Canadian Tax Essentials: Personal & Corporate
50 chapters
1. Capital Cost Allowance (CCA) System
[Verse 1]
When you buy assets for your business trade
There's a system for the costs you've paid
Can't expense it all in year one
CCA spreads it out until it's done
Different classes for each asset type
Rates and rules that must be applied right
[Chorus]
CCA classes, know your rates
Declining balance calculates
Half-year rule in year one applies
Recapture when the proceeds rise
Terminal loss when assets go
CCA system helps cash flow
[Verse 2]
Class One buildings at four percent
Class Eight furniture, twenty percent
Class Ten vehicles at thirty rate
Class Twelve tools don't hesitate
One hundred percent in year of use
Each class has its own special rules
[Chorus]
CCA classes, know your rates
Declining balance calculates
Half-year rule in year one applies
Recapture when the proceeds rise
Terminal loss when assets go
CCA system helps cash flow
[Bridge]
When you sell and get more than book
Recapture income, take a look
If proceeds beat the UCC
Income inclusion, that's the key
But if the balance still remains
Terminal loss reduces gains
[Verse 3]
Undepreciated capital cost
That's your pool, track what's not lost
Take the rate times the balance there
Half of additions, that's your share
Maximum claim but not required
Flexibility when cash is tired
[Chorus]
CCA classes, know your rates
Declining balance calculates
Half-year rule in year one applies
Recapture when the proceeds rise
Terminal loss when assets go
CCA system helps cash flow
[Outro]
From acquisition to disposal day
CCA guides the tax you pay
Classes, rates, and rules combined
Keep these concepts in your mind
2. Property Income Sources
[Verse 1]
Sarah owns a rental house downtown
Collects twelve hundred every month around
That's rental income flowing to her name
Before expenses, it's all fair game
The tenant pays utilities and more
But Sarah handles mortgage at the core
[Chorus]
Property income streams flowing in
Interest, rents, and dividends begin
Gross it up then deduct what's right
Maintenance, taxes, mortgage bite
I-R-O-D, remember the key
Interest, Rental, Other, Deductively
[Verse 2]
Michael's got bonds that pay him twice a year
Six percent return, the income's clear
That's interest income, fully taxable
No deductions make it more manageable
Corporate bonds or government debt
Interest earned is income you can bet
[Chorus]
Property income streams flowing in
Interest, rents, and dividends begin
Gross it up then deduct what's right
Maintenance, taxes, mortgage bite
I-R-O-D, remember the key
Interest, Rental, Other, Deductively
[Bridge]
Royalties from patents that you hold
Lease payments on equipment that you've sold
These are property sources, don't forget
Income earned from assets that you get
Deduct the costs that earn the income stream
Repairs and fees to keep your money machine
[Verse 3]
Property tax and insurance on the place
Advertising costs to fill the space
Property management fees you pay
Reasonable repairs along the way
These deductions lower taxable amount
Every dollar saved is what will count
[Chorus]
Property income streams flowing in
Interest, rents, and dividends begin
Gross it up then deduct what's right
Maintenance, taxes, mortgage bite
I-R-O-D, remember the key
Interest, Rental, Other, Deductively
[Outro]
From real estate to bonds you own
Property income helps your wealth grow strong
Calculate it right and you will see
How property builds prosperity
3. Dividend Income & Tax Credits
[Verse 1]
Sarah gets her dividend check, from her shares of company stock
Two types flow into her hands, eligible and non-eligible blocks
Eligible comes from Canadian corps, paying full corporate tax
Non-eligible from smaller firms, with different treatment facts
[Chorus]
Gross it up, then credit down, that's the dividend dance
Eligible gets thirty-eight percent enhancement
Non-eligible gets fifteen, a smaller advance
Tax credit follows the gross-up, giving taxpayers a chance
[Verse 2]
Take that dividend amount, multiply by gross-up rate
Eligible dividends grow, by thirty-eight percent straight
Non-eligible multiplied, by fifteen percent more
This grossed-up income hits your return, increasing what's in store
[Chorus]
Gross it up, then credit down, that's the dividend dance
Eligible gets thirty-eight percent enhancement
Non-eligible gets fifteen, a smaller advance
Tax credit follows the gross-up, giving taxpayers a chance
[Bridge]
Federal credit comes next, to offset what you owe
Eligible gets twenty-five percent of gross-up flow
Non-eligible earns nine point zero three, of the enhanced amount
Provincial credits vary too, every jurisdiction counts
[Verse 3]
Integration is the goal, avoiding double tax
Corporate income taxed once, then personal attacks
The credit system balances, what companies have paid
So dividend income flows, with fairness overlaid
[Chorus]
Gross it up, then credit down, that's the dividend dance
Eligible gets thirty-eight percent enhancement
Non-eligible gets fifteen, a smaller advance
Tax credit follows the gross-up, giving taxpayers a chance
[Outro]
Remember the key numbers, thirty-eight and fifteen
Twenty-five and nine-oh-three, credits in between
Dividend taxation, keeps the system fair and clean
4. Capital Gains & Losses Basics
[Verse 1]
When you sell that stock or piece of land
Capital gains come into play
First we need the cost that's in your hand
Adjusted cost base leads the way
Purchase price plus improvements made
Minus depreciation claimed
Every dollar tracked and carefully weighed
That's your starting point maintained
[Chorus]
ACB minus POD equals your gain or loss
Adjusted cost base minus proceeds across
Then take that gain and cut it right in half
Fifty percent inclusion makes the tax math
ACB minus POD, then slice it down the middle
That's the capital gains tax riddle
[Verse 2]
Proceeds of disposition tell the tale
What you received when assets sold
Market value when the sale's not real
Fair market value must be told
Legal fees and selling costs
Reduce the proceeds that you claim
Every expense that the transaction costs
Lowers the taxable gain
[Chorus]
ACB minus POD equals your gain or loss
Adjusted cost base minus proceeds across
Then take that gain and cut it right in half
Fifty percent inclusion makes the tax math
ACB minus POD, then slice it down the middle
That's the capital gains tax riddle
[Bridge]
If the number comes out negative
You've got a capital loss instead
Carry it back three years selective
Or forward indefinitely ahead
Only against capital gains it fights
Can't offset your regular income flow
But it reduces those future tax bites
When capital gains start to grow
[Verse 3]
Identical properties complicate
Average out the cost base true
When you buy the same stock at different dates
Pool them all to see it through
Superficial loss rules watch for trades
Thirty days before and after sale
If you repurchase in that time window's shade
The loss claim will surely fail
[Chorus]
ACB minus POD equals your gain or loss
Adjusted cost base minus proceeds across
Then take that gain and cut it right in half
Fifty percent inclusion makes the tax math
ACB minus POD, then slice it down the middle
That's the capital gains tax riddle
[Outro]
From stocks and bonds to real estate
Capital gains are everywhere
Master the formula don't be late
ACB and POD with care
Fifty percent inclusion rate
Makes the tax bite not so deep
Capital gains don't have to be your fate
When you know the rules to keep
5. Principal Residence Exemption
[Verse 1]
When you sell your family home, there's a rule you need to know
Capital gains can disappear if you play your cards just so
Principal residence exemption, it's a powerful CPA tool
One plus years of ownership, that's the golden calculation rule
[Chorus]
One plus years over total years you owned
Times the gain, that's the exemption zone
PRE protects your family dwelling place
Capital gains tax you won't have to face
Remember the formula, keep it in mind
One plus years will save you every time
[Verse 2]
Only one home per family unit, spouses have to choose
