Canadian Tax Podcast 025: Royalties, Home Office, and Expense reimbursements

Canadian Tax Podcast for the week of 23 November 2021. This week we cover:

• US electric vehicle subsidy;
• GST filing extension for the E-Commerce Framework (AKA: Netflix Tax reporting);
• 2022 TFSA limits announced;
• Transferring intangibles from proprietorship to corp;
• Home office: part-time vs full-time use of space;
• Informal expense reimbursements;

[INTRO]:

“This is the Canadian Tax Podcast, Episode # 025, hosted by me, Cameron Ware. Good morning”

[NEWS SECTION]

1. “Happy Tuesday, it is the week of November 23, 2021. We’ll start with the news.

ITEM [1] – What Canada could do to combat US EV Tax Credit Article

• We’ve discussed over the last few weeks the new US EV tax credit
• CBC covered what Canada might do if they deal were to go through, even though US officials have noted Canada’s displeasure with the proposal
• Quick summary: the US is subsidizing up to $12,500 if consumers buy an electric vehicle. The catch is the subsidy only applies to US-made vehicles. This makes Cdn manufacturers grumpy. 
• One option Cdn govt could use: Cdn mines are a reliable source for the electric batteries. Why does the taxpayer care: Because regardless of the politics involved, tariffs are taxes. Canada applies tariffs somewhere, US does the same, = taxes go up
• https://www.cbc.ca/news/business/electric-car-retaliation-column-don-pittis-1.6255204

 

[ITEM 2] – Obligations for new Gst/HST rules

• The CRA announced new rules for GST/HST for digital economy businesses earlier this year.
• These are the rules for “Foreign suppliers” of digital goods. AKA the “Netflix tax”.
• Supposed to kick in on July 1.
• The CRA has deferred the GST return filing requirement for the first calendar year information return.
• However, suppliers still need to notify/register with CRA if the supplier provides specified services. (Storage/fulfillment warehousing, Digital platform operators)
• https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy-gsthst/notification-information-reporting.html

 [ITEM 3] – TFSA Limit for 2022 ANnounced

• New TFSA limit was announced for 2022
• The new limit is $6000, matching previous amounts from 2019-2021
• If you’re able, definitely max these each year if you can. Tax-free returns are always a good thing.
• All the other usual limits can be found at the link below. RRSP.
• https://www.canada.ca/en/revenue-agency/services/tax/registered-plans-administrators/pspa/mp-rrsp-dpsp-tfsa-limits-ympe.html

LISTENER QUESTIONS

• Sole proprietor artist wanting to transfer assets
  • [Question]
  • This is like any property transfer. Proprietorship, Sec 85 over to corp.
  • Watch: Passive income trap.
• Home office deduction in studio apartment
  • [Question]
  • If I’m understanding correctly, listener filed one way, wants to change to “Dedicated” space.
  • Need T2200 if for employment. Or T2125 if self-employed. Pro-rated on basis of sq/ft for business vs. sq/ft for home.
• How can business partner deduct expenses if they are paid on one card?
  • [Question]
  • One party is purchasing Facebook and Instagram ads, but the expenses are actually 50/50.

That will wrap things up for today. Like always, if you have any questions, send them to questions@canadiantaxpodcast.ca, or find us on twitter: https://twitter.com/cdntaxpodcast  

This is Canadian Tax Podcast, thanks for listening. 

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