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regarding tax return for Canada

Hello David,

I am Canadian citizen working in US on TN visa, my family is here with me on TD visa. We have been here for more then a year. We have a house in Ontario that we rent. We have never canceled Canadian driver's license, healthcards, credit cards and bank account however we have obtained US medical, driver's license, etc. We have been visiting Ontario once for a week to do some repaires around house. My wife was not working last year. We filed a 1040 Joint return for the US .

Question: What is the best way to file my Canadian tax? Should we do it jointly or separately? Are we still considered Canadian residents? Should we pay Provincial tax to Ontario or/and Federal Tax or neither one?

Also could you please let me know how much would you charge to prepare my Canadian tax?

Thank you in advance,

david ingram replies:

You are a non-resident of Canada although you have kept too many Canadianisms

You need to file two returns. One for any earned income up to the date of departure and the second for the rental on the house after you left. This return is called a Section 216(4) return. Theoretically, the Canadian return has to be prepared BEFORE the US return and to file a Joint return in the US, you would also have to report any earnings from Canada in 2006 for before you moved to the US.

It is very unlikely that the US returns are correct.

The following is a usual price suggestion:

Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.

This is not intended to be definitive but in general I am quoting $800 to $2,400 for a dual country tax return.

$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.

$1,000 would be the same with one rental

$1,200 would be the same with one business no rental

$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.

$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits no move in or out

$2,400 would be all of the above and you moved in and out of the country.

This is just a guideline for US / Canadian returns

We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.

With a Rental for $350

A Business for $350 - Rental and business likely $450

And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.

Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.

TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.

8891 forms are generally $50.00 to $100.00 each.

18 RRSPs would be $900.00 - (maybe amalgamate a couple)

Capital gains *sales) are likely $50.00 for the first and $20.00 each after that.

Just a guideline not etched in stone.
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Invitation to make a voluntary disclosure

My_question_is: Canadian-specific
Subject: Invitation to make a voluntary disclosure
Expert: [email protected]
Date: Tuesday February 20, 2007
Time: 01:09 PM -0500


I hold a number of shares in the company of NCCC (National Credit
Counsellors of Canada)
I purchased these shares in 2003/2004 at an average price of 25 cents, and
the company declared their value at the time to be $1.00. I swapped these
shares into my self Directed RRSP at their declared value of $1.00, and have
just received a letter from the legal firm representing NCCC saying that the
increased value of the shares made by NCCC was incorrect. This has
considerably reduced the value of my RRSP, and to add insult to injury, NCCC
has reduced the share holdings of all share holders by 10 to 1 (100 shares
now becomes 10 shares)
The legal firm representing NCCC has sent shareholders a letter suggesting
that any shareholder affected by the disclosure by NCCC may come forward and
make a voluntary disclosure to CRA. I would be interested in your opinion
and advice as to what course of action, if any, I should take.
Thanks in advance for your help.

david ingram replies:

In my opinion, you should be putting the excess cash back into your RRSP to
reflect the true value. Then you should amend your tax returns for that
year to include a capital gain or maybe even a straight gain on any
difference between what you paid and the value that you actually put them
into the RRSP. Of course, a proper method would likely be to put the shares
in at exactly what you paid for them.

Sending the CRA a letter stating that you have corrected the innocent
mistake should suffice.

The good news is that because the stock in in an RRSP, the loss is 100 %
deductible. I have often said that the only stock to put in an RRSP is
stock that goes down because you get twice as much of a tax deduction that
way. I believe that if you are buying stock or mutual funds, they should
always be outside any RRSP so that you get the favourable tax treatment on
Capital Gains and Dividends.

Fred Snyder has a worksheet that shows that you break even at 4% and make
more money on a leveraged purchase where you borrow $100,000 and use the
interest as your 5% a year write-off as an alternative to putting $5,000 a
year into an RRSP.

Get him to do the paperwork for you.