Which property gets the designation, careful not to lose
Four years absent, still protected, if you move away
Temporary work or study, keeps exemption in play
[Chorus]
One plus years over total years you owned
Times the gain, that's the exemption zone
PRE protects your family dwelling place
Capital gains tax you won't have to face
Remember the formula, keep it in mind
One plus years will save you every time
[Bridge]
Change of use brings complications
Business use needs allocations
Nineteen ninety-four election
Saves your future from inspection
Normally inhabited, that's the key
Principal residence must be
[Verse 3]
Half a hectare, that's your limit for the land around
More than that gets partial treatment, extra tax is found
Death and marriage change the players in this tax game
Spousal transfers keep exemption benefits the same
[Chorus]
One plus years over total years you owned
Times the gain, that's the exemption zone
PRE protects your family dwelling place
Capital gains tax you won't have to face
Remember the formula, keep it in mind
One plus years will save you every time
[Outro]
Principal residence exemption
Your home's tax protection
Calculate it right, sleep well at night
PRE is your direction
6. Specialized Capital Property Rules
[Verse 1]
When assets have a story more complex than the rest
Listed personal property needs a special test
Depreciation claimed becomes the gain you'll see
When selling price exceeds what it used to be
[Chorus]
LPP - Listed Personal Property
ABIL - when business dreams go wrong
Terminal loss only when the class is gone
Special rules for capital, sing along
LPP, ABIL, terminal when it's done
Special capital rules, let's learn every one
[Verse 2]
Business investment losses hurt but there's relief
ABIL treatment gives the taxpayer some reprieve
Small business corporation shares that go to zero
Turn capital loss into ordinary, making you the hero
[Chorus]
LPP - Listed Personal Property
ABIL - when business dreams go wrong
Terminal loss only when the class is gone
Special rules for capital, sing along
LPP, ABIL, terminal when it's done
Special capital rules, let's learn every one
[Verse 3]
Principal residence exemption saves the day
Four plus years of ownership shows the way
Ordinarily resident and designated too
Personal use property has limits that are due
[Bridge]
Depreciable property in a class
Terminal loss when assets pass
But only when the balance shows
UCC below zero goes
[Chorus]
LPP - Listed Personal Property
ABIL - when business dreams go wrong
Terminal loss only when the class is gone
Special rules for capital, sing along
LPP, ABIL, terminal when it's done
Special capital rules, let's learn every one
[Verse 4]
Identical properties need averaging rules
FIFO doesn't work, don't be fooled
Adjust the base of what remains
When partial disposition gains
[Outro]
From principal residence to business loss relief
These special rules provide the treatment and belief
That capital property isn't always the same
Master these exceptions, win the CPA game
7. RRSP Rules & Strategies
[Verse 1]
Eighteen percent or pension adjustment amount
Whichever leaves you less is what will count
Twenty-nine thousand two hundred maximum cap
Annual room that carries forward if there's a gap
Check your notice of assessment every spring
Prior year earnings determine what you bring
[Chorus]
RRSP rules remember this way
Contribute deduct withdraw and pay
Money In Tax Out that's the game
Retirement planning is the aim
Eighteen percent or max amount
Prior year earnings always count
[Verse 2]
Earned income from employment self-employed too
Rental net income and alimony due
But investment income doesn't qualify
Pension income won't increase your room supply
Carry forward unused space up to seven years
But over-contribution brings costly tears
[Chorus]
RRSP rules remember this way
Contribute deduct withdraw and pay
Money In Tax Out that's the game
Retirement planning is the aim
Eighteen percent or max amount
Prior year earnings always count
[Verse 3]
Home Buyers Plan twenty-five thousand you can take
First-time purchase is the only legal break
Pay it back in fifteen years or face the tax
Two thousand minimum or your refund lacks
Lifelong Learning Plan twenty thousand for school
Education expenses follow the same rule
[Bridge]
Spousal RRSP shifts the tax load
Lower income spouse breaks the code
Attribution rules don't apply here
Three year wait makes splitting clear
Seventy-one conversion time
RRIF or annuity by year-end prime
[Chorus]
RRSP rules remember this way
Contribute deduct withdraw and pay
Money In Tax Out that's the game
Retirement planning is the aim
Eighteen percent or max amount
Prior year earnings always count
[Outro]
Plan your contributions maximize the gain
Tax-deferred growth through sun and rain
Retirement income splitting strategy
RRSP wisdom for CPA mastery
8. Other Deductions & Income Sources
[Verse 1]
When you pack your life and move away
For a job that's forty clicks or more each day
Moving trucks and storage fees
Gas and hotels, if you please
Keep those receipts, they'll save the day
[Chorus]
M-C-S-P, other deductions we can see
Moving costs and childcare too
Support payments coming through
Pension splitting, miscellaneous
Tax planning so advantageous
M-C-S-P, building wealth strategically
[Verse 2]
Childcare costs while you're at work
Camps and daycare, don't you shirk
Seven thousand is the cap
Per child under seventeen, perhaps
Earned income sets the limit, don't go berserk
[Chorus]
M-C-S-P, other deductions we can see
Moving costs and childcare too
Support payments coming through
Pension splitting, miscellaneous
Tax planning so advantageous
M-C-S-P, building wealth strategically
[Verse 3]
Alimony payments made
After the divorce decree's laid
Periodic and required
Not a lump sum that's acquired
Deductible when properly paid
[Bridge]
Pension splitting with your spouse
Share that income through the house
Up to fifty percent can flow
To the lower bracket, watch it grow
RRSP room for the receiving spouse
[Verse 4]
Other income streams appear
Rental profits crystal clear
Investment gains and losses too
Universal childcare coming through
Death benefits and EI so dear
[Final Chorus]
M-C-S-P, other deductions we can see
Moving costs and childcare too
Support payments coming through
Pension splitting, miscellaneous
Tax planning so advantageous
M-C-S-P, your CPA strategy
[Outro]
Calculate and allocate
Optimize that tax rate
M-C-S-P, your pathway to CPA mastery
9. Tax Calculation Process
[Verse 1]
Starting with the net income on the books we see
Accounting profit calculated carefully
But tax rules differ from what GAAP demands
So adjustments come from Revenue's hands
Add back expenses that tax law denies
Subtract the income that's tax-free in their eyes
Permanent differences change the base
Temporary timing puts items in place
[Chorus]
From net to taxable, follow the flow
Add back what's denied, subtract what won't show
Net income plus and minus equals the key
Taxable income is what we need to see
Then multiply rates to find what we owe
Tax payable is the final blow
[Verse 2]
Depreciation methods create a divide
Book straight-line versus tax rates applied
Warranty reserves we book but can't deduct
Until actually paid, timing's been struck
Meals and entertainment, only fifty percent
Fines and penalties, tax deduction's bent
Golf club dues and life insurance too
Add these back, it's what we must do
[Chorus]
From net to taxable, follow the flow
Add back what's denied, subtract what won't show
Net income plus and minus equals the key
Taxable income is what we need to see
Then multiply rates to find what we owe
Tax payable is the final blow
[Bridge]
Municipal bond interest comes off the top
Capital gains inclusion rates never stop
Fifty percent in Canada's the way
Half included in taxable pay
Deferred tax assets when book exceeds tax
Future benefits from timing attacks
Deferred tax liabilities flow the reverse
When tax deductions come later, not first
[Verse 3]
Federal rates and provincial combined
