calculated only when you remit those amounts to the CRA.

9. What if I don’t reduce my remittances during the year?

If you are an eligible employer but choose not to reduce your payroll remittances during the year, calculate the temporary wage subsidy for remuneration paid between March 18, 2020, and June 20, 2020. You can then ask for the subsidy to be paid to you at the end of the year, or transferred to your remittance account for the following year.

10. What documentation do I need?

You will need to keep information to support your subsidy calculation. This includes:

• The total amount of remuneration paid between March 18, 2020, and June 20, 2020;
• The federal, provincial, or territorial income tax deducted from that remuneration; and
• The number of employees paid during that period.

The CRA is currently updating reporting. More information on how to report this subsidy will be released soon.

11. Is the subsidy considered taxable income?

Yes. If you receive a subsidy, you must report the total amount to the CRA in the year you receive the subsidy.

12. What if my business is closed?

If you did not pay wages, bonuses or other remuneration to your employees between March 18, 2020 and June 20, 2020, you will not be able to receive a subsidy even if you are a qualified employer.

For tax services, please look for CPA

During this special period, you only need to calmly protect the physical and mental health of yourself and your family, and the rest of the tax issues will be completed by our AOE CPA team.

Let's work together to get through this difficult time.

If you have any questions about taxation, please contact us. We will provide you with the most professional and comprehensive taxation advice.

Please call: 289-597-1869  or

Welcome to add our WeChat customer service number for detailed consultation:

AOE Taxation customer service number - aoetaxation

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The Canada Revenue Agency will allow all businesses to defer until August 31, 2020 any income tax amounts that are due on or after today and before September 2020. No interest or penalties will accrue on these amounts during this period.

For the next four weeks, the Canada Revenue Agency will not contact any small and medium-sized (SME) businesses regarding GST/HST or income tax audits. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interactions with taxpayers and representatives.

Ensuring access to business loans for businesses:

The Business Credit Availability Program (BCAP) will enable the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion in additional support, primarily for SMEs. The BDC and EDC are working with private sector lenders to coordinate credit solutions for individual businesses, including in sectors such as oil and gas, air transport and tourism. Short-term credit to farmers and the agri-food sector will also be increased through Farm Credit Canada.

The Office of the Superintendent of Financial Institutions (OSFI) announced that it has reduced the domestic stability buffer by 1.25% of risk-weighted assets, effective immediately. The move will allow Canada's large banks to inject an additional $300 billion in lending into the economy.

This includes a reduction in interest rates to 0.75% as a proactive measure, given the negative shock to the Canadian economy caused by the COVID-19 pandemic and the recent sharp drop in oil prices.

Supporting financial market liquidity

On March 16, the government announced that it would launch the Insured Mortgage Purchase Program (IMPP). Under the program, the government will purchase up to $50 billion of secured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). This move will provide banks and mortgage lenders with long-term stable funding, help facilitate continued lending to Canadian consumers and businesses, and add liquidity to Canada's mortgage market. Details of the terms of the purchase operation will be provided to lenders by CMHC later this week.

The Bank also announced that, as a proactive measure, it stands ready to provide support to the Canada Mortgage Bond (CMB) market to enable this important funding market to continue to function normally. This will include secondary market purchases of CMBs as needed. Similar to the increase in Canadian government bond repurchases, this will support market liquidity and price discovery.

AOE reminds everyone to contact your accountant as soon as possible. If you have a tax refund, please file your tax return as soon as possible and get your tax refund as soon as possible.

For tax services, please look for CPA

During this special period, you only need to calmly protect the physical and mental health of yourself and your family, and the rest of the tax issues will be completed by our AOE CPA team.

Let's work together to get through this difficult time.

If you have any questions about taxation, please contact us. We will provide you with the most professional and comprehensive taxation advice.

Please call: 289-597-1869  or

Welcome to add our WeChat customer service number for detailed consultation:

AOE Taxation customer service number - aoetaxation

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The Canada Emergency Response Benefit is available to people who have stopped working or are eligible for EI regular employment insurance or sickness benefits for reasons related to COVID-19. Stopping work means (but is not limited to):

• You have been laid off by your employer, or your work hours have been reduced to zero;
• You are in quarantine or sick due to COVID-19;
• You are caring for a family member who is in quarantine or sick due to COVID-19;
• You are caring for a child who is at home because of a school or childcare facility that is closed due to COVID-19.

