Capital cost is the amount on which you first claim capital cost allowance. The capital cost of a property is usually the total of:
Capital cost
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Month: June 2013
Depreciable property
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Depreciable property is the property on which you can claim Capital cost allowance (CCA). It is usually capital property used to earn income from a business or property. The capital cost can be written off as CCA over a number of years.
Proceeds of disposition
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Proceeds of disposition usually means the amount you received or will receive for your property. In most of cases, it refers to the sale price of the property. This could also include compensation you received for property that has been destroyed, expropriated, or stolen.
Non-arm’s length transaction
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Non-arm’s length transaction is a transaction between persons who were not dealing with each other at arm’s length with each other.
How tax returns are selected for audit?
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Once you file a tax return, your return is recorded in the Canada Revenue Agency (CRA)’s computer system. The computer system can sort tax returns into various groups to help auditors select tax returns for audit. Most returns are selected for audit review from Computer-generated lists.
How does a corporation pay taxes?
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A corporation must file a corporation income tax return (T2) by its due date even if it does not owe taxes. Complete financials statements and the necessary schedules should also be attached to the T2 return.
Audit
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Auditing is a way for the Canada Revenue Agency (CRA) to monitor and inspect GST/HST and income tax returns, excise taxes and duties, and payroll records. Audits help maintain public confidence in the fairness and integrity of Canada’s tax system.
What documents do I need to support my business expense claims
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You can deduct legitimate business expenses to low your income, and thus income taxes. But make sure you can back up your expense claims with supporting documents in case you are audited. Here are the common supporting documents:
Sole proprietorship
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Sole proprietorship is an unincorporated business entirely owned by an individual. It is one of the three most common types of business structures. The other two are partnership and corporation.
What is the penalty if I file my corporate income tax return late?
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If you file your corporate income tax return late, the penalty is 5% of the unpaid tax that is due on the filing deadline, plus 1% of the this unpaid tax for each complete month that the return is late, up to a maximum of 12 months. If the Canada Revenue Agency (CRA) sent you…