Marginal brackets keep rates refined
Small business rates for active income earned
Integration principles must be learned
Apply the percentage to taxable base
Installments paid reduce the space
Between owing and already sent
Tax payable is what's really meant
[Chorus]
From net to taxable, follow the flow
Add back what's denied, subtract what won't show
Net income plus and minus equals the key
Taxable income is what we need to see
Then multiply rates to find what we owe
Tax payable is the final blow
[Outro]
Three steps to master, three amounts to know
Net income, taxable income, tax owed below
The calculation process clear and true
CPA knowledge coming through
10. Non-Refundable Tax Credits
[Verse 1]
When you file your return each year in spring
There's credits that reduce the tax you bring
Non-refundable means they cut what's owed
But never give you cash to take back home
Basic personal amount for everyone
Eleven thousand plus to get you done
[Chorus]
Credits cut your tax but never pay you back
B-A-D-T-M-C that's the basic track
Basic personal, Age, Disability
Tuition, Medical, Charity
They reduce your burden line by line
But zero is the limit every time
[Verse 2]
Age credit starts at sixty-five years old
But income over forty thousand told
Will claw it back until it fades away
Disability credit here to stay
If you qualify with severe impairment
Mental physical both need requirement
[Chorus]
Credits cut your tax but never pay you back
B-A-D-T-M-C that's the basic track
Basic personal, Age, Disability
Tuition, Medical, Charity
They reduce your burden line by line
But zero is the limit every time
[Bridge]
Tuition fees and textbook costs
Medical bills when health is lost
Charitable gifts you donate
All reduce your tax rate
Transfer unused to spouse or parent
Make those credits more apparent
[Verse 3]
Medical expenses have a threshold floor
Three percent of income maybe more
Charitable donations fifteen percent
On first two hundred that you've sent
Then twenty-nine on higher amounts
Every dollar given really counts
[Chorus]
Credits cut your tax but never pay you back
B-A-D-T-M-C that's the basic track
Basic personal, Age, Disability
Tuition, Medical, Charity
They reduce your burden line by line
But zero is the limit every time
[Outro]
Non-refundable means what it says
Reduces tax but never pays
Know your credits know them well
CPA exam you're gonna excel
11. Provincial Tax & Residency
[Verse 1]
When you file your return each year in spring
Provincial tax comes into play
Where you lived on December thirty-first
Determines how much you will pay
Each province sets their own tax rates
On income that you've earned
But residency rules can get complex
When boundaries have been turned
[Chorus]
Province of residence, December day
That's where your tax burden will stay
Flat rate or progressive, each one's unique
Alberta's flat while others peak
Residence matters, location's key
Provincial tax liability
[Verse 2]
If you moved between the provinces
During the fiscal year
You'll calculate on a daily basis
Split your income clear
Primary ties like home and spouse
Will anchor where you stand
Secondary ties like bank accounts
Help determine the land
[Chorus]
Province of residence, December day
That's where your tax burden will stay
Flat rate or progressive, each one's unique
Alberta's flat while others peak
Residence matters, location's key
Provincial tax liability
[Bridge]
Federal base times provincial rate
Some use brackets, others straight
Surtax added in certain places
Non-refundable credits embrace us
Quebec's different, they collect their own
While others let the feds bring it home
[Verse 3]
Students, military, seasonal work
May have special residence rules
Deemed resident or non-resident
Different provincial tools
Your marginal rate combines both levels
Federal plus your province
Understanding where you truly live
Makes tax planning more convincing
[Chorus]
Province of residence, December day
That's where your tax burden will stay
Flat rate or progressive, each one's unique
Alberta's flat while others peak
Residence matters, location's key
Provincial tax liability
[Outro]
Ten provinces, three territories too
Each with rates for me and you
Know your residence, plan ahead
Provincial tax knowledge keeps you fed
12. Alternative Minimum Tax
[Verse 1]
Sarah earned two million last year, thought her taxes were complete
Regular income tax was paid, but there's another sheet to meet
The system has a parallel track, designed to catch the wealthy few
Alternative Minimum Tax kicks in when preferences break through
[Chorus]
A-M-T, it's the safety net
Add back preferences you can't forget
SALT and depreciation, ISOs too
Twenty-six or twenty-eight percent will do
Calculate both ways, pay the higher amount
A-M-T makes sure the wealthy count
[Verse 2]
Start with regular taxable income, then the adjustments flow
Add back state and local taxes, watch the AMT income grow
Depreciation differences, incentive stock options gain
Private activity muni bonds, they all increase the pain
[Chorus]
A-M-T, it's the safety net
Add back preferences you can't forget
SALT and depreciation, ISOs too
Twenty-six or twenty-eight percent will do
Calculate both ways, pay the higher amount
A-M-T makes sure the wealthy count
[Verse 3]
Exemption starts at one-eighteen for joint filers today
But phases out at one point-oh-four, then slowly fades away
Single filers get seventy-five, phaseout at five-twenty-eight
The rates are twenty-six percent, then twenty-eight for higher weight
[Bridge]
Plan ahead with timing strategies
Exercise those options carefully
Spread the income, watch the phase-out
AMT credit helps you later out
[Verse 4]
When regular tax exceeds AMT in future years ahead
That credit from the past will help reduce what must be fed
But only to the regular amount, not below that line
Strategic planning pays off well when stars and timing align
[Chorus]
A-M-T, it's the safety net
Add back preferences you can't forget
SALT and depreciation, ISOs too
Twenty-six or twenty-eight percent will do
Calculate both ways, pay the higher amount
A-M-T makes sure the wealthy count
[Outro]
Two systems running parallel
The higher tax will always tell
A-M-T, the parallel way
Making sure the wealthy pay
13. Taxable Income Calculation Fundamentals
[Verse 1]
Start with accounting income on your page
Book profits tell one story on the stage
But tax rules play a different game tonight
Converting numbers to get taxable right
Permanent differences never reverse
Temporary ones will flip in future verse
[Chorus]
Permanent stays, temporary plays
Add back the meals at fifty percent ways
Fines and penalties never deduct
Depreciation and CCA reconstruct
From book to tax we make the switch
Following rules that never glitch
[Verse 2]
Entertainment meals are only half allowed
Fines and penalties disallowed out loud
Political donations can't reduce your tax
These permanent hits never circle back
While timing differences will even out
Future reversals remove all doubt
[Chorus]
Permanent stays, temporary plays
Add back the meals at fifty percent ways
Fines and penalties never deduct
Depreciation and CCA reconstruct
From book to tax we make the switch
Following rules that never glitch
[Bridge]
Book depreciation straight line flows
CCA declining balance shows
Faster write-offs in early years
Slower later as time appears
Deferred tax assets when book exceeds
Liabilities when CCA leads
[Verse 3]
Warranty reserves book but not tax
Add them back then subtract what's tracked
Bad debt allowance estimated high
Actual write-offs qualify
These timing differences create the gap
Between the book and tax roadmap
[Chorus]
Permanent stays, temporary plays
Add back the meals at fifty percent ways
Fines and penalties never deduct
Depreciation and CCA reconstruct
From book to tax we make the switch
Following rules that never glitch
[Outro]
Reconcile the numbers every year
Make adjustments crystal clear
Taxable income calculated right
Book to tax conversion done tonight
14. Small Business Deduction (SBD)
[Verse 1]
When you're Canadian controlled and private too
