Choose an Estate Planning Expert to Help You with Real Estate Taxation

Real estate tax is also known as property tax and is the tax that government imposes on a property. The property tax is said to be influenced by only one factor and that is the value of the property. The higher the property value, the more tax you will have to pay for it.

The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state, a county/geographical region, or a municipality. Multiple jurisdictions may tax the same property.

There are four broad types of property: land, improvements to land (immovable man-made objects, such as buildings), personal property (movable man-made objects), and intangible property. Real property (also called real estate or realty) means the combination of land and improvements. Under a real estate taxation system, the government requires and/or performs an appraisal of the monetary value of each property, and tax is assessed in proportion to that value. Forms of property tax used vary among countries and jurisdictions.

Many provinces in Canada levy property tax on real estate based upon the current use and value of the land. This is the major source of revenue for most municipal governments in Canada. While real estate taxation levels vary among municipalities in a province there is usually common property assessment or valuation criteria laid out in provincial legislation. There is a trend to use a market value standard for valuation purposes in most provinces with varying revaluation cycles. A number of provinces have established an annual reassessment cycle where market activity warrants while others have longer periods between valuation periods.

It is not easy to keep tabs of the tax laws that are in use in a country and add the fact that there are changes in tax laws every year, it is not an option for a person to know every tax law that will influence him. One can be aware of the major taxation laws that are important and not get into the intricate laws that exist.

Real estate taxation can be a tricky thing to do and it is better to get the help of a good tax consultant who specializes in property taxes to ensure that you do not end up paying more than you ought to.

There are also a number of professional financial planners, who specialize in creating and managing the estate plans of their clients. Such finance advisors, also known as estate planning expert, need to be hired, in order to take wise and informed decisions regarding planning. These experts can also raise the value of estates to the largest extent possible, by lowering the required tax rates and cutting down on related estate expenses.

Experts in taxation are available to help you in tax planning and to help you in saving money by making you pay less taxes. But finding a good expert can be tricky. Research and find out the best real estate tax experts available closer to you, check on their reputation and consumer reviews and then shortlist a few of them. Then talk to the shortlisted experts and identify if anyone has experience in handling your type of taxation and then look at the fee charged by the expert. Consider all the options and take you time to select a good estate planning expert for you.

An Overview of Income Tax and Corporate Tax System in Canada

Canadian income tax constitutes the majority of the annual revenues of the Government of Canada, and of the governments of the Provinces of Canada.

Canadian federal income taxes, both personal and corporate are levied under the provisions of the Income Tax Act. Provincial and territorial income taxes are levied under various provincial statutes.

The canadian income tax system is a self-assessment regime. Taxpayers assess their tax liability by filing a return with the CRA by the required filing deadline. CRA will then assess the return based on the return filed and on information it has obtained from employers and financial companies, correcting it for obvious errors. A taxpayer who disagrees with CRA's assessment of a particular return may appeal the assessment. The appeal process starts when a taxpayer formally objects to the CRA assessment. The objection must explain, in writing, the reasons for the appeal along with all the related facts. The objection is then reviewed by the appeals branch of CRA. An appealed assessment may be confirmed, vacated or varied by the CRA. If the assessment is confirmed or varied, the taxpayer may appeal the decision to the Tax Court of Canada and then to the Federal Court of Appeal.

Canada levies personal income tax on the worldwide income of individuals’ resident in Canada and on certain types of Canadian-source income earned by non-resident individuals. The amount of income tax that an individual must pay is based on the amount of their taxable income (income earned less allowed expenses) for the tax year. Personal income tax may be collected through various means:

• Deduction at source - where income tax is deducted directly from an individual's pay and sent to the CRA.

• Installment payments - where an individual must pay his or her estimated taxes during the year instead of waiting to settle up at the end of the year.

