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Notice of Ways and Means Motion October 2018: At-Risk Rules for Tiered Partnerships

Budget 2018   At-Risk Rules for Tiered Partnerships The income (or loss) of a partnership for income tax purposes is allocated to its partners, who include (or deduct) the amount in calculating their own income. Limited partners of a partnership may deduct losses of the partnership allocated to them only to the extent of their […]

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Notice of Ways and Means Motion October 2018: Part IV Tax – Allocation of Losses

Part IV Tax – Allocation of Losses   ITA 129 New subsections 129(4.1) and (4.2) of the Act are introduced consequential to the introduction of the eligible refundable dividend tax on hand (ERDTOH) and non-eligible refundable dividend tax on hand (NERDTOH) accounts. These new subsections provide an allocation rule for situations in which losses are

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Notice of Ways and Means Motion April 2018: Passive Income, RDTOH, and Small Business Deduction Grind

Passive Investment Income   Budget 2018 Active business income earned by private corporations is taxed at corporate income tax rates that are generally lower than personal income tax rates, giving these corporations more money to invest in order to grow their business. In addition, a small Canadian-controlled private corporation (CCPC) can benefit from a corporate

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Notice of Ways and Means Motion October 2018: Reassessment Period – Non-Resident Non-Arm’s Length Persons

Reassessment Period – Non-Resident Non-Arm’s Length Persons   Budget 2018 After a taxpayer files an income tax return for a taxation year, the Canada Revenue Agency (CRA) is required to perform an initial examination of the return and to assess tax payable, if any, with all due dispatch. The CRA then normally has a fixed

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Notice of Ways and Means Motion October 2018: Foreign Affiliates

Foreign Affiliates   Budget 2018 Budget 2018 proposes modifications to the foreign affiliate rules as a result of the Government’s ongoing monitoring of developments in this area. A foreign affiliate of a taxpayer resident in Canada is a non-resident corporation in which the taxpayer has a significant interest. A controlled foreign affiliate of a taxpayer

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Notice of Ways and Means Motion October 2018 – Cross-Border Surplus Stripping Using Partnerships and Trusts

Cross-Border Surplus Stripping Using Partnerships and Trusts   Budget 2018 The Income Tax Act contains a rule (section 212.1) that is intended to prevent a non-resident shareholder from entering into transactions to extract free of tax (or “strip”) a Canadian corporation’s surplus in excess of the PUC of its shares, or to artificially increase the

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Case Update: Laplante v. Canada, 2018 FCA 193 (Multiplying Capital Gains Exemptions)

Key Takeaway The decision in Laplante highlights a major pitfall that tax practitioners should be mindful of when advising clients on structures to multiply the lifetime capital gains exemption among family members. Family members who are allocated a capital gain to claim the lifetime capital gains exemption should be entitled to the money: they cannot

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Finance Canada Releases Draft Rules For Allocating Losses Between the Eligible and Non-Eligible RDTOH Accounts

If a corporation opts to claim non-capital losses against Part IV tax using paragraphs 186(1)(c) or (d),  proposed subsections 129(4.1) and (4.2) prescribe an ordering rule what requires the loss be set off against the Non-Eligible RDTOH account before any of it can be used against the Eligible RDTOH account. Finance Canada provides two simple

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Rules of Professional Content: What You Can and Cannot Do As an Auditor

As an auditor, did you ever wonder about your constraints in the following situations: Financial interest — having a financial interest in your clients Family — auditing client which employes a family member in a financial capacity Contingent fees  — charging a contingent fee Gifts — accepting gifts from clients. We discuss these issues in the following

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