Every Thursday Evening, Fred Snyder of Dundee Wealth Management conducts one
of 17 different financial seminars in the boardroom of his office

Time: 7:00 to 9:30 PM
Date: Every Thursday evening
Place 1764 West Seventh
Vancouver (corner of Burrard)

Phone (604) 731-8900 to register

No cost - no obligation

Topics always cover mortgage interest as a deduction

other topics - getting the mortgage, estate planning, critical care
insurance, income taxation, differences between stocks and bonds, and
usually the most innovative HELOC mortgage offered in Canada from Manulife

If you are starting in downtown Vancouver and do not want to go home first,
one of the excellent THAI HOUSE restaurants is in the same building and
makes a nice start to the evening. If it is your first seminar, Fred will
buy you dinner if you are pre-registered.

I, david ingram, will be at the Thursday evening following the last Sunday
of each month to cover mortgage interest as a deduction and give the class
an adding test.
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US rental income for Canadian landed immigrant and sale of US property after 1 year

I am a xxxxxxxxxxxxxxxx xxxxx citizen, who had lived and worked in the US for 8 yrs unitl July 2006. I moved to Canada as a landed immigrant in July 2006. I have an apartment in the US, which I rented out when I moved to Canada. I have no income in Canada so far ( but I have W2 with earned income from Jan-July 2006 from US). Where do I report my rental income - in the US or in Canada for tax purposes? Also, how do I avoid being taxed twice?

In addition, I plan to sell my apartment in the US in July 2007. I will not realize a profit of more than $40,000. Since it was my primary residence in the US up until July 2006, do I have to pay any taxes in the US? How about Canada?

Thanks for the help.

david ingram replies:

Welcome to Canada.

You will prepare your US return as if you were a resident because you have no Canadian income and under the US presence rules, there is no problem. You will elect to fill out a 1040 reporting your world income and a Schedule E reporting the rental income.

You will fill out a Canadian return as a an 'arriving' Canadian and report the rent on the apartment for the period from Aug 1 to Dec 31st on schedule T776. After deducting the expenses, it will be unlikely that any taxable profit will be generated but be sure that you do not claim any depreciation on the US apartment on your Canadian return. With your Canadian return include a statement that you elect to treat this building as a personal residence even though you are not ordinarily inhabiting it under section 45(2) of the Canadian Income Tax Act.

If there is a tax payable calculated on the Canadian return, you can claim a foreign tax credit for tax paid to the US on lines 431 and 433 of Schedule 1 of the Canadian return.

If you find you need them prepared for you, we do all states and provinces and the Canada and US federal returns at the same time.

For the US in 2007, you will claim the house as your principal residence in both countries. However, you will report the sale and profit on schedule D of your US return and claim the profit as a tax free exemption at the same time.
The sale may be questioned in which case you willinform the IRS of the circumstances. There should not be any problem.

For Canada, you will report the sale as a tax free one of form T2091. This form says it does not have to be included with the return but I suggest you include it and send in a paper return. (I do not think anyioneshould efile.) You will report the rental income from Jan 2007 until the date of sale on Schedule T776.
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Gordon Bizar alive and kicking

Is Gordon Bizar still around?

Have you heard of a technique where one purchases a corporation by having that corporation issue redeemable preferred shares to the “vendors” in exchange for their selling their shares to the “purchaser” for $1 and then having the corporation redeem the preferred shares using working capital or funds loaned in by the purchaser? Seems to me that the proceeds received by the vendor would be taxable and thereby deprive him of the $500,000 exemption on sale of control of a CCPC and that during the transaction the “vendor” would have NO security as against the “purchaser” bleeding the corp. dry and moving on.

How to buy a business with no money and no down payment either!

A friend of mine has been approached with this scheme (or scam) to buy his successful plumbing contracting corp.

Seems a tad risky for the vendor to me.

No tyranny is so irksome as petty tyranny: the officious demands of policemen, government clerks, and electromechanical gadgets.

david ingram replies:

(For those who do not know Gordon Bizar has a nothing down "buy a business" seminar which is intriguing and which I taught at one time back in the 80's. Great for the buyer, usually bad for the seller.)(The sender of this email actually taught it as well.)

Gordon Bizar is alive and kicking at

Seller should NOT sell under terms you suggest but you knew that.