• Payment on filing - payments made with the income tax return

• Arrears payments - payments made after the return is filed

Canadian corporate tax includes taxes on corporate income in Canada and other taxes and levies paid by corporations to the various levels of government in Canada. These include capital and insurance premium taxes; payroll levies (e.g., employment insurance, Canada Pension Plan, Quebec Pension Plan and Workers' Compensation); property taxes; and indirect taxes, such as goods and services tax (GST), and sales and excise taxes, levied on business inputs.

Corporations are subject to tax in Canada on their worldwide income if they are resident in Canada for Canadian tax purposes. Corporations not resident in Canada are subject to Canadian income tax on certain types of Canadian source income.

Canadian corporate tax is collected by the CRA for all provinces and territories except Quebec and Alberta. Provinces and territories subject to a tax collection agreement must use the federal definition of "taxable income", i.e., they are not allowed to provide deductions in calculating taxable income. These provinces and territories may provide tax credits to companies; often in order to provide incentives for certain activities such as mining exploration, film production, and job creation.

In Canada, corporate income is subject to corporate income tax and, on distribution as dividends to individuals, personal income tax. To avoid this "double taxation" of the same income, the personal income tax system, through the gross-up and dividend tax credit (DTC) mechanisms, provides recognition for corporate taxes, based notional federal-provincial corporate tax rates, to taxable individual’s resident in Canada who receives dividends from Canadian corporations.

An Overview of Canadian Taxation of Non-Residents

There is always a provision in the income tax law books of most countries that any person who is working and living in a country and is not a resident of that country will have to pay non resident taxes. This is also the case if you live and work in Canada. Any non-resident who is living or working in Canada and who is not a resident of any place in Canada will have to pay non-resident tax according to the regulations and the norms that are printed in the non-resident taxation policy derived from the Canadian Revenue Agency (CRA). If you are a person who is living in Canada and rendering your services for a Canadian company in Canada, then you should be aware of the rights, obligations and the entitlements that you need to face when you receive your work wages or income.

Generally, non-resident taxation is filed under Part I tax or Part XIII tax. If you receive income from dividends, rental payments, royalty payments, pension payments, management fee, retiring allowances, old age security pension, Canada Pension Plan, registered retirement savings or income plan payments or annuity payments then you will be taxed under Part XIII. If you are running a business in Canada or if you sell, transfer or plan to sell a Canadian property, then you will pay tax under Part I.

There are a lot of factors that are considered while determining the residency status of an individual in Canada. The most important factor is said to be the residential ties that the non-resident has in Canada or is in the process of establishing.

As per the Canadian law,

• One is deemed a non resident when he/she customarily or routinely live in another country and thus do not reside in Canada

• When you do not have residential ties with anyone in Canada and have stayed for less than 183 days in a tax year or lived outside the country for the major part of a tax year.

In such cases one usually becomes liable to pay non-resident taxes. It is important to find out all you can about the Canadian taxation of non-residents laws.

The nonresident taxation policy in Canada considered 15% tax deduction at the source to be a rough estimate of the nonresident tax liability of the person. If you are covered by treaty protection or can show that your expenses are bound to be more you can apply for a waiver or tax reduction request to the concerned department.

Non-resident taxation can be tough to deal and there are tax experts who will be aware of all the different tax laws that a country will have. This is why it is always better to opt for the services of a tax expert, especially if you are a non-resident and you are looking for non-resident tax planning. Find a reputed tax expert company and get their advice before you start any activity regarding nonresident tax planning.

All You Need to Know About Canadian Non-Resident Taxation Policies

As in many other countries, non-residents in Canada are also subjected to taxation and they will have to pay taxes for the income that they generate from sources that are within Canada. Canadian non-resident taxation rules apply to you if you are living and working in Canada and you are not a Canadian resident. It is ideal that if you are living or working in Canada as a nonresident, you should be aware of such taxation rules. Through the internet and online discussion forums, you will be able to gather a lot of information about the taxation laws in Canada on nonresidents. You can as well contact some of the experienced and reputed tax accountants in the area you live in Canada in order to get full information on the nonresident taxation laws. 