Active business income flowing through
Up to the limit, there's a break for you
Small Business Deduction, tax rate reduced
Corporation qualified, ownership's key
Fifty percent Canadian residency
Active business earnings, not investment gains
Lower federal rate is what remains
[Chorus]
SBD, saves you money
Eleven percent federal, isn't that sunny
Four hundred thousand business limit cap
Associated corps must share that gap
CCPC with active income flow
Small Business Deduction helps you grow
[Verse 2]
Associated corporation rules apply
When control connects, you can't deny
Same people controlling different entities
Must share the limit, no duplicities
De jure control means more than fifty
De facto control can be more shifty
Related persons, look-through rules
Family connections, these are the tools
[Chorus]
SBD, saves you money
Eleven percent federal, isn't that sunny
Four hundred thousand business limit cap
Associated corps must share that gap
CCPC with active income flow
Small Business Deduction helps you grow
[Bridge]
Active business income defined with care
Not specified investment income there
Not personal services business disguised
Manufacturing, retail, well-advised
Taxable capital over fifty million
Phases out the deduction, that's the drill then
Large corporations lose the small biz rate
Income threshold seals their fate
[Verse 3]
Calculate the deduction, take the least
Of active business income, that's the piece
Or business limit allocated fair
Among associated corps that share
Federal rate eleven point five percent
Provincial rates vary where you're sent
Combined small business rate so low
Helps small enterprises grow and grow
[Chorus]
SBD, saves you money
Eleven percent federal, isn't that sunny
Four hundred thousand business limit cap
Associated corps must share that gap
CCPC with active income flow
Small Business Deduction helps you grow
[Outro]
Canadian controlled private corporation
Small Business Deduction across the nation
Active business income, stay within the limit
Tax advantages for those who are in it
15. Capital Cost Allowance (CCA) Basics
[Verse 1]
When businesses buy assets for their trade
Equipment, buildings, tools they've made
The tax man says you can't deduct it all
But CCA helps break the fall
Each asset fits a class with its own rate
Some fast, some slow, that's how they depreciate
[Chorus]
CCA, CCA, capital cost allowance way
Classes one through fifty, each has rates that stay
Half-year rule applies, cut that first year down
But AII speeds it up, the best deal around
Remember the classes, remember the rates
CCA's the system that depreciation creates
[Verse 2]
Class one holds your buildings at four percent
Class eight has furniture at twenty percent
Class ten is vehicles at thirty rate
Class fifty-three manufacturing, don't be late
The higher the class, the faster you write
These rates are declining balance, that's right
[Chorus]
CCA, CCA, capital cost allowance way
Classes one through fifty, each has rates that stay
Half-year rule applies, cut that first year down
But AII speeds it up, the best deal around
Remember the classes, remember the rates
CCA's the system that depreciation creates
[Bridge]
Half-year rule means fifty percent
Of normal CCA in year one is spent
But AII says take it all
First year full deduction, standing tall
Accelerated investment incentive
Makes business buying more attractive
[Verse 3]
UCC is what remains each year
Undepreciated cost stays here
Apply the rate to the balance there
Declining every year with care
When you sell for more than UCC
Recapture income, that's the key
[Chorus]
CCA, CCA, capital cost allowance way
Classes one through fifty, each has rates that stay
Half-year rule applies, cut that first year down
But AII speeds it up, the best deal around
Remember the classes, remember the rates
CCA's the system that depreciation creates
[Outro]
From buildings slow to computers fast
CCA makes tax savings last
Learn the classes, know the game
Capital cost allowance is the name
16. General Rate Reduction and Integration Theory
[Verse 1]
When corporations earn their active income stream
There's a special rate that helps achieve the dream
Of integration where the tax burden's fair
Whether earned by you or by your corporate share
[Chorus]
General rate reduction makes it right
Lower corporate tax brings balance to light
Integration theory keeps it fair and true
Same total tax whether it's corp or you
G-R-R for active business income
Integration makes the system welcome
[Verse 2]
Small business rate is low to help you grow
But when you hit the limit, rates will flow
To general corporate rate minus the reduction
This creates the perfect tax deduction
[Chorus]
General rate reduction makes it right
Lower corporate tax brings balance to light
Integration theory keeps it fair and true
Same total tax whether it's corp or you
G-R-R for active business income
Integration makes the system welcome
[Bridge]
Personal tax on salary earned today
Should equal corporate tax plus dividend pay
That's the theory behind this careful design
To keep the playing field aligned
[Verse 3]
Active business income gets the break
Investment income, different rules they take
The reduction only applies to what you earn
From business activities, this you must learn
[Chorus]
General rate reduction makes it right
Lower corporate tax brings balance to light
Integration theory keeps it fair and true
Same total tax whether it's corp or you
G-R-R for active business income
Integration makes the system welcome
[Outro]
Tax neutrality is the ultimate goal
Integration theory plays the leading role
General rate reduction paves the way
For fair taxation every single day
17. RDTOH and Dividend Refund System
[Verse 1]
When corporations earn their passive income streams
Investment dollars flowing through their schemes
The government takes tax upon that gain
But promises a refund through this chain
RDTOH account starts building up the store
Each dollar taxed means refunds at the door
[Chorus]
Refundable dividend tax on hand
RDTOH helps integration stand
When taxable dividends flow outside
The refund comes back to your corporate side
One dollar out means one-third back in
Keep the tax integration engine spinning
[Verse 2]
Eligible RDTOH from public shares
Non-eligible from other income bears
Thirty-eight point thirty-three's the rate
For eligible dividends that we create
Twenty-six point sixty-seven for the rest
Non-eligible pool puts refunds to the test
[Chorus]
Refundable dividend tax on hand
RDTOH helps integration stand
When taxable dividends flow outside
The refund comes back to your corporate side
One dollar out means one-third back in
Keep the tax integration engine spinning
[Bridge]
Integration means no double taxation
Individual rates through corporation
Pay it once whether direct or through the corp
RDTOH makes sure the system doesn't warp
Eligible and non-eligible pools
Following their own refunding rules
[Verse 3]
Calculate the refund when dividends are paid
One-third of taxable amount that's made
But never more than what's in the account
RDTOH balance is the maximum amount
Grind through the lesser of these two
Integration working just for you
[Chorus]
Refundable dividend tax on hand
RDTOH helps integration stand
When taxable dividends flow outside
The refund comes back to your corporate side
One dollar out means one-third back in
Keep the tax integration engine spinning
[Outro]
Investment income taxed then refunded clean
The smoothest integration you've ever seen
RDTOH keeps the system fair and true
Corporate and personal rates coming through
18. Connected Corporations and Part IV Tax
[Verse 1]
When corporations intertwine and share their corporate fate
Connected through control or common ownership they create
A bond that runs through voting shares or common management ties
The tax man watches carefully for schemes in their disguise
[Chorus]
Connected corps and Part Four tax
Portfolio dividends attack
Refundable when paid out clean
The smartest anti-deferral scheme
Remember this accounting fact
