June 2016 Newsletter

Does your business have clients or customers in Atlantic Canada? Whether you ship goods or provide services to them, you may need to know about upcoming Harmonized Sales Tax (HST) rate changes.

The Income Tax Act (the "Act") provides many potential benefits, credits and tax breaks to persons with disabilities.

In most but not all cases, the test to qualify for these benefits is based on qualifying for the “Disability Tax Credit”, which requires having a physician complete a Form T2201 (for some disabilities, other health-care providers also qualify), certifying that the person has a “severe and prolonged impairment” that affects the person’s “activities of daily living” in a particular way. The Act and Form T2201 have detailed requirements which must be met to qualify.

Do you make donations to charities located in the United States? They may be eligible for a tax credit on your Canadian tax return in one of several ways.

There is a little-known refund of excise tax on gasoline for persons with physical disabilities and for registered charities.

Spousal support payments are normally deductible if they meet certain conditions, such as being required under a Court Order or written separation agreement, and being “periodic” payments. They must also be made to the spouse (or ex-spouse) in a way that that person has discretion over how to use the funds. Generally the same conditions that allow a support payment to be deducted mean that it will be included in the recipient’s income.

Taxpayers who have been treated badly by the Canada Revenue Agency often wonder whether they can sue the Agency.

The answer is yes. However, it is important to realize two things.

High management fees to owners’ companies were reasonable

6051944 Canada Inc. v. The Queen, 2015 TCC 180, was a GST appeal, on an issue that is relevant to both income tax and GST. It was an appeal of denied input tax credits (ITCs) on management fees paid by a company to its parent holding companies.