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  • Sep 2nd, 2014 10:22 am
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[OP]
Member
Dec 9, 2007
296 posts
56 upvotes
Montreal

Income tax rate for my business

I am the owner (only shareholder in the compagny), i do new construction : buy a piece of land, build a house on it and then sale it. Annual income always less than 500k. I am going to pay the low rate or the higher one? Thank s
4 replies
Deal Fanatic
Aug 21, 2007
5181 posts
309 upvotes
Markham
if your in the business of selling houses (seems like it), you would be taxed federally at 11% (plus provincial taxes), and not at capital gains level
[OP]
Member
Dec 9, 2007
296 posts
56 upvotes
Montreal
Just to make sure , profit will be less than 500k, but sales will be more than that, 800-900k a year. Thank s
Deal Addict
Oct 2, 2006
1270 posts
236 upvotes
Sep 1st, 2014 3:17 am

tbtaoufiq wrote:
Aug 31st, 2014 11:07 pm
Just to make sure , profit will be less than 500k, but sales will be more than that, 800-900k a year. Thank s
You could do 5 millions in sales if the profit is under 500k you will pay the small business tax rate
Member
Aug 17, 2011
448 posts
141 upvotes
CALGARY
The short answer is "capital gains rate" if you have a good accountant. The long answer is make sure you have the right answers to these questions:

"...n making such determinations, the courts have considered factors such as those listed below: (The list is not intended to be exclusive of any other factor.)

(a) the taxpayer's intention with respect to the real estate at the time of its purchase;

(b) feasibility of the taxpayer's intention;

(c) geographical location and zoned use of the real estate acquired;

(d) extent to which intention carried out by the taxpayer;

(e) evidence that the taxpayer's intention changed after purchase of the real estate;

(f) the nature of the business, profession, calling or trade of the taxpayer and associates;

(g) the extent to which borrowed money was used to finance the real estate acquisition and the terms of the financing, if any, arranged;

(h) the length of time throughout which the real estate was held by the taxpayer;

(i) the existence of persons other than the taxpayer who share interests in the real estate;

(j) the nature of the occupation of the other persons referred to in (i) above as well as their stated intentions and courses of conduct;

(k) factors which motivated the sale of the real estate;

(l) evidence that the taxpayer and/or associates had dealt extensively in real estate."

http://www.cra-arc.gc.ca/E/pub/tp/it218r/it218r-e.html

Additionally, there's always the question of whether or not you have 5 or more full-time employees, which factor in to whether or not a company is "in the business" of selling property,


tbtaoufiq wrote:
Aug 31st, 2014 3:56 pm
I am the owner (only shareholder in the compagny), i do new construction : buy a piece of land, build a house on it and then sale it. Annual income always less than 500k. I am going to pay the low rate or the higher one? Thank s

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