Connected corps and Part Four tax
[Verse 2]
If Company A owns Company B through shares or control test
Or both are owned by common hands, they've passed connection's quest
But when these connected entities receive portfolio gold
From outside corporations, then Part Four rules take hold
[Chorus]
Connected corps and Part Four tax
Portfolio dividends attack
Refundable when paid out clean
The smartest anti-deferral scheme
Remember this accounting fact
Connected corps and Part Four tax
[Verse 3]
Portfolio dividends from strangers trigger Part Four's bite
Thirty-eight point thirty-three percent paid up that very night
But here's the twist that makes it fair, this tax can be reclaimed
When dividends flow out again, refunds can be obtained
[Bridge]
Connected means control or common
Portfolio means arms-length common
Part Four prevents the deferral game
Making sure the tax stays the same
[Chorus]
Connected corps and Part Four tax
Portfolio dividends attack
Refundable when paid out clean
The smartest anti-deferral scheme
Remember this accounting fact
Connected corps and Part Four tax
[Outro]
When connections form and dividends flow
Part Four makes sure the taxes show
Refundable but paid today
That's the connected corporate way
19. Shareholder Benefits and Loans
[Verse 1]
When shareholders receive something more than dividend cash
Section fifteen brings the tax, no way to make it pass
Cars and homes and interest-free, benefits they take
Add it to their income stream, no escape they'll make
[Chorus]
Section fifteen, fifteen two
Shareholder benefits coming through
Deemed benefit, imputed rate
Calculate before it's too late
Bona fide arrangements save the day
But prove legitimate or you'll pay
[Verse 2]
Shareholder loans without a plan trigger the alarm
Two years to repay or face the taxman's firm arm
If you can't pay back in time, income it becomes
Add it to your T-one slip, see how quickly it sums
[Chorus]
Section fifteen, fifteen two
Shareholder benefits coming through
Deemed benefit, imputed rate
Calculate before it's too late
Bona fide arrangements save the day
But prove legitimate or you'll pay
[Bridge]
Prescribed rate interest must be charged
Or CRA will make your bill enlarged
Business purpose saves you from the trap
Document everything, close the gap
Fair market value is the test
Anything below fails the rest
[Verse 3]
Housing benefit, personal use
Company assets you abuse
Calculate the standby charge
Personal portion looms large
Every benefit has its price
Tax inclusion, roll the dice
[Chorus]
Section fifteen, fifteen two
Shareholder benefits coming through
Deemed benefit, imputed rate
Calculate before it's too late
Bona fide arrangements save the day
But prove legitimate or you'll pay
[Outro]
When shareholder and company mix
Know the rules or face the fix
Section fifteen keeps it clear
Benefits cost you every year
20. Corporate Loss Carryovers
[Verse 1]
When your company shows a loss this year
Don't let those red numbers disappear
Non-capital losses can travel through time
Twenty years forward, that's the timeline
Three years backward if you need relief
Carry those losses to find tax relief
[Chorus]
Twenty forward, three back, that's the rule to know
Non-capital losses, watch them flow
Seven years for capital, but only ahead
Restricted business losses, different rules instead
Carry forward, carry back
Keep your losses on the right track
[Verse 2]
Capital losses have their own special way
Seven years forward, no backward play
Against capital gains they must align
Can't offset business income, that's by design
When corporations change their control
Loss restrictions take their toll
[Chorus]
Twenty forward, three back, that's the rule to know
Non-capital losses, watch them flow
Seven years for capital, but only ahead
Restricted business losses, different rules instead
Carry forward, carry back
Keep your losses on the right track
[Bridge]
Farm losses get ten years to grow
Restricted business losses, same way they go
Acquisition of control can stop the ride
Continuity tests must be applied
Same business or similar line
To keep those loss carryovers in time
[Verse 3]
Year of loss plus twenty more
That's how long non-capital can soar
Use them first before they expire
FIFO method, that's what tax laws require
Document well and track each year
Loss utilization must be clear
[Chorus]
Twenty forward, three back, that's the rule to know
Non-capital losses, watch them flow
Seven years for capital, but only ahead
Restricted business losses, different rules instead
Carry forward, carry back
Keep your losses on the right track
[Outro]
Time limits matter, don't let them fade
Use your losses before they're delayed
Corporate changes can restrict your claim
But proper planning keeps you in the game
21. Acquisition of Control Rules
[Verse 1]
When fifty percent plus one changes hands today
A corporation's world turns upside down in every way
The taxman says your year has ended right here and now
New rules kick in, let me tell you how
[Chorus]
Deemed year-end when control's acquired
Loss restrictions now required
Assets written down if the value's not there
ACO rules - handle with care
Deemed year-end, losses trapped
Future profits, can't be tapped
Unless the business stays the same
That's the acquisition game
[Verse 2]
Twenty-four months before the change of control date
Look at losses sitting there, decide their fate
Non-capital losses face the hardest test
Same business or similar, that's what works best
[Chorus]
Deemed year-end when control's acquired
Loss restrictions now required
Assets written down if the value's not there
ACO rules - handle with care
Deemed year-end, losses trapped
Future profits, can't be tapped
Unless the business stays the same
That's the acquisition game
[Bridge]
Capital losses different story, only offset capital gains
Net capital losses carried forward, within their lanes
And don't forget about the assets, fair market value test
Write them down if they're worth less, put goodwill to rest
[Verse 3]
Associated status breaks apart, no more group relief
Depreciable property gets bumped up, beyond belief
The purchaser's perspective matters now for what it's worth
New basis, new beginning, like a corporate rebirth
[Chorus]
Deemed year-end when control's acquired
Loss restrictions now required
Assets written down if the value's not there
ACO rules - handle with care
Deemed year-end, losses trapped
Future profits, can't be tapped
Unless the business stays the same
That's the acquisition game
[Outro]
When the gavel falls and ownership's sold
Remember these rules, they never get old
Control acquisition brings change overnight
Get the tax planning done, do it right
22. Section 85 Asset Rollovers
[Verse 1]
When you transfer property to a corporation's hands
Section eighty-five is how you make your stand
Tax-deferred rollover keeps the burden light
Choose your elected amount to get the treatment right
From the floor of adjusted cost base way up high
To the ceiling of fair market value in the sky
[Chorus]
Eighty-five election, make your choice with care
Elected amount between the floor and ceiling there
Boot received plus shares equals fair market price
Tax-deferred transfer, roll it over nice
Section eighty-five, Section eighty-five
Keep your taxes low while ownership's alive
[Verse 2]
Boot is non-share consideration that you take
Cash or debt or property for goodness sake
When boot exceeds your elected amount chosen
Capital gain appears, your deferral's broken
Shares received take up the remaining space
Adjusted cost base fills out their tax base
[Chorus]
Eighty-five election, make your choice with care
Elected amount between the floor and ceiling there
Boot received plus shares equals fair market price
Tax-deferred transfer, roll it over nice
Section eighty-five, Section eighty-five
Keep your taxes low while ownership's alive
[Bridge]
Corporation takes the asset at elected cost
Depreciable property rules can't be lost
Capital cost allowance classes stay the same
Undepreciated balance plays the transfer game
Goodwill and eligible capital property too
