Entrepreneurship & Small Business

Post your CORPORATE TAX questions here

  • Last Updated:
  • Jun 14th, 2017 9:45 am
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Deal Addict
Aug 21, 2007
4739 posts
221 upvotes
Markham
Abel4Life wrote:
Jan 29th, 2015 5:37 pm
Hi, would like to confirm how this tax credit works for hiring a co-op student for 12 weeks.

Co-operative Education Tax Credit
http://www.fin.gov.on.ca/en/bulletins/c ... html#qlfyg

I fully understand the eligibility, calculation etc. I want to confirm if this credit is in addition to deducting the wages of the student.

So in other words:

1. Deduct the wages of the student just like employee wages,
2. In addition to #1, you calculate the credit and claim it.

Am I correct?
not the OP, but yes that is how it works
Newbie
Sep 8, 2014
16 posts
3 upvotes
Newmarket, ON
Hi,

I am in the process of entering my first business partnership and had a number of questions regarding the tax implications of some options. The operating company is its own corporation.

1) I will be working at the operating company and was wondering what the tax implications of withdrawing a salary directly to me vs having the operating company pay the professional corporation for services rendered. I am wondering what the tax implications would be for either myself personally, or my professional corporation that I own wholly. (ie employer share of ei, cpp, etc.)

2) How the rules around the Small Business Deduction (SBD) work. For example, if one of my partners also owns another business does that mean that our operating corporation in not eligible for the SBD? If so would my professional corporation be eligible?

Thanks,
Member
Jun 8, 2010
327 posts
18 upvotes
Toronto
Sarb,

I just wanted to say thank you so much for this thread and the service you provide! You have helped and educated countless of people on this forum!

Cheers!
Deal Addict
Jun 20, 2009
1049 posts
45 upvotes
If I have a corporation that makes only 20k-30k a year, and after expenses (all part of the business) the corporation is left with 10-15k can i take this amount and pay it to myself as a salary leaving the corporation with $0 for that year. Meaning that i dont pay any corporate tax but i pay income tax for myself.
Member
Feb 15, 2010
414 posts
221 upvotes
Surrey
virgilaug wrote:
Feb 8th, 2015 3:21 pm
If I have a corporation that makes only 20k-30k a year, and after expenses (all part of the business) the corporation is left with 10-15k can i take this amount and pay it to myself as a salary leaving the corporation with $0 for that year. Meaning that i dont pay any corporate tax but i pay income tax for myself.
Of course you can, there's no requirement to leave the company with a profit. That you may be better issuing dividends, depending on your other sources of income, as you will likely pay less taxes. Alternatively, if you don't require the money it may be worth while to leave the money in the company and increase your tax deferral.
Member
Jul 4, 2012
359 posts
25 upvotes
Calgary
Is there a limit for dividends? what part will be taxed?
Member
Jun 6, 2008
297 posts
30 upvotes
Hi Sarb,

I have two questions about taxes and reviving a Business Corporation;

1.I had an incorporation which I dissolved in Aug 2014 (stupid decision) on advice of my Accountant as I was no longer doing the IT Consulting and had accepted a full time job offer.
My question is do I show the remaining money (around 35K) from the business as my capital gains or dividends on my personal income tax for 2014 or just as dividends?

2. Also I am planning to do consulting again. Should I open a new corporation or revive the one that i dissolved in 2014 (cost is same). I am not inclined in reviving the old one as the old books are not nicely managed. I want to know if opening a new corporation (shortly after closing one) will raise any red flags to CRA?

THanks,
Newbie
Dec 7, 2011
26 posts
1 upvote
RICHMOND HILL
Hey all,

1) If my year end is December 31, and in 2014 I paid for a conference held in 2015, does the item get expensed to 2014 or 2015?
2) Is HST remittance an expense, possibly under GIFI code 8760 Business Taxes?
3) Does capital expense vs. current expense have anything to do with the absolute cost of the item? For example, I bought a customized banner for $150.
4) Does rules regarding expenses for sole proprietorships/partnerships also apply to corporations?
e.g. GIFI 8521 Advertising (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/ ... u-eng.html)

Thank you very much in advance!
Newbie
Dec 28, 2010
55 posts
5 upvotes
Toronto
Great thread! Read thru it, Sorry I didn't find answer to my question - its probably a very basic newbie question.
1. Have had ON corporation since last year and receiving HST for my consulting services. As per my accountant, we file HST every quarter. I provide him with all expense receipts.
2. Last quarter I provided $1500 in Meals , $2000 in equipment, $2000 in phones, internet, vehicle lease, gas, $1500 - in other items, such as office supplies etc.
3. I noticed that my accountant came up with hst deduction of = 460. On inquiring he said this is the max we can do with the $7K receipts I provided.

Is their any simple information available on what % HST can be deducted for different categories ? I understand we cannot go above 13% but as close to be able to claim 13% should be good.
Newbie
May 23, 2011
97 posts
1 upvote
BURNABY
Hi Sarb, If I decided to use automobile allowance instead of actual expenses, do I still need to keep the auto log?
Deal Guru
Feb 29, 2008
14826 posts
1553 upvotes
Montreal
groobi wrote:
Jun 30th, 2015 7:28 pm
Hi Sarb, If I decided to use automobile allowance instead of actual expenses, do I still need to keep the auto log?
Yes. The allowance is a per km reimbursement. You need to justify the kilometers.
Deal Addict
User avatar
Mar 23, 2008
3775 posts
303 upvotes
Toronto
What's the proper way to borrow from the corporation to personal expenses and repay the corporation back? And can it be tax free?
Newbie
May 23, 2011
97 posts
1 upvote
BURNABY
Dear all. If a car will be used for business for 90% or more (10% is for commute), does it make sense to have a corporation buy the car?
Can I avoid standby charge and operating benefit in this case?

Thanks
Deal Addict
Jun 12, 2015
1682 posts
413 upvotes
Ontario
NEMESIS_2008 wrote:
Jul 2nd, 2015 10:42 pm
What's the proper way to borrow from the corporation to personal expenses and repay the corporation back? And can it be tax free?
Short answer is no if you borrow for more than 1 year.

You can take a corporate shareholder loan (assuming you are shareholder in this case). It will be added to your income unless you use it to buy a house, new shares of that Corp, or a car for work. You will have to pay interest on it regardless.

If you use money for any other reason than above, the loan will be added to your income and you pay tax. If however you pay the entire loan back within a year, then it is not added to your income.
Deal Addict
Jun 12, 2015
1682 posts
413 upvotes
Ontario
groobi wrote:
Jul 14th, 2015 2:46 pm
Dear all. If a car will be used for business for 90% or more (10% is for commute), does it make sense to have a corporation buy the car?
Can I avoid standby charge and operating benefit in this case?

Thanks
If you're providing the car and paying the operating expense and the contract states you pay for expenses, you could deduct cca or automobile expenses. No standby or operating benefit.

If you provide the car and Corp pays for operating expenses, you would personally only include personal operating benefit in your income. No standby charge.

If Corp owns car and pays expense, then you must include both standby and operating benefit in your income. Since you use more than 50% you get reduction.

Really not sure why you are including both standby and operating benefit if you currently own the car and pay for it. Hope that helps.

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