He or she will help you in computing the tax figures that you need to pay a tax to the Government of Canada.

There are a lot of factors that are considered while determining the residency status of an individual in Canada. The most important factor is said to be the residential ties that the non-resident has in Canada or is in the process of establishing. Canada also asks for tax to non-residents on certain source of income such as withholding tax on interest, dividends, royalties, etc. People who visit and stay in Canada longer than 6 months in the same year are considered to be a resident in Canada and subject for a tax fee base on their worldwide income.

The Canadian non-resident taxation policy considered 15% tax deduction at the source to be a rough estimate of the nonresident tax liability of the person. If you are covered by treaty protection or can show that your expenses are bound to be more you can apply for a waiver or tax reduction request to the concerned department. A waiver application will have to be filled and submitted to the tax services office that is responsible for tax related functions in the area that you provide services in. The application will have to be filed 30 days before receiving the first payment and no later than 30 days from the start of providing the services. If the required details are in order then the tax office will give you a waiver or deduction certificate that can be given to the employer.

It is very important to not take things for granted while filing the nonresident tax in Canada and if there is any ambiguity in the various clauses of the tax treaty that has been signed with your resident country, contact the International Tax Services Office for clarification. It will also be a good option to avail the services of tax experts to help you with your nonresident taxation procedures as they will have the knowledge of the exemptions that can be availed by you. It will also make the process a lot simpler with you not having to run around to get your income tax return filed properly.

Taxes and Tax Haven

What Is Nonresident Tax

If you go to the definition of what is a nonresident tax, it is a return that comes to a state of which you are not a natural resident of. You might be working in an another state or country or you could make earnings in another state for which you need to file a nonresident tax return. If you fall into any of these categories, you might need to be clear about nonresident tax a bit more. You will then need to figure out the amount of income that you make in the nonresident state as well as the income that you make in the home state. Most of the federal returns even include the nonresident tax returns. Thus, it is necessary to complete one’s federal returns and then make a separate effort to file in nonresident tax returns. The legalities of filing nonresident tax returns may vary from country to country.

So how do you go about listing your income and deductions? In most states you need to first list out the total income as per the federal return in one column while in the other column one needs to write in the income that comes in as a nonresident. The total in both columns needs to be considered in order to calculate the percentage of the non-resident income as per the total income. Every state has its own laws by which one needs to allocate the taxable income or one’s tax liability accordingly.

What are Tax Havens

In such cases one often seeks out tax haven. These are countries like Anguilla, Nevis, British Virgin Islands, Singapore Hong Kong, Mauritius and other countries. Over the last two decades the number of tax havens has increased. These have evolved as most people search them out in order to protect their interests. The advancement of technology and communication has allowed these tax havens to come within reach of many people and they can avail of the benefits of storing their money and saving tax liabilities on them.

Their Characteristics

So what kind of services can you expect from a tax haven? They usually have the following characteristics:

• They are usually financial centers based offshore

• It can be a country or an organization that offers business services even to non nationals

• The business services consist of offshore trusts, registration of vessels, investment funds management, offshore foundations, offshore banking and others

• It is a legal as well a safe means of reducing one’s tax liabilities

When the economy is struggling and people are reeling under effects of low income and high tax liabilities, tax haven come to the rescue. People can resort to the offshore banking services of tax havens and get their money secured and away from unwanted tax liabilities. However, before one decides to approach such a country or organization, it is best to refer to the legal guidelines of their own country or state to understand the legalities involved.

Canadian Tax Rules That You Need to Follow As A Non Residents

There is always a provision in the income tax law books of most countries that any person who is working and living in a country and is not a resident of that country will have to pay non resident taxes. This is also the case if you live and work in Canada. Any non-resident who is living or working in Canada and who is not a resident of any place in Canada will have to pay nonresident tax according to the regulations and the norms that are printed in the nonresident taxation policy derived from the Canadian Revenue Agency. If you are a person who is living in Canada and rendering your services for a Canadian company in Canada, then you should be aware of the rights, obligations and the entitlements that you need to face when you receive your work wages or income.