Follow special rules for what they're allowed to do
[Verse 3]
Common planning sees the freeze transaction flow
High-growth assets at today's value low
Preferred shares for current worth you hold
Common shares for future growth untold
Estate planning and succession strategies
Use Section eighty-five for tax efficiencies
[Chorus]
Eighty-five election, make your choice with care
Elected amount between the floor and ceiling there
Boot received plus shares equals fair market price
Tax-deferred transfer, roll it over nice
Section eighty-five, Section eighty-five
Keep your taxes low while ownership's alive
[Outro]
File the election by the deadline date
Joint election, don't be running late
Floor to ceiling, boot and shares align
Section eighty-five keeps your taxes fine
23. Corporate Reorganizations: Exchanges and Amalgamations
[Verse 1]
When companies need to restructure and grow
Section Eighty-Six shows the way to go
Share exchanges let the magic happen clean
Tax-deferred deals keep the slate pristine
Corporations swap their equity around
New parent companies can now be found
[Chorus]
Eighty-Six and Eighty-Seven
Corporate reorganization heaven
Tax-deferred when rules align
Share exchanges work just fine
Amalgamations merge as one
Section rules get the deal done
[Verse 2]
For share exchange to qualify today
Common shares must come into play
Ninety percent control must be achieved
And consideration rules must be believed
Boot received can trigger tax to pay
But qualifying shares can defer the day
[Chorus]
Eighty-Six and Eighty-Seven
Corporate reorganization heaven
Tax-deferred when rules align
Share exchanges work just fine
Amalgamations merge as one
Section rules get the deal done
[Verse 3]
Section Eighty-Seven brings companies tight
Amalgamation makes them unite
Two or more become a single name
Predecessor corps end their legal game
Assets transfer at their book amount
Tax-deferred benefits really count
[Bridge]
Shareholders get rollover treatment when
Qualifying conditions all align again
Adjusted cost base flows right through
Capital gains can wait for you
But watch for non-qualifying consideration
That triggers immediate taxation
[Chorus]
Eighty-Six and Eighty-Seven
Corporate reorganization heaven
Tax-deferred when rules align
Share exchanges work just fine
Amalgamations merge as one
Section rules get the deal done
[Verse 4]
For amalgamation to succeed
All shareholders must agree indeed
Voting rules and statutory plans
Guide the merger through legal hands
New corporation takes the place
Of predecessors without a trace
[Outro]
When restructuring is your corporate goal
These sections help you stay in control
Tax-deferred reorganization way
Keeps the Canada Revenue at bay
Eighty-Six and Eighty-Seven
Your restructuring pathway to heaven
24. Corporate Wind-ups Under Section 88
[Verse 1]
When a parent holds the shares, ninety percent or more
Section eighty-eight's the door to wind up and explore
Subsidiary's got assets, time to liquidate
But choose your pathway carefully, don't hesitate
[Chorus]
Eighty-eight one, eighty-eight two
Different rules for me and you
Bump-up basis, losses flow
Wind-up rules you need to know
Section eighty-eight, don't be late
Tax elections seal your fate
[Verse 2]
Eighty-eight one is the choice when you want control
Asset bump-ups to fair value, that's the goal
But watch the capital gains, they'll hit the sub
Before the assets transfer, that's the rub
[Chorus]
Eighty-eight one, eighty-eight two
Different rules for me and you
Bump-up basis, losses flow
Wind-up rules you need to know
Section eighty-eight, don't be late
Tax elections seal your fate
[Verse 3]
Eighty-eight two's automatic, no election made
Cost basis transfers over, price you paid
But losses from the subsidiary can flow upstream
To offset parent's income, living the dream
[Bridge]
Nine months to wind it down completely
File the forms and do it neatly
Non-capital losses carry forward
Capital losses, different reward
Choose your section, plan ahead
Get the timing right instead
[Chorus]
Eighty-eight one, eighty-eight two
Different rules for me and you
Bump-up basis, losses flow
Wind-up rules you need to know
Section eighty-eight, don't be late
Tax elections seal your fate
[Outro]
When the subsidiary's done its part
Wind-up rules are quite an art
Ninety percent ownership key
Section eighty-eight sets you free
25. GST/HST Basics: Registration and General Obligations
[Verse 1]
When your revenue hits thirty thousand in a year
Or four quarters rolling, registration's near
Small suppliers get a choice to join the game
But once you're in, you'll never be the same
Commercial activity requires your attention
Taxable supplies need GST mention
[Chorus]
Register, collect, and file on time
HST or GST, keep it in line
Input tax credits, output tax due
Quarterly returns, here's what you do
R-E-G-I-S-T-E-R when you hit the floor
Thirty thousand opens up the door
[Verse 2]
Zero-rated sales still count toward your threshold
Books and groceries, exports you've sold
Exempt supplies like insurance don't apply
But watch your mixed-use, don't let it slide by
Registration gives you credits to claim
Input taxes back, it's part of the game
[Chorus]
Register, collect, and file on time
HST or GST, keep it in line
Input tax credits, output tax due
Quarterly returns, here's what you do
R-E-G-I-S-T-E-R when you hit the floor
Thirty thousand opens up the door
[Bridge]
Monthly filing if your sales are high
One point five million is where you qualify
Keep your records for six years straight
Books and receipts, don't leave it to fate
Charge the tax when you make the sale
Invoice requirements, don't let them fail
[Verse 3]
GST number on every receipt
Business name and date, keep it complete
Remit the difference between what you owe
And credits claimed from your cash flow
Late filing penalties will make you pay
Stay compliant every business day
[Chorus]
Register, collect, and file on time
HST or GST, keep it in line
Input tax credits, output tax due
Quarterly returns, here's what you do
R-E-G-I-S-T-E-R when you hit the floor
Thirty thousand opens up the door
[Outro]
From registration to your final return
GST compliance, these rules you must learn
Thirty thousand threshold, quarterly file
Keep your records and maintain your style
26. Supply Classifications: Taxable vs Exempt vs Zero-Rated
[Verse 1]
When you're dealing with supplies under GST and HST
Three categories you need to know for CPA mastery
Taxable means you charge the tax and claim your input credits too
Exempt means no tax collected but no credits coming through
[Chorus]
T-E-Z, that's the key to GST
Taxable, Exempt, Zero-rated, sing it with me
T-E-Z, memorize these three
Tax collected, no tax, or zero but with credits free
[Verse 2]
Taxable supplies are the standard way to go
Restaurant meals and retail goods, tax rates that you should know
Five percent GST or combined HST rate
Collect it from your customers, input credits you can take
[Chorus]
T-E-Z, that's the key to GST
Taxable, Exempt, Zero-rated, sing it with me
T-E-Z, memorize these three
Tax collected, no tax, or zero but with credits free
[Verse 3]
Exempt supplies get special treatment under the law
Health and dental services, no tax collection at all
But here's the catch that hurts your cash, no input credits back
Educational services fall in this exempt track
[Chorus]
T-E-Z, that's the key to GST
Taxable, Exempt, Zero-rated, sing it with me
T-E-Z, memorize these three
Tax collected, no tax, or zero but with credits free
[Bridge]
Zero-rated is the sweet spot, best of both worlds here
No tax charged to customers but input credits clear
Basic groceries and exports get this special deal
Prescription drugs and medical devices, zero-rated is real
[Verse 4]
How to tell which category fits your supply today
Look at the nature of the good or service, that's the way
Check the legislation carefully, exceptions you might find
Context matters more than labels when you classify each kind
[Chorus]
T-E-Z, that's the key to GST
Taxable, Exempt, Zero-rated, sing it with me
T-E-Z, memorize these three