Voluntarily quit your job and cannot apply for the emergency benefit.

If I am in quarantine or sick due to COVID-19, do I need a medical certificate to get the Canada Emergency Response Benefit?

No.

You can just apply online.

Do I need to be laid off to get the Canada Emergency Response Benefit?

No.

Employees of a company can receive company benefits. If you stop working due to COVID-19 and have no wage income for at least 14 consecutive days in the first four weeks, and expect to have no wage/self-employment income in the subsequent period.

If you are eligible for EI regular employment insurance or sickness benefits, you can also apply for the Canada Emergency Response Benefit.

Where can I apply for the Canada Emergency Response Benefit?

The application website will be launched on April 6, 2020, and applicants can apply for the benefit retroactively to March 15, 2020.

Until the website is launched, individuals who are not working and eligible for EI can continue to apply for unemployment insurance.

How much can I get through the Canada Emergency Response Benefit?

The benefit amount is $2,000, paid every four weeks. This is equivalent to $500 per week. Benefits are paid for up to 16 weeks.

This is a taxable benefit and you need to report the benefit as income when you file your income taxes for the 2020 tax year.

Can I receive other income while receiving the Canada Emergency Response Benefit?

No.

You must have stopped working due to COVID-19 and had no income for at least 14 consecutive days in the first four weeks, including paid leave income, self-employment income, or receiving any employment insurance benefits, and for subsequent dates, you expect to have no wage/self-employment income.

If you are eligible for EI regular employment insurance or sickness benefits, you can also apply for the Canada Emergency Response Benefit.

Can you get the Canada Emergency Response Benefit if you are not a citizen or permanent resident?

You must live in Canada and have a valid Social Insurance Number (SIN).

Workers who are not Canadian citizens or permanent residents (including temporary foreign workers and international students) may be eligible for the Canada Emergency Response Benefit if they meet other eligibility requirements.

Does the minimum required income of $5,000 have to be earned in Canada?

No.

The income does not have to be earned in Canada, but you do need to live in Canada.

When and how do I get the Canada Emergency Response Benefit? Is there a waiting period?

You will receive your benefit within 10 days of submitting your application, with no waiting period.

Payments will be made by direct deposit or cheque. Your payment will be backdated to the date you became eligible.

Do I need to provide any documents when applying for the Canada Emergency Response Benefit?

You will need to provide your personal contact information, your Social Insurance Number (SIN), and confirm that you meet the eligibility requirements.

The CRA may need documents from you in the future to confirm your eligibility.

If I already receive EI regular benefits, do I need to reapply for the Canada Emergency Response Benefit?

No.

If you already receive EI regular benefits, you will continue to receive those benefits until your benefit period ends.

If your EI started before March 15, 2020, and your EI ended before October 3, 2020, you can apply for the Canada Emergency Response Benefit if you meet the eligibility requirements for the emergency benefit.

You cannot receive EI and the Canada Emergency Response Benefit during the same period.

I have submitted an application for EI benefits but it has not been processed yet, do I need to reapply for the Canada Emergency Response Benefit?

No.

If you were eligible for EI benefits before March 15, your claim will be processed under EI.

If you became eligible for EI benefits after March 15, your claim will automatically be transferred to the Canada Emergency Response Benefit.

For tax services, please look for CPA

During this special period, you only need to calmly protect the physical and mental health of yourself and your family, and the rest of the tax issues will be completed by our AOE CPA team.

Let's work together to get through this difficult time.

If you have any questions about taxation, please contact us. We will provide you with the most professional and comprehensive taxation advice.

Please call: 289-597-1869  or

Welcome to add our WeChat customer service number for detailed consultation:

AOE Taxation customer service number - aoetaxation

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No.

4. I went back to China for the Chinese New Year and now I can't enter Canada. Can I apply for emergency benefits?

No. After you come back, if you still meet the requirements, you can apply.