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foreign property excluded if its a vacation home

Hello David,
My tax accountant just told me that the question on the tax form " do You own a foreign Property" does not apply to a me since my property in the U.S. in primarily use as a vacation home and does not earn any income whatsoever. Is he right?

david ingram replies:

He is correct. If you are not renting it out, it is not reportable.
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Is income tax higher in the US or Canada? - it DEPENDS

I'm a Canadian citizen living and working in Niagara Falls, ON. I married a US citizen in November and have applied for a K3 visa. If and when I move to Buffalo, NY to live with my wife (who won't relocate here), I'll still be working in Canada as I have a good job. Do I pay taxes as usual to CRA and do the AMT in the US or can I just pay the IRS..?? I can't receive health care, unemployment or pension from the Ontario government anymore if I live in New York, so I'd rather pay US taxes as they are lower.

Any help you can provide would be appreciated.

david ingram replies:

You will continue to pay Canada taxes just as if you lived in Canada.

Then you will report the income on your US return and file form 1116 to claim the credit for the Income tax, CPP and EI that you paid to CANADA.

The AMT does not apply anymore in your situation.

However, you are incorrect about New York having lower taxes.

If you were comparing Toronto and New York City, New York City is much higher.

Calculated as Married filing separately.

However I used $50,000 US as a Niagara falls New York salary and that works out to $2516.00 State tax, $6,951.00 Fed Tax, $3,100 FICA and $725.00 Medicare for a total of $13,292 US or $15,074.37 Cdn at 1.1340936

At the same exchange rate, $50,000 US is $56,704.68 which earns Ontario Tax of $4,044.59, Fed Tax of $8,231.00, CPP of $1,910.70 and EI of $729.70 for a total of $14,915.99 Canadian.

With the exception of mortgage interest as a deduction, the other deductions in the US are NOT AS GOOD as Canadian deductions and since I can (with a little time and reorganization) make a Canadian mortgage deductible as well (Nov 2001 Newsletter in top left hand box at, I do not take that into consideration.
The following answer goes even further


I am a U.S. citizen and resident, married to a (non-working) dual U.S.-Canadian citizen. I recently learned that the company where I've worked for the last 20+ years is closing its doors near the end of this year. I'm 55 and can't get my pension for at least 5 years...10 years if I want a full pension. We've been thinking of the idea of moving across the border to Canada (wife would sponser me), and I have a question. Would it make any sense tax-wise for me to live and work in Canada, pay into CPP for 5 or 10 years? I understand that Canadian taxes are higher than in Michigan, and I have mutual funds and other savings that are generating about $10,000 in yearly interest/dividends/capital gains that I would be leaving in the U.S.


david ingram replies:

As an esoteric exercise, I decided to see what the difference actually was because Canadian taxes are NOT always higher than the US, particularly where two spouses have equal earnings.

The big difference is that the US has a joint tax return rate and when one spouse works an the other does not, a discrepancy does arise.

I used a US salary of $60,000 and a joint 1040 and MI 1040.

I did not use any deductions other than the standard deduction and did not claim for any children.

The results were

US fed tax of 5.714
MI tax of 2,083
FICA 3,720
Medicare 870
For a total of 12,387 which converts to $14,048.02 in Canadian funds
If you had lived in Detroit, the city tax would be $1,470 changing the figures to
a total of $13,857.00 US or $15,715.14 Canadian

I converted the $60,000 to $68,045.62 Canadian

The results were
Cdn Fed tax of 9,581.69
ON tax of 4,659.14
CPP of 1,910.70
EI of 729.30
for a total of 16,880.83 which converts to $14,884.86 in US funds

The difference is $2,497.86 or about $200 a month. if you did not move from a Michigan city with a tax return or a difference of (14,884.86 - 13,857) $1,027.86 if you moved from Detroit

Then - (I was intrigued) I tried it with you both receiving $30,000 US

The results were

US fed tax of 5.714
MI tax of 2,083
FICA 3,720
Medicare 870
For a total of 12,387 which converts to $14,048.02 in Canadian funds
and $1,470 Detroit tax 'IF' There is no change

Then I decided to show what would happen to a couple who moved to Canada and both worked equally.

I converted the $60,000 to $68,045.62 Canadian but split it into 2 returns of $34,022.81

The results were
Cdn Fed tax of 3,474.97 x's 2 or 6,949.94
ON tax of 1,721.67 x's 2 or 3,443.34
CPP of 1,510.88 x's 2 or 3,021.76
EI of 636.23 x's 2 or 1,272 .45
for a total of 14,687.49 which converts to $12,950.86 in US funds

and is only a difference of 12,950.86 - 12,387 or $563.86 or less than $50.00 a month AND qualifies your wife for her own CPP.

