Return of a Gifted Property – Charitable Organizations Beware!

In a March 31, 2017 Technical Interpretation, CRA commented on the tax consequences of a charity returning a donated property to the donor. This could occur, for example, when a donation was made specifically for a project that had been halted.

Donor – Where the property is returned to the donor, the taxpayer is deemed not to have disposed of the property nor to have made the gift. As such, the portion of the original charitable donation tax credit or deduction related to the property may be disallowed.

Donee – Before returning a gifted property, the charity should review other provincial and federal legislation as it might affect their ability to legally return donated property. CRA also noted that returning property could be regarded as making a gift to a non-qualified donee or providing an undue benefit which could result in revocation of charitable status.

A qualified donee that issued an official donation receipt and later returns donated property must file an information return with CRA if the fair market value of the property is greater than $50 when it is returned, and the property is returned after March 21, 2011.

If a charitable organization returns a gift to a donor, they should do so very carefully so as to avoid revocation of their charitable status.

Withholdings on Remuneration to Non-Resident: Get your CRA Filings Correct

In a March 9, 2017 Technical Interpretation, CRA commented on the tax filing and withholding requirements related to a non-resident individual providing services to a Canadian company.

If an individual is employed solely outside of Canada, and is not, and has never been, a resident of Canada, no withholdings on payments are required. However, the corporation would generally be required to file a T4 in respect of the non-resident individual’s total remuneration. One exception to this rule, would be where the total remuneration for the year is less than $500. This requirement to file a T4 is not conditional upon the payee being taxable in Canada.

CRA also opined that participation in meetings using the Internet or telephone from outside of Canada would not constitute performing the services in Canada.

Ensure you are filing T4s in respect of non-resident employees providing services outside of Canada.

RRSP Beneficiaries and Tax Liabilities

Financial Institutions issuing RRSPs or RRIFs cannot withhold or remit taxes when paying out proceeds from a deceased person’s RRSP or RRIF. If you are the sole beneficiary named on an RRSP or a RRIF (presuming it is not being rolled over), Canada Revenue Agency can hold you responsible for the tax liability, because you and the deceased’s estate are jointly liable for it.

While CRA typically assesses the tax to the deceased’s estate first and only goes after the beneficiary if the estate is out of money, they are not actually required to do so by the Income Tax Act.

RRSP/RRIF beneficiaries should obtain confirmation that the payment to the executor of an estate is a payment of tax, or issue the cheque payable to Receiver General directly. Professional tax advice should be sought before making any payments, whether to the estate or to CRA.

Source: Jamie Golombek. “When an RRSP beneficiary faces a tax liability.” Accessed August 1, 2017.  http://www.advisor.ca/retirement/retirement-news/when-an-rrsp-beneficiary-faces-a-tax-liability-217787

Did you know you can now pay your taxes at Canada Post? For a fee, of course.

You can now use cash or debit card to pay certain balances owing to the CRA (e.g. personal tax, source deductions, corporate tax, GST/HST, and others) at any Canada Post outlet – for a fee. You will also require a self-generated quick response (QR) code which will provide CRA with personalized information in order for them to credit the appropriate account. Canada Post uses a third party service provider to create the QR code: https://www.payinperson.ca/cra.

You can pay up to $1,000 per transaction, and there will be a $3.95 fee for each transaction to cover the third party service provider’s expenses.

For more information, see: https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/pay-canada-post.html.