5. My company has resumed work, but my children still can't go to school. I need to take care of them at home. I can't resume work. Can I continue to apply for emergency benefits?

Yes. As long as you make sure that your monthly income from work is less than $1,000 while you are at home taking care of your children.

6. My own company pays itself a salary. Now I stop paying myself a salary, and I have no income every month. Can I apply for emergency benefits?

Yes. But we do not recommend that you do so, because the government's emergency benefits are for those who really need help.

7. I have received my maternity leave EI, but because of the epidemic I cannot return to work. Can I apply for emergency benefits?

Yes.

8. After receiving my maternity leave EI, I applied for a student loan, but now I am at home taking care of my children who cannot go to school. Can I apply for emergency benefits?

Yes.

9. The $5,000 income requirement for applying for emergency benefits must be Canadian income?

Not necessarily. It can be overseas work income, but it must be reported when filing taxes.

10. I have no overseas work income in Canada, nor Canadian work income. But I have overseas assets, and I declare them every year. Can I receive emergency benefits?

No. The government requires that it must be work income, the same as question 1.

11. I am a college student, and the school cannot open. Can I apply for emergency benefits?

Yes. As long as you are still a college student in September this year (or a freshman who enrolled in September; or a college student who graduated in December 2019), and your monthly income is less than or equal to $1,000, you can apply for a monthly benefit of $1,250, and the application period is from May to August. If you take care of sick relatives during this period, there will be an additional $500 in welfare benefits per month.

12. I am a student. I have always worked during the summer vacation. This year, I can’t work during the summer vacation due to the epidemic. Can I apply for emergency benefits?

If you are a college student who meets the requirements, you can. But you can’t apply for $2,000 in benefits per month. You can apply for $1,250 in benefits per month.

13. Doesn’t HST give everyone a subsidy of about $400? Why don’t I have it? Do I need to apply for it extra?

First of all, there is no need to apply for HST epidemic subsidies, and the government will issue them directly. Secondly, not everyone has them. The government will only issue them to low- and middle-income families and individuals.

14. How to apply for the milk money subsidy?

No need to apply, the government will directly issue extra milk money to families with milk money in early May.

15. Emergency benefits, will the government automatically issue it every month after I apply once?

No. You need to apply separately in the month you are eligible.

16. I am an agent. The commission income from the February transaction order will be credited in April. Can I still apply for emergency benefits?

No.

17. Can I apply for a work permit or a study permit?

As long as you meet the requirements, you can apply. *There are news reports that international students are not eligible for the latest student emergency benefits, but AOE accountants have not obtained relevant information from the tax bureau documents. Let's wait for official updates for specific details.

18. Does the epidemic sick leave EI or emergency benefits require a doctor's certificate?

No.

19. I used to have a job, but now I can't work because of the epidemic, but I have rental income and investment income. Can I apply for emergency benefits?

Yes.

20. What should I do if I applied for emergency benefits that I do not meet the requirements?

You can write a check and return it to the tax bureau.

In the face of the epidemic, each of us is actually our own hero. We gave up our freedom and stayed at home to buy time and space for doctors and medical scientists.  

In the face of the epidemic, each of us is actually a creator of history. We strive to prove to the future that as long as we are united and grateful, there is no difficulty that cannot be overcome.

Finally, I would like to remind everyone not to believe in rumors or spread them. Stay at home if you have nothing to do and avoid all overseas travel. If you have family and friends who are still overseas, please urge them to return home as soon as possible. Don't rush to buy daily necessities. Together, we will definitely be able to defeat the new coronavirus.

Whether you need to apply for EI, CERB or corporate benefits, a professional and responsible accounting firm is the most worthy of your trust.

For tax services, please look for CPA

During this special period, you only need to calmly protect the physical and mental health of yourself and your family, and the rest of the tax issues will be completed by our AOE CPA team.

Let's work together to get through this difficult time.

If you have any questions about taxation, please contact us. We will provide you with the most professional and comprehensive taxation advice.

Please call: 289-597-1869  or

Welcome to add our WeChat customer service number for detailed consultation:

AOE Taxation customer service number - aoetaxation

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Salary is a form of stable and predictable personal income.  