Of course, if you moved from Detroit to Windsor, you would be paying ($13,857 - 12,950.86) $906.14 LESS living in Canada.

For the record, I would normally charge a minimum of $400 Cdn for this 'what if' calculation and your question was rejected originally along with another 100 or so. However, it caught my eye and I decided to use it as a major answer.

The investment part of your income will also cause some differences because Canada will tax the dividends and capital gains differently,likely a little more. However, if you switched your accounts to Canadian securities, the tax may be a little less because of Canada's dividend tax credit.
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H-1 Visa gift tax

My_question_is: US-specific
Subject: H-1 Visa gift tax
Expert: [email protected]
Date: Friday February 16, 2007
Time: 08:58 PM -0500



I am a married Indian citizen and am on a H-1 visa. We are planning to buy a
house and my father in law (an Indian also), who stays in Bahrain, wants to
gift us the down payment up to $ 100,000. Is this legal? And if so, am I
liable to be taxed in anyway such as a gift tax? Please advise how do I
proceed on this?


david ingram replies:

If the gift comes from your father-in-law and he is NOT a resident of the
United States or in the United States when he gives it to you, he is NOT
subject to gift tax. However, he should specifically give it to you in
India or Bahrain. You can then transfer it electronically from their to
your account in the US.

If the money was already in the US, the IRS CAN make a claim for gift tax.

To be perfectly safe from "any" possible claim, he can give you and your
wife $12,000 each per year - If there ae children, he can give them $12,000
each. So, He could give your wife and you $24,000 this year and loan you
the $76,000 and then forgive $24,000 a year for three and a 1/3 more years.


He could give you and your wife $24,000 this year and his wife, your
Mother--in-law could give you another $13,000 and forgive another $24,000
next year.

Or if there are 2 children, mom could give you all $12,000 for a total of
$48,000 and he could give you $12,000 each for a total of $48,000 and you
would have $96,000 right now with NO possible tax consequences.

The consequences you DO have to worry about is the fact that you will always
be beholden in a "subtle" if not overt way. You may find that situation
harder to live with in the future. I am dealing with a two country divorce
now where the father in law just could not let the son in law forget that
"the only reason you have this house is that I gave you the down payment."
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Services Info Requested

Hi David,
> > >
> > > My father refereed me to you. I have a question I own a small business
> > > corporation here in BC (xxxxxxxxxx Business Consulting Co) I also work as an
> > > independent consultant (not through my business consulting Co )and I am in
> > > New York right now on TN-Work Visa till Sept. I also own part of a small
> > > corporation in New York (xxxxxxxxxxxxxx) and I was just hired to work as a
> > > manager for Nxxxxxxxxxxxxx out of the Los Angeles office
> > > for next 3 years and to be paid in American dollars. Can you suggest a strategy
> > > for me so that I'm not paying tax 2 X (Canada & US) both on a personal and
> > > corporate level and the costs involved for you to help me implement these and
> > > anything else that might help me as I seem to be
> > > getting different types of advice.
> > >
> > > Kind Regards,
> > > ------------------------------------------
> david ingram replies:
> >
> > It sounds to me that you are likely in an illegal position in the US unless you have a separate visa to work in each of these entitities. For instance, merely answering the phone or taking out the garbage at the New York business you own could result in arrest, fine, and deportation.
> >
> > Without a separate visa, you can NOT work for the LA company. There is NO TN visa available for you to take over as the manager of a US company unless it was something like an engineering company requiring a professional degree to be a manager which is unlikely. A TN management "consultant" visa does NOT allow you to be a manager of anything in the US.
> >
> > As for tax, if you are genuinely living and working in the US, Canada would not be able to tax you on the US earnings under Article IV of the US / Canada Income Tax Treaty.
> >
> > Goto and read the US/Canada Taxation section in the second box down on the right hand side.
> >
> > You HAVE TO / MUST deal with the visa question first. You can find a little more out about the proper visa at and read the "Entering the USA" section in the second box down on the right hand side.
> >
> > A quick search of the internet found you involved as manager of a band, involved with Nettwerk, involved with the 2010 paralympics, and your consulting company in Vancouver and New York and so on.
> >
> > If I can find this so quickly, Homeland Security can do the same thing.You likley need a phone consultation with myyself or Joe Grasmick ( or Greg Suskind at
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Turin, Chicago and Istanbul (Not Constantinople)


Can you please tell me if you know can a U.S. company send goods from a
factory in Italy directly to Turkey without any taxes/duties charged?