Tax collected, no tax, or zero but with credits free
[Outro]
From taxable to exempt to zero-rated supplies
Master these distinctions and you'll ace the CPA prize
T-E-Z, remember this simple key
Supply classification mastery
27. Input Tax Credits: Claims and Restrictions
[Verse 1]
When you purchase goods for business use
Check that GST upon your receipt
Input tax credits you can deduce
But only if your records are complete
Commercial activities qualify
Personal expenses you deny
Registration threshold you must meet
Before these credits you can greet
[Chorus]
Claim it, track it, document well
ITCs have a story to tell
Ninety percent for mixed-use cars
Fifty percent when meals are ours
Claim it, track it, don't delay
Four years and credits slip away
Supporting docs must tell the tale
Or CRA will make you fail
[Verse 2]
Capital property needs special care
Depreciation over several years
But if you sell or change the share
Recapture rules will bring you tears
Basic groceries get no relief
Zero-rated brings no grief
Exempt supplies will block your way
No ITCs on those you pay
[Chorus]
Claim it, track it, document well
ITCs have a story to tell
Ninety percent for mixed-use cars
Fifty percent when meals are ours
Claim it, track it, don't delay
Four years and credits slip away
Supporting docs must tell the tale
Or CRA will make you fail
[Bridge]
Bad debts can bring credits back to life
Election forms will end the strife
Passenger vehicles have a cap
Thirty thousand bridge that gap
Non-residents have different rules
Quick method users different tools
[Verse 3]
When business use is less than ten
No credits flow from your pen
Reasonableness must guide your claim
Aggressive stances bring you shame
Monthly quarterly or yearly filed
Timing matters reconciled
Input tax credits earned with care
Will reduce the tax you bear
[Final Chorus]
Claim it, track it, document well
ITCs have a story to tell
Ninety percent for mixed-use cars
Fifty percent when meals are ours
Claim it, track it, follow through
CPA knowledge seeing you through
Supporting docs will save the day
When auditors come out to play
[Outro]
Input tax credits properly claimed
Keep your GST balance tamed
28. Place of Supply Rules: Where Tax Applies
[Verse 1]
When goods cross provincial lines today
The place of supply shows the tax we pay
If shipped to Ontario from BC
HST applies at delivery
The recipient's province sets the rate
Don't let the origin complicate
[Chorus]
Where it goes, that's where tax flows
Destination rule, that's how it goes
Services follow where they're used
Place of supply can't be confused
Where it lands, tax demands
Know the province, understand
[Verse 2]
Real property tax stays where it sits
The land location is what permits
But legal services have their way
Taxed where the lawyer's office stays
Advisory work and consultation
Follow the supplier's registration
[Chorus]
Where it goes, that's where tax flows
Destination rule, that's how it goes
Services follow where they're used
Place of supply can't be confused
Where it lands, tax demands
Know the province, understand
[Bridge]
Transportation's got its special case
Point of departure sets the base
Telecommunications bridge the gap
Billing address fills the map
Intangibles cross every border
Software follows purchaser's order
[Verse 3]
When in doubt about the jurisdiction
Check the federal act's prescription
General rule for goods is clear
Destination tax will appear
Services need more careful thought
Where performed or where they're bought
[Chorus]
Where it goes, that's where tax flows
Destination rule, that's how it goes
Services follow where they're used
Place of supply can't be confused
Where it lands, tax demands
Know the province, understand
[Outro]
From coast to coast the rules apply
Place of supply will specify
Which tax rate governs every deal
Make sure your compliance is real
29. Quick Method of Accounting for Small Businesses
[Verse 1]
Small business owner with sales below the line
Four million threshold keeps your method fine
Instead of tracking every input credit
Quick method makes your GST submitted
Choose your rate based on your business type
Service or retail, get your percentage right
[Chorus]
Quick and simple, that's the way
Calculate your GST today
Take your sales, multiply the rate
Input credits you don't calculate
Quick method, saves you time
Keep your business books in line
[Verse 2]
Service business gets eleven percent rate
Retail and wholesale, different numbers wait
Manufacturing sits at seven and a half
Construction gets six, check the calculation path
Your taxable supplies times the quick rate
Minus GST collected, that's what you remit straight
[Chorus]
Quick and simple, that's the way
Calculate your GST today
Take your sales, multiply the rate
Input credits you don't calculate
Quick method, saves you time
Keep your business books in line
[Bridge]
But remember the limitations here
Large purchases need regular method clear
Over ten thousand for equipment bought
Quick method benefit comes to naught
Real estate and financial don't apply
Choose your method, keep compliance high
[Verse 3]
File your return with your quick rate math
HST provinces follow the same path
Ontario adds eight more to the base
Nova Scotia doubles, know your place
Annual election, make your choice
Let the quick method be your accounting voice
[Chorus]
Quick and simple, that's the way
Calculate your GST today
Take your sales, multiply the rate
Input credits you don't calculate
Quick method, saves you time
Keep your business books in line
[Outro]
Small business owners, take control
Quick method keeps you on your goal
Simplified taxes, peace of mind
Leave the complex math behind
30. Real Property GST/HST: Sales, Rentals, and Rebates
[Verse 1]
When real estate changes hands today
GST HST comes into play
New construction bears the tax
Commercial sales follow these facts
But used residential walks away
Exempt from tax on closing day
[Chorus]
Real property rules to remember well
Sales Rentals and Rebates tell the tale
New homes pay tax but get rebates back
Commercial always stays on track
Residential rentals mostly free
That's the GST HST key
[Verse 2]
New housing rebate saves the day
When purchase price shows the way
Under four fifty gets you more
Federal rebate at the door
Provincial rebate sweetens still
Based on your regional bill
[Chorus]
Real property rules to remember well
Sales Rentals and Rebates tell the tale
New homes pay tax but get rebates back
Commercial always stays on track
Residential rentals mostly free
That's the GST HST key
[Verse 3]
Commercial property pays its share
Input credits offset with care
Office buildings retail space
Full taxation sets the pace
Lease or sale the rule's the same
Commercial plays the taxing game
[Bridge]
Short term rentals change the scene
Less than thirty days between
Means you're taxable supply
Hotel treatment you can't deny
Long term residential rent
Usually tax exempt
[Chorus]
Real property rules to remember well
Sales Rentals and Rebates tell the tale
New homes pay tax but get rebates back
Commercial always stays on track
Residential rentals mostly free
That's the GST HST key
[Outro]
From construction to the final sale
These property rules will never fail
Know your rebates know your rates
Real estate tax never waits
31. Personal Income Splitting Strategies
[Verse 1]
When income's high and taxes bite
There's strategies to make it right
Split the load across your clan
Income shifting is the plan
But attribution rules stand guard
Making simple moves too hard
Know the law before you start
Income splitting is an art
[Chorus]
Split it smart, split it clean
Keep it fair, keep it lean
Attribution watch your back
Spousal loans stay on track
Prescribed rate lock it in
Family trust let wealth begin
Split it smart, split it clean
Tax efficiency supreme
[Verse 2]
Spousal loans at prescribed rate
Lock it low don't hesitate
Lend the funds for her to invest
Beat the rate and keep the rest
Attribution rule won't apply
If the interest payments fly
On time every single year
Keep those records crystal clear