Benefits of paying salary:

• RRSP Contributions- Salary can generate RRSP contribution room, while dividends cannot.
• CPP- This is a double-edged sword. Salary can participate in Canada Pension Plan (CPP) contributions, while dividends cannot. This means that shareholders/employees can benefit from pensions when they retire; but at the same time, CPP contributions are a cost to the company. Less cash now, more cash later.
• Applying for a mortgage- When applying for a loan qualification, banks want to see stable, predictable income. Active salary income will help show stable income, while dividend income may not be optimistic.

Dividends

Dividends are payments from a company's after-tax earnings to its shareholders. This means that dividends are not a company expense and do not reduce the company's tax liability. On the other hand, dividends may result in a lower personal tax rate than wages because of the Dividend Tax Credit (more on the tax difference below).  

In practice, paying dividends to company shareholders is relatively easy. The company declares the dividend and transfers the cash from the company's account to the shareholder's personal account. The company must file a T5 with the tax office for the shareholder who received the dividend by the end of February of the following year.  

The tricky thing about dividends is that they are paid and distributed based on share ownership. For example, if ABC Ltd. wants to pay a $100,000 dividend to owners of Class A common stock, it must distribute it based on the proportion of shares held. So if shareholder A owns 30% of ABC Ltd.'s Class A common shares and shareholder B owns the other 70%, shareholder A will receive $30,000 and shareholder B will receive $70,000. It is difficult to allocate different amounts of income to multiple shareholders if they all own the same class of shares.

Why choose dividends

Issuing dividends is an easy way for shareholders to take money out of the company.

The advantages of issuing dividends include:

• Lower costs - Dividends are paid without paying CPP, EI, thus reducing company and personal costs. The downside is that it does not allow contributions to the Canada Pension Plan. More cash now, less cash later.
• Simple - If you own 100% of the company, just declare the dividends and the cash will be transferred from the company to your personal account. No need to keep track of payroll and withholding amounts.
• Reduce Penalties - Wage withholding is very time-sensitive. Late remittances are subject to penalties and interest. Paying dividends eliminates the opportunity to delay or miss a payroll remittance. That being said, T5 returns must be completed on time each year when dividends are paid.   

Which method reduces taxes?

The most common question about wages vs. dividends is ”Which method allows me to pay less tax?

This is a very important question, and changes to the tax law that came into effect at the beginning of 2018 have made it more difficult to reduce taxes by choosing one method or another.

Before comparing the various wage and dividend models, you first need to understand the Canadian tax system.  

Tax Integration

Canadian tax law implements a tax concept called ”integration”. The idea is that when comparing dividend payments and wage payments of the same amount, there should be no difference in the overall income tax paid (personal income tax + corporate tax).

How it works:

• Wages reduce corporate taxes, but personal income taxes are higher than dividends.
• Dividends do not reduce corporate taxes, but dividends generate higher personal income taxes than wages.

Dividend sprinkling

In the past, corporate shareholders could get around integration issues and use a method called dividend sprinkling to spread income and reduce taxes by distributing dividends to spouses or adult family members with lower incomes. Since the spouse or adult family member is in a lower tax bracket than the person running the business, the personal income tax paid on the dividend income will be reduced.

However, changes to the tax law that took effect in early 2018 make this approach more difficult to implement. Since dividends are more difficult to implement, it is particularly important to consider the qualitative factors discussed above when deciding which payment method to use.

Calculate and Compare Taxes

While the tax savings may not be as great as they have been in the past, we can still do some simple calculations to help determine if dividends or wages are more tax efficient.

The idea is to calculate the total taxes (corporate + personal) that will be paid when using dividends and compare it to the total taxes that will be paid when using wages. A tool such as the Simple Tax Calculator can be used to calculate personal tax estimates, and the corporate tax rate will also be needed to estimate corporate taxes. You can consult your accountant.

Common Scenarios

Finally, let's look at some common scenarios. We discuss each scenario below and may help company management make a better decision.