Thank you

david ingram replies:

I don't have a clue. I don't deal with customs and tariffs dealing with

Now if you wanted to know where a US executive who was working in Chicago,
Turin and Istanbul (not Constantinople) pays his or her tax, I would be glad
to assist.
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Capital Gain or Flip

My question is: Canadian-specific

QUESTION: My sister bought recreation property in BC for $100,000 ten years
ago. Now she wants to sell at $200,000. Her capital gains would be at 50% of
the profit? My question is if i bought if from her privatley for 200k and
put my name on title and later take hers off. When I sell the property for,
say $250,000 in 6 months or so, what would be my capitol gain?

david ingram replies:

If it was a capital gain, you would pay tax on 1/2 of $50,000.


If you are buying for $200,000 intending to sell in six months, you likely
do NOT have a capital gain. You are buying with the intention of flipping
and "flipping" is taxable at straight tax rates.

The $50,000 profit would go on line 135 as a business.

Go to and read the Capital Gains chapter in the "Tax Guide"
section in the top left hand box.

The following older question and answer will help as well.
A "friend" who is a BC realtor and has your same question presented to her
from time to time recently attended a seminar that was related to this
subject. As a result she was able to provide me with some interesting
thoughts to ponder concerning
"intent" and "professional background" when it comes to "flipping houses"
and tax in Canada. You may possibly be looked at as a Developer with all
subsequent tax implications.

Read the full article at <>;


david ingram replies:

In Canada, the purchase and sale of any piece of real estate with or without
renovations is considered a sale and subject to straight income tax unless:

1. It was bought for and clearly used as your personal residence and was
intended to be used for an indefinite period of time which is usually in the
five to ten year range.

2. It was bought as and used as a recreational property

3. It was bought for the purposes of earning long term rental income.

In the case number 1, there is no tax.

In the case of numbers 2 and 3, the sale is treated as a capital gain and
only fifty per cent of the profit is taxed at your regular tax rates.

Lots of / many (anyone caught) are taxed full tax rates when they buy a
house, move in, fix it up and sell it a year or two later and then do
another one.

Of course, most are NOT caught in these circumstances.

However, "any" flip is going to be straight income unless the person can
prove that they bought it to live in and then:

* married a person with three children and it is not big enough (had to sell
and bought bigger)

* were transferred to another city (had to sell to buy in new city)

* lost their job, were injured, etc. and can no longer afford to move in. In
this case, they would have to show that they had the finances to have paid
for it when they bought it. (Not only can they not afford it but they have
moved into their parents' basement (boomeranged).

* Inherited a house from their parents and do not need it any more. (are
living in the new house)

You can read more by going to - click on tax guide in the top
left hand corner and then click on the "capital gain" section.


This older q & A also gives an idea

My daughter is closing on a presale Yaletown condominium this summer. She
is working until Christmas in Alberta. She returns to Vancouver from Jan to
May and if the job becomes a full time position, then she may return to
Alberta to live. At the time of presale, February 2004, we thought that the
suite would be assigned to her and that she would live in the suite.

I was hoping that she could declare the suite as her permanent residence
since she is only renting in Alberta and the work is not permanent. In
May 2007, she could decide to keep or sell the suite.

What does she need to do in order to qualify the suite as her permanent


david ingram replies:

There is no absolute answer because you can call a toad a frog all day long
but it is still a toad.

To be a principal residence and tax free for income tax purposes, the
property must have been bought by her to live in and she HAS TO move into
it. - No exceptions that I know of.

You can expect that the CRA will be looking at "every" quick resale in EVERY
downtown building.

In deciding if it is a capital gain or a flip, the CRA will be looking at
the suitability of the unit as a residence, the ability to pay for the unit
and past and even future performance.

In other words if she claimed this one as a principal residence and then did
it again a year later, the CRA would have every right to go back and
reclassify the first one.