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Mr Ingram:
A family member is an Emergency physician working in a hospital. He is paid by MSP for each patient he sees. He is considered as self employed.
Can you provide some answers and clarifications on these items:
1 - Is it better (tax wise) to in-corporate? And what is the best / right way to go about doing the incorporation? What about personal/business liabilities?
2 - Should he buy or lease a car? What is the difference and advantages with regards to income tax allowable deductions/claims?
3 - Should he buy or rent an apartment? Is there any tax advantage?
4 - Apart from the high cost of insurance, licences to pratice, professional fees, is there any other business deductions that he can use if he were to incorporate?
Greatly appreciate your assistance.
Thank you.
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david ingram replies:
1. If he incorporates, it will cost him more tax dollars if he wishes to spend the money. Nothing is deductble to the
corporation that he cannot deduct as a proprietorship other than the extra accounting and legal fees he will need to pay for his incorporation.
2. Leasing a car is a fool's game. He should buy. the car is not deductible against his income because he is not using it for business purposes. He is considered to be working at the hospital and back and forth to work expenses are NOT deductible.
3. He should buy his apartment. He can NOT make the rent deductible. If he follows the presepts shown in the November 2001 newsletter, he CAN make his mortgage interest deductible.
4. A corporation does NOT make things deductible that are not deductible as a proprietorship. In the case, you describe, it is unlikley that he has any legitimate deductions for tax purposes because of his job. A car is not required, an office is not required, he is using hospital equipment and hospital drugs and hospital staff. What he is, is an employee without benefits.
For information about making the mortgage interest deductible, goto www.centa.com click on newsletters, click on 2001 and click on November. Pages 2 to 12 deal with mortgage intertest as a tax deduction.
Your friend should come and see us for a personal consultation.
David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
Be ALERT, the world needs more "lerts"
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