[Chorus]
Split it smart, split it clean
Keep it fair, keep it lean
Attribution watch your back
Spousal loans stay on track
Prescribed rate lock it in
Family trust let wealth begin
Split it smart, split it clean
Tax efficiency supreme
[Verse 3]
Income splitting pension style
CPP sharing all worthwhile
Split your credits with your spouse
Retirement planning in your house
Business income pay your kin
Reasonable wages let them win
Dividends through family shares
Structure smart and no one cares
[Bridge]
Attribution rules will catch
Income splitting that's a patch
Under eighteen kids beware
Investment income triggers snare
But capital gains get through
Business income passes too
Know the rules and play it right
Keep your planning clear and bright
[Chorus]
Split it smart, split it clean
Keep it fair, keep it lean
Attribution watch your back
Spousal loans stay on track
Prescribed rate lock it in
Family trust let wealth begin
Split it smart, split it clean
Tax efficiency supreme
[Outro]
Family trust the wealthy choose
Income splitting they can use
Discretionary power flows
Tax efficient dynasty grows
Split it smart across the years
Minimize those tax bill tears
32. Prescribed Rate Loans and Family Planning
[Verse 1]
When families want to split their income flow
There's a special rate that helps the money grow
Canada Revenue sets it every quarter
Prescribed rate loans keep attribution slaughter
The rate is locked when documents are signed
One percent or two, whatever rate you find
Lend to spouse or kids at this low cost
Beat attribution rules, no income lost
[Chorus]
Prescribed rate loans, lock it in
Document right, let planning begin
Interest paid by January thirty-first
Avoid attribution, income dispersed
P-R-L, that's the key
Family planning strategy
[Verse 2]
Timing matters when you start the game
Rising rates mean lock before they change
If prescribed rate climbs from one to three
Your old loan stays at one, lucky you'll be
The borrower invests at higher yield
Market returns of six percent revealed
Pay one percent back, keep five for free
Income split successfully
[Chorus]
Prescribed rate loans, lock it in
Document right, let planning begin
Interest paid by January thirty-first
Avoid attribution, income dispersed
P-R-L, that's the key
Family planning strategy
[Bridge]
Written agreement, formal and clear
Interest terms stated, year after year
Commercial terms, arm's length deal
Make it legitimate, make it real
Annual payment, don't be late
One day past due seals your fate
Attribution kicks right back in
All your planning down the drain
[Verse 3]
Corporate structures amplify the gain
Prescribed rate loans through the corporate chain
Freeze estate values, pass growth along
When rates are low, the strategy's strong
Monitor payments, track every dime
CRA scrutiny happens all the time
Professional advice, don't go alone
Complex rules around every loan
[Chorus]
Prescribed rate loans, lock it in
Document right, let planning begin
Interest paid by January thirty-first
Avoid attribution, income dispersed
P-R-L, that's the key
Family planning strategy
[Outro]
When the rate is low and markets high
Prescribed rate loans will multiply
Your family's wealth across the years
Smart tax planning, that much is clear
33. Family Trusts for Tax Planning
[Verse 1]
When wealth accumulation starts to grow
And tax bills make your profits feel so slow
There's a structure that can help you plan ahead
Family trust arrangements, smartly led
The settlor transfers assets to the trust
While trustees manage what they must
Beneficiaries wait to receive their share
Income and capital with proper care
[Chorus]
Trust the structure, plan the flow
Income splitting helps wealth grow
Capital gains can be deferred
Discretionary powers, every word
Family trust, tax planning key
Preserve wealth for family
Attribution rules to navigate
Smart distributions calculate
[Verse 2]
Discretionary trusts give flexibility
Trustees choose who gets the money free
Income can flow to lower tax brackets
Spouse and children, strategic packets
But watch the attribution rules apply
Twenty-one year rule, time will fly
Principal residence exemption stays
Capital gains, there are better ways
[Chorus]
Trust the structure, plan the flow
Income splitting helps wealth grow
Capital gains can be deferred
Discretionary powers, every word
Family trust, tax planning key
Preserve wealth for family
Attribution rules to navigate
Smart distributions calculate
[Bridge]
Preferred beneficiaries get first call
Income tested benefits won't fall
Kids under eighteen face the tax
But business income fills the cracks
Kiddie tax won't apply to that
Corporate distributions where it's at
[Verse 3]
Trust distributions must be reasonable
Benefit test makes it defensible
Income earned inside the trust
Gets taxed at highest rates, a must
So flow it out by year-end date
Don't let taxation escalate
Estate freeze techniques work so well
Freeze the value, let growth swell
[Chorus]
Trust the structure, plan the flow
Income splitting helps wealth grow
Capital gains can be deferred
Discretionary powers, every word
Family trust, tax planning key
Preserve wealth for family
Attribution rules to navigate
Smart distributions calculate
[Outro]
Professional advice you'll always need
Tax planning laws are complex indeed
Family trusts when structured right
Keep your tax burden burning bright
But burning low, not burning high
Wealth preservation, that's the why
34. Estate Freezes: Basics and Benefits
[Verse 1]
When wealth has grown beyond your dreams
And future gains look bright ahead
You want to pass it to your heirs
But keep control until you're dead
The answer lies in freezing time
Your current value locked in place
While all the growth from this day forth
Goes to the next generation's space
[Chorus]
Freeze your estate, crystallize today
Preferred shares hold your current value's way
Common shares for kids, they get the growth
Keep control while passing wealth to both
Freeze it, please it, plan it right
Transfer growth but hold on tight
[Verse 2]
You reorganize your company
Exchange your commons for preferred
Fixed dividend, redemption rights
Your current value is preserved
The children get new common shares
For nominal or gifted price
They'll capture all future increases
While you maintain your voting slice
[Chorus]
Freeze your estate, crystallize today
Preferred shares hold your current value's way
Common shares for kids, they get the growth
Keep control while passing wealth to both
Freeze it, please it, plan it right
Transfer growth but hold on tight
[Bridge]
Attribution rules don't apply here
If the kids pay fair market price
Income splitting becomes valid
Tax planning rolling the dice
But watch out for the deemed disposition
Capital gains may come to play
Get your valuation expert
To assess the value today
[Verse 3]
The benefits are crystal clear
Your estate won't grow from here
Probate fees are minimized
Tax burden's better organized
You keep the cash flow coming in
Through preferred dividend streams
While junior builds their future wealth
On growth beyond your wildest dreams
[Chorus]
Freeze your estate, crystallize today
Preferred shares hold your current value's way
Common shares for kids, they get the growth
Keep control while passing wealth to both
Freeze it, please it, plan it right
Transfer growth but hold on tight
[Outro]
When the time comes for succession
Your estate is frozen still
All the growth has passed along
According to your structured will
Estate freeze, the wealthy's friend
Plan today for tomorrow's end
35. Corporate Holding Company Structures
[Verse 1]
Build your empire from the ground up high
Parent company watching from the sky
Separate entities but connected tight
Holding shares to keep control in sight
Operational risk stays down below
While the holding company helps you grow
Limited liability shields your core
That's what corporate structures are made for
[Chorus]
Hold and protect, direct and collect
Dividends flowing up the chain
Tax defer, risks transfer
Holding companies ease the pain
HOLD - Hierarchy of Liability