• Cash Flow - If on-time payments are a weakness, it may be easier and less costly to pay yourself using dividends. Wages require regular on-time source deductions. Penalties can quickly add up if source deductions are missed or delayed.
• Qualifying for Financing- If you plan to buy a home in the near future and know you’ll need to qualify for a mortgage, it’s better to earn your income through payroll. Banks want to see more steady income than sporadic dividend payments.
• Childbirth/Parental Leave- If you plan to have a baby soon and you want to earn maternity leave or parental benefits, it may be better to earn your income through payroll. This is because withholding and remitting employment insurance premiums allows employees to receive maternity leave or parental benefits.
• Paying Bonuses- Sometimes it’s possible to reduce or defer taxes by paying shareholders in the form of bonuses. This is a bit complicated and doesn’t apply to all scenarios, but it’s important to know if the technique exists.
• Working Income Tax Benefit (WITB)- The Working Income Tax Benefit is a refundable tax credit designed to provide tax relief to qualifying low-income working individuals and families. If your personal or family net income is low, it may be beneficial to pay a small salary from your business to trigger a tax deduction on your personal taxes.

There are many things to consider when deciding whether to pay via salary or dividends. A professional and responsible accounting firm is the best place to put your trust.

For tax services, please look for CPA

During this special period, you only need to calmly protect the physical and mental health of yourself and your family, and the rest of the tax issues will be completed by our AOE CPA team.

Let's work together to get through this difficult time.

If you have any questions about taxation, please contact us. We will provide you with the most professional and comprehensive taxation advice.

Please call: 289-597-1869  or

Welcome to add our WeChat customer service number for detailed consultation:

AOE Taxation customer service number - aoetaxation

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§ Retirement Savings Plans and Retirement Income Funds (RRSP/RRIF)

§ Locked-in Retirement Accounts (LIRA)

§ Tax-Free Savings Accounts (TFSA)

§ Registered Education Savings Plans (RESP)

Registered account owners other than TFSAs must pay taxes on their death if no beneficiary is designated. The market value of these accounts will be included in the deceased's last year of income. Canada's tax rate is a progressive tax rate. In 2020, the highest marginal tax rate for Ontario residents with income exceeding 220,000 yuan is 53.53%. This means that if there are 220,000 assets in the RRSP account, the RRSP owner will need to pay about 118,000 in taxes on the RRSP alone when he dies, and more than half of the hard-earned money will be handed over to the government.

The owner of a registered account can designate one or more beneficiaries to inherit the registered account.

Eligible beneficiaries include:

§ Spouse/Common-law partner

§ Children/grandchildren under 18 who are financially dependent on the owner

§ Children/grandchildren of disabled age who are financially dependent on the owner

§ Personal/family trust

Eligible beneficiaries inherit the assets of the registered account and enjoy tax deferral until the beneficiary sells the investment or dies, at which time the registered assets will be taxed as ordinary income in the hands of the beneficiary.

If tax planning is not done in advance, the beneficiary of the estate does not have enough cash to pay the taxes due. He/she needs to sell part or all of the registered account to pay the individual tax of the deceased (similar in nature to the inheritance tax in other countries) before inheriting the estate. It is recommended that you consider buying life insurance, and the insurance coverage should be equal to or greater than the expected taxes payable at the time of death.

Special reminder to everyone, specifying the beneficiary of the registered account outside the will will cause unnecessary trouble. The executor/beneficiary of the estate needs to pay the taxes payable when making the final filing, and then apply for the tax clearance certificate, and then go through the transfer procedures of the estate. If the assets of the registered account are transferred to the designated beneficiary (not the executor/beneficiary of the estate), this may result in the beneficiary of the registered assets receiving the assets, but the executor/beneficiary of the estate still needs to pay taxes if they do not receive the assets.

• Non-registered assets and other personal assets

Non-registered assets include investment accounts, directly held stocks and mutual funds, etc.; other assets include capital assets held to earn income, such as investment properties, etc., as well as personal use assets (antiques/stamps, etc.).

Non-registered assets and other capital property are considered to be sold (or reacquired) at fair market value at the time of the death of the asset holder, and a capital gain is generated. The capital gain calculation formula is the fair market value at the time of death (Fair marktet value) minus its original cost. Fifty percent of the capital gain is included in the income of the asset owner, and the tax rate is calculated according to the increase tax rate.

