David only doing one radio program and one seminar a

To: taxman at centa.com; centapede at lists.centa.com
penalties for oneman corporation Working More Than 2 Years With
Same CompanyAnd At The Same Position - ask international income
taxexpert preparer consultant david ingram North Vancouver BC
I don't want to unsubscribe.     We have used David's services in
the past and find the info invaluable.    We would really like to
attend one of the Thursday seminars but find it is too far from
White Rock to drive in the winter.    Any chance of there being
held closer to home - say Surrey, Delta, Langley etc?.
Wouldn't mind driving that far at night.
Thanks again.
N xxxxxx
david ingram replies:
It is unlikely.  we went form major monthly seminars in various
hotels, BCIT and other locations and we charged for them.  They
were expensive and a lot of work.  Now Fred is running them out
of his office.  All the material is there and we have 4 people
speaking most of the time and 3 of us all the time.  Everyone
takes a night off now and then.  If night driving is a problem,
get a son or daughter or next door neighbour to come with you.
Heck if you phone in to the program  on Sunday, Fred will even
buy you dinner at the THAI HOUSE restaurant next to the office
before the seminar.
As an example, we had a lot of people asking us to come to
Nanaimo,  We made the trip - it likely cost us a combined $2,000
for the room, ferries, hotel rooms for us, meals, let alone the
day out of our lives, etc.  Less than 10 people showed up for a
free seminar we should have charged $100.00 for.
We have been talking about doing one every fourth Saturday
afternoon though and that could happen.  I am passing this to
Fred as you can see.
In the meantime,   Get a neighbour to drive.
Thanks for the kind comments.
I will only be doing one seminar a month. Fred wanted to have
more guests on the program so I am reduced to the last Sunday of
every month.   Because of this, I have decided that I will only
do the Thursday seminar which follows the last Sunday so I will
be doing the seminar tomorrow night but then none for a month or
  ----- Original Message -----
  From: centapede at lists.centa.com
  To: CENTAPEDE ; Webmaster at Jurock. Com
  Sent: Friday, November 25, 2005 6:03 PM
penalties for oneman corporation Working More Than 2 Years With
Same CompanyAnd At The Same Position - ask international income
taxexpert preparer consultant david ingram North Vancouver BC
  newtna at telus.net: Please see bottom of message for unsubscribe.
If you are new to the list, you were probably added because you
sent a question to taxman at centa.com, posted a question online at
www.centa.com or at possibly at www.jurock.com
  My_question_is: Canadian-specific
  Subject:        Working More Than 2 Years With Same Company And
At The Same Position
  Expert:         taxman at centa.com
  Date:           Friday November 25, 2005
  Time:           06:06 PM -0800
  I am providing a consulting services to a client through a
third party/headhunter, means my client where I actually work
doesn't directly pay me, she pays to the Headhunter/personal
resources company, then they pay to my Company and my Company
pays me 
.  I have been working for the same client almost 2
years, and my client wants to renew my contract to another 6-12
months, but they are saying per Canada Revenue, "A contract
worker can't work on the same position more than 2 years", so the
only way that I can renew my contract is, if I just work till end
the end of my current contract and then work some where else for
4-5 months, and then I can come back and can work on the same
position as a contractor
  My questions: First, is there such a rule per CRA, second would
that rule apply to my situation, where all payment transactions
are made between the Incorporated companies; no one directly pays
to me but my own Incorporated company..
  david ingram replies:
  You are caught in the   Personal Service Business rules.  These
apply at "any" one time - I do not know of a two year rule but I
may have missed it.  In my opinion, based upon your question, a
corporation does you no good anyway "IF" your returns have been
done properly.  In fact, if you have a corporation, you can not
make your mortgage interest deductible as easily.
  What is a PSB?
  A business carried on by a corporation will generally be a PSB
if the following two tests are met:
  1.    The individual performing the services (or someone
related to the person) owns 10% or more of any class of shares of
the corporation, and
  2.    Without the use of the corporation, the individual would
reasonably be regarded as an employee of the person or
partnership paying a fee to the corporation.
  The key test is really - are "you" an "incorporated employee"?
  The CRA will look at in determining whether an individual is an
incorporated employee using the following criteria:
  Who is an Incorporated Employee?
  The issue of whether someone is an incorporated employee is a
question of fact dealt with on a case-by-case basis.
  Answering yes to the following questions would be indicative of
an "incorporated employee" relationship with a client:
  *    Are there very few clients, or worse, only one client?
  *    If you only have one or two clients, do you carry on the
duties at the client's offices on a regular and continuous basis?
  *    Does your client provide an office and tools of the trade
such as a computer or service truck?
  *    Does  your business card have your company name or the
client's name on it?
  *    Do customers of the client think of you as an employee of
the client or are you an obvious business on your own?
  *    Does the client pay you on a regular basis, without the
submission of an invoice?
