Many of us are aware that if we are living in Canada, we may be entitled to certain benefits. These benefits can vary depending on our country of origin, but they are usually tax-related.
For example, if you are a resident of Canada, you may be able to claim a foreign tax credit for money you have spent outside of Canada. Also, if you work in another country, you may be able to receive bonuses that are taxable in Canada.
1. Withholding tax
If you are a non-resident of Canada, you may qualify for withholding tax benefits under the Canadian Tax Service. You will need to register with CRA, establish a payroll account, and remit your withholding taxes to the CRA. There are also certain tax treaties that will allow you to reduce your withholding tax.
Under the Income Tax Act (ITA), you must withhold 15% from payments to non-residents of Canada who provide services in Canada. This applies even if you have a treaty with Canada for taxing the income you receive from providing services. In addition, you must report the payments you make to non-residents on your information returns.
The ITA also provides generous incentives for scientific research and experimental development (SR&ED) expenditures. Public corporations can return capital in the course of reorganization or redemption, and can also return capital on the acquisition of a non-arm’s length foreign entity.
2. Foreign tax credits
The Canadian Tax Service benefits foreign tax credits in a number of ways. Among other things, they are creditable against Canadian taxes owed. They are also a great way to reduce double taxation.
There are two basic types of foreign tax credits: property and business taxes. For property taxes, you cannot claim more than 15 percent of your foreign-source income. Alternatively, you can claim a small amount of your property’s fair market value. In the case of a business tax, you are able to offset some of your corporate or partnership expenses, if your taxes were not paid to the jurisdiction in which you provided services.
On the other hand, there is no escaping the fact that you need to pay taxes on the other half of your salary. While it is possible to claim some of these taxes on a Canadian return, it is not a very attractive option.
3. Hiring a tax preparer
If you have a small business, hiring a tax service with a personal tax accountant can be very helpful. A personal tax accountant will know how to maximize your deductions and minimize your taxes. They also can help you set up a plan for the following year.
Tax professionals can help you avoid costly mistakes. For example, they can check for unused employment deductions and optimize your tax savings. Additionally, they can help you determine whether you are paying too much in taxes.
Hiring a CPA will eliminate the hassle of filing your own taxes. You can find a CPA who is licensed and has years of experience. Also, you can read reviews from real clients.
Most tax preparation services have fixed fees. Depending on the complexity of your return, the fees will vary. Make sure to get a full list of all the services included in the price.
A good tax preparer will be easy to work with and knowledgeable about the tax code. This will make it easier to file your tax return on time.
If you haven’t filed yet, you should make sure to take advantage of these and other common tax breaks. By doing so, you can lower your tax bill by as much as one-third.