Certain qualified assets can enjoy a lifetime capital gains exemption. For example, holding shares of a Canadian small business (CCPC) company that meets the tax law requirements may be eligible for a lifetime capital gains exemption of $883,384 (2020). In addition, capital gains generated from a primary residence can also enjoy capital gains exemption.

When the owner of the assets dies, they can pass the assets to a surviving spouse, common-law partner or personal/family trust, and the calculation of capital gains on these assets can be deferred until the death of the spouse or the sale of the assets. Assets may include real estate, business assets, non-registered investment assets, cars and other personal property.

Ontario imposes a probation fee on estates

Ontario imposes a probation fee similar to an estate tax on certain types of assets (such as real estate, bank and investment accounts). The collection of this tax mainly involves the court's confirmation of the legality of the will and is related to the will process. The current tax rate is 1.5% of the fair market value of the assets subject to probate. Stocks and debts of private companies are not subject to probate tax. However, if real estate assets are mixed with other assets subject to probate, the entire estate will be taxable. Therefore, when making a will, you should plan reasonably to avoid the probation tax on stocks and debts of private companies.

If an individual is an investor in a private company, he needs to consider how to avoid double taxation. If he owns shares of a private company worth more than 220,000 and has no tax planning, the final marginal tax rate will be as high as 75% or more, which is a result that all business owners do not want to see. We will explain in detail how to avoid double taxation in another article.

Although there is no official inheritance tax in Canada, there are usually very complicated tax issues when a taxpayer dies or a spouse/cohabiting partner dies. During your lifetime, you must plan your inheritance tax correctly to reduce the tax burden at the time of death. These inheritance planning strategies include establishing personal/family trusts, purchasing life insurance, etc.

From the time you set up your will, you need to consider potential tax issues, and professional inheritance tax accountants are the most trustworthy.

For tax services, please look for CPA

During this special period, you only need to calmly protect the physical and mental health of yourself and your family, and the rest of the tax issues will be completed by our AOE CPA team.

Let's work together to get through this difficult time.

If you have any questions about taxation, please contact us. We will provide you with the most professional and comprehensive taxation advice.

Please call: 289-597-1869  or

Welcome to add our WeChat customer service number for detailed consultation:

AOE Taxation customer service number - aoetaxation

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Example:

Lao Wang is a real estate agent. After deducting all expenses, his net income in 2020 is 200,000.

Self-employed: According to the personal tax rate in 2020, Lao Wang needs to pay $69,000 in federal and ON provincial taxes;

Company: According to the corporate tax rate in 2020, Lao Wang's company needs to pay $24,400 in federal and ON provincial taxes.

The difference between the two is nearly 45,000!

Just for the tax difference, Lao Wang must set up a company! The company can save so much tax! ! !

In addition to paying less tax, what other benefits are there to setting up a company?

Advantages of the company:

• Protect personal property from being damaged by the company's bankruptcy;
• Family income distribution. The company can reasonably pay wages, bonuses or dividends to spouses or adult children;
• The company's retained earnings can be distributed to shareholders through dividends, which is more flexible and convenient;
• The company's business losses can be offset against the company's profits in the previous 3 years and the next 20 years;
• Each investor who meets the requirements can have an investment income exemption of 880,000 (Life time capital gain exemption);
• Individual companies can pay wages according to the needs of shareholders, thereby delaying tax payments;
• Individual companies can pay wages according to the needs of shareholders, thereby smoothing income to reduce taxes (see the example analysis in the figure below)

Of course, there are also disadvantages to setting up a company, such as high costs. The government charges fees for setting up a company, and you have to file taxes every year, and accountants charge fees.

So,

• If your income is stable and reaches a certain scale: for example, positive cash flow and income is greater than expenses. It is recommended that you register a company.
• If your income is low and your cash flow is less than your expenses, it is recommended that you file a self-employed tax return.
• Your personal income tax rate is higher than your corporate tax rate. It is recommended that you register a company.
• In the past 20 years, the personal income tax rate in Ontario, Canada has been on an upward trend, while the corporate tax bracket has been on a downward trend overall (see the figure below, data source: Manulife.ca).