  *    Is your name on the client phone directory?
  *    Would you appear to be an officer or employee of the
client to a third party?
  *    Are you remunerated on an hourly fees basis irrespective
of the time needed to accomplish the task?
  *    Were you hired to perform ongoing services as opposed to
completing specific projects?
  *    Are there expected hours of work that are to be put in
each day?
  *    Are you allowed to send someone else to do your duties or
must all services be performed by you (that is, would the client
not allow you to provide a substitute or not allow you to
subcontract your duties)?
  *    If supplies or equipment are needed to complete a task,
are they provided by the client?
  *    Will the client absorb any risk should a project go over
budget or do you take the risk of completion?
  There is an exception for corporations having more than 5
full-time employees, and for services provided to an associated
corporation (since these two corporations must share one small
business deduction regardless).
  How is PSB Income Taxed?
  When a corporation is carried on by a PSB, there are two main
tax consequences:
  *    The corporation will be prevented from claiming the small
business deduction, both federally and provincially.
  *    When calculating income from the PSB, the eligible
deductions will be restricted to:
  1.    Remuneration and benefits for the incorporated employee;
  2.    If the incorporated employee is a salesperson receiving
commissions, expenses paid by the corporation that would have
been allowed as a deduction to the individual personally as a
commissioned salesperson had he/she incurred the expense; and
  3.    Legal expenses incurred by the corporation in collecting
amounts owing to it on account of services rendered.
  The PSB is NOT eligible for the small business deduction.
Therefore tax can end ip being higher using a PSB one person
corporation working for one  entity than if you just worked as an
employee with no benefits - i.e. no EI, etc.
  Worse yet, is that the CRA can come along three years later and
re-assess several years at once leaving you with massive tax and
interest bills.
  I do not know of any two year rule about hiring a one person
  However, they have likely done you a favour in pointing this
  At a $100,000 year profit, the tax is about $10,000 "higher" if
you pay the profit to yourself as a dividend and the CRA reverses
it  as a one person corporation with one client than it is as a
straight salary "IF" the corporate tax return is done correctly.
In BC, the difference is $10,000 a year.
  The US is no better by the way.  A one or two person
corporation is usually an "S" Corporation where all profits flow
through to the shareholder at their personal tax rates.
  If you offer your services to a small number of businesses, you
need to decide with each one if you are an employee or
  If you incorporate, the stakes are very high - if you are a
true self-employed contractor, you might be able to benefit from
a lower tax rate provided by the small business deduction.
However, if it turns out that you are an incorporated employee,
the tax cost will also multiply,
  Remember that the reason for the small business tax rate is so
that the small business can buy machinery, a new truck, etc.  It
is not so that "George" will pay less tax.  If the CRA
reclassifies you, the tax penalty is HUGE!  From your
description, you would be reclassified.
  As I said at the start, the other problem is that with a
corporation it is hard to make your mortgage interest deductible.
Go to www.centa.com and read the November 2001 Newsletter in the
top left box.
  This is a great question for the Sunday Morning Radio Show.
  Now I am going to bed.
  Answers to this and other similar  questions can be obtained
free on Air every Sunday morning.
  Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram
am a regular guest on Fred Snyder of Dundee Wealth Managers' LIVE
talk show called "ITS YOUR MONEY"
  Those outside of the Lower Mainland will be able to listen on
the internet at
  Call (604) 280-0600 to have your question answered.  BC
listeners can also call 1-866-778-0600.
  Callers to the show and questioners on this board can also
attend the Thursday Night seminars on finance and making your
Canadian Mortgage Interest deductible.
  David Ingram's US/Canada Services
  US / Canada / Mexico tax, Immigration and working Visa
  US / Canada Real Estate Specialists
  Home office at:
  4466 Prospect Road
  North Vancouver,  BC, CANADA, V7N 3L7
  Cell (604) 657-8451 -
  (604) 980-0321 Fax (604) 980-0325
  Calls welcomed from 10 AM to 10 PM 7 days a week (please do not
fax or phone outside of those hours as this is a home office)
  email to taxman at centa.com
  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"
  This from "ask an income tax and immigration expert" from
www.centa.com or www.jurock.com or www.featureweb.com. David
Ingram deals on a daily basis with expatriate tax returns with:
  multi jurisdictional cross and trans border expatriate problems
for the United States, Canada, Mexico, Great Britain, United
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US, UK, GB, and any of the 43 states with state tax returns, etc.
Rockwall, Dallas, San Antonio Houston
  Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and
Immigration Tips, Income Tax  Immigration Wizard Antarctica
Rwanda Guru  Consultant Specialist Section 216(4) 216(1) NR6 NR-6
NR 6 Non-Resident Real Estate tax specialist expert preparer
expatriate anti money laundering money seasoning FINTRAC E677
E667 105 106 TDF-90 Reporting $10,000 cross border transactions
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