Nonresident Taxation

If you are working and living in Canada and are offering your services in Canada, then you need to pay Canadian income tax on the income that you earn by doing your services for a company in Canada. You might have been hired by the company in Canada to render regular services for a long time or might be offered a job that requires your services for a stipulated period of time. There are different rules for different kinds of jobs that you do in Canada.

Withholding of Your Income

If you are employed in Canada on a regular basis for any company, then a certain amount of money will be withheld from your income by the person who is paying you the money. This will be deducted from your payment right at your employer’s end and an information slip will be handed over to you wherein the details of the amount deducted from your income would be mentioned. Generally, the percentage of the amount that is deducted from your income would be about 15% of your gross income and the employer who deducts the amount will need to remit the amount as a non-resident tax to the Receiver General of Canada.

This is the Canadian taxation of non-residents norms for deducting the income tax at source. It is the duty of the employer to remit the amount as non-resident tax to the concerned department dues, no matter if the employer is a Canadian citizen ore not. It is for the employer to not fail to deduct this amount from your income. If he misses the deduction, then he will have to pay 10% of the income tax amount as penalty.

Waiver of Withholding Tax Amount

• You can apply for a waiver of certain tax amount if you can show that you are covered by treaty protection.

• The tax could also be waived if you are able to prove that your expenses are bound to be more than the income that you have received after tax deductions.

• The tax waiver or reduction of taxes application has to be filed by you to the concerned tax related office in your area of 

service 30 days before you commence your service and not later than 30 days from the commencement of your job.

The Characteristics of U.S. Corporate Tax

Average Rate

When you run a business you need to be clear on matters of business taxation. Like all countries the US imposes a tax on the profit that the US corporations make and the rates vary from fifteen to thirty five percent. Much of the corporate income is often taxed at the minimum rate. Those who are corporate shareholders even pay individual income tax on the dividend as well as on the capital gains that they realize from the sale of the shares. The tax rate on dividends as well as on capital gains can go up to fifteen percent at a maximum. Both are scheduled to revert back to the levels that they existed in the period before 2001.

History

As per the federal revenue the following are the characteristics of the corporate income tax:

• This is the third largest source of revenue for the federal resources after the individual income tax and taxes collected from payroll

• The importance of the tax declined as a source of revenue between the period of the fifties and eighties

• Corporate tax accounts for two percent of the GDP in the US

If you are looking into the calculation of the corporate profits that are taxable one needs to equal the receipts of the corporation minus the expenses that it incurs. That includes the wages and the interest. The deductions of the inventory costs as well as depreciation of capital investments also need to be subtracted. Often many multinational corporations have their presence in other countries too and in that case nonresident tax may also come into the picture. The tax that one pays on the profits made on subsidies of foreign origin is deferred till the profits are repatriated or paid back in the form of dividends to the US parent company. The nonresident tax that may apply is usually at the individual level and not at the corporate level.

Different Features

There are other peculiar characteristics of the US corporate tax setup. For instance, there is little mechanism to prevent individuals from collecting income that is tax free within corporate. This is however discouraged as the corporate profits are taxed twice, once to the corporation and then again on the profits given out to shareholders. Again, another feature of the tax structure is that it encourages debt financing as compared to equity financing. That is mainly because the interest payments that are made by corporate are deductible while the dividends that are gained are not. Thus, it encourages corporations to retain their earnings than giving it out as dividends. Many organizations in the US are categorized as “flow through” businesses and they do not come under the purview of corporate tax.

These include partnerships or sole proprietor businesses. That is mainly because here the business owners are taxed at an individual level. At such levels nonresident tax may become applicable if they make earnings from a state that they are not resident of. It is usually calculated as a percentage of the total federal tax returns filed.