December 2016 Newsletter

Under our Income Tax Act, non-residents of Canada are subject to Canadian withholding tax on various kinds of income paid to them by Canadian residents. If you are a Canadian resident making such payments to a non-resident, you must withhold the required amount and remit it to the Canada Revenue Agency within a prescribed period. These rules cover, for example:

As part of a worldwide crackdown on tax evasion co-ordinated by the Organisation for Economic Cooperation and Development (OECD), over 100 countries have committed to “automatic exchange of information” about bank accounts and accounts at other financial institutions including investment dealers. Generally, any person in one country who has an account at a financial institution in another country can expect to have this information disclosed to their home country.

Most people know that, under the GST/HST, a “small supplier” with sales under $30,000 per year does not need to charge GST/HST on their sales.

However, the rule is not that simple.

If you are required to pay the CRA personal or corporate instalments for income tax or GST/HST purposes, here is a useful tip that can simplify your payments. It is only worth considering if you have ample cash available and no concerns about running short of cash.

Personal income tax instalments are payable quarterly. Corporate tax installments are payable monthly. GST/HST instalments, if you are a registrant that files GST/HST returns annually, are payable quarterly. Instalments are normally based on your previous year’s tax, although if your current year’s tax is lower, you can use that figure instead.

In our September 2016 letter, we wrote that Canadian chartered banks are required to accept cheques in payment of income tax accounts. This was based on section 229 of the Income Tax Act.

Knowing when and how to object or appeal is crucial

If you disagree with an income tax or GST/HST assessment, you must file a Notice of Objection (internal appeal within the CRA), before you can appeal to the Tax Court of Canada. If you aren’t satisfied with the CRA’s decision on your objection, you can then appeal to the Tax Court. (You can also appeal to the Tax Court after 90 days (180 days for GST/HST) with no decision from the CRA.)