During this epidemic, the government's support for companies is far greater than that for individuals. Wage and welfare subsidies have been extended to December. There are also interest-free loans that can be applied for.

For tax services, please look for CPA

During this special period, you only need to calmly protect the physical and mental health of yourself and your family, and the rest of the tax issues will be completed by our AOE CPA team.

Let's work together to get through this difficult time.

If you have any questions about taxation, please contact us. We will provide you with the most professional and comprehensive taxation advice.

Please call: 289-597-1869  or

Welcome to add our WeChat customer service number for detailed consultation:

AOE Taxation customer service number - aoetaxation

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A: The tax bureau stipulates that any assets exceeding $25,000 (excluding cash/RRSP/TFSA, etc.) must report to the tax bureau the FMV of the assets on the day of departure (Form T1161). Form T1161 must be submitted to the tax bureau before the tax filing deadline. If you are late for one day, you will be fined $25, with a maximum fine of $2,500. When leaving the country, you also need to fill out Form T1243 to declare that the assets are deemed to be sold and calculate the investment income to pay the departure tax. If you don't want to pay the departure tax, you can fill out Form T1244 and apply to pay the tax when you actually sell the assets. If the departure tax-federal part to be paid exceeds $16,500, the tax bureau requires a mortgage of the corresponding value.

Q: I live in China all year round, and I have to find a way to file taxes every year. It's really troublesome. I gave up my PR card directly. Am I a non-tax resident?

A: Tax residency in tax law is different from your residency status in Canada. Giving up your status does not mean you automatically become a non-tax resident. In other words, you still need to file your taxes on time every year.

Q: I applied for non-tax residency, but the tax bureau has not responded yet. Do I need to file my taxes?

A: Generally speaking, if the tax bureau has not responded, it means that your case is still under review and you are still a tax resident. You should file your taxes normally.

Q: I applied for non-tax residency, but I still have my health card and driver's license.

A: Six months after you leave the country, your health card and driver's license will be considered expired.

Q: I live in China all year round, but my wife and children are in Canada, and I also have real estate. Can I apply for non-tax residency?

A: You can apply for non-tax residency, but you need to prove that your connection with China is closer than your connection with Canada. If you cannot cut off your residential connection with Canada, we can help you apply through the China-Canada Tax Agreement.

Q: Why did my accountant mail the last tax return for me before I became a non-tax resident?

A: Because the tax bureau stipulates that after leaving Canada, your personal tax return must be mailed to the tax bureau, and the tax bureau does not accept electronic filings.

Q: I am a non-tax resident now, but I decided to move back to Canada this year. What should I do?

A: Notify the government of the time of your return, and inform your accountant of the date of your return when filing your tax return.

Q: My application for non-tax residency has been approved, but I still have an investment property in Canada that I rent out. Do I need to file a tax return?

A: You need to report rental income. Non-tax residents must pay 25% withholding tax on the rent to the tax bureau every month.

Q: I am a non-tax resident now. My main source of income is in China, but I also have some income in Canada. Do I need to file a tax return?

A: You need to report Canadian income. Rental income and salary income need to be reported separately. For specific reporting details, please consult us.

Q: I have not lived in Canada for many years, I have not applied for non-tax residency, and I have not filed taxes. Is this okay?

A: Non-tax residents are deemed tax residents without approval. According to Canadian tax laws, it is the obligation of every tax resident to file taxes on time, and tax residents need to declare global income. If the tax bureau finds that a tax resident has concealed or underreported global income, the tax bureau will automatically take corresponding measures.

Finally, I want to remind everyone very seriously. The application for non-tax residency is not as simple as filling out a form. If you want to apply, please be sure to consult a professional licensed accounting firm.

For tax services, please look for CPA

During this special period, you only need to calmly protect the physical and mental health of yourself and your family, and the rest of the tax issues will be completed by our AOE CPA team.

Let's work together to get through this difficult time.

If you have any questions about taxation, please contact us. We will provide you with the most professional and comprehensive taxation advice.

Please call: 289-597-1869  or

Welcome to add our WeChat customer service number for detailed consultation:

AOE Taxation customer service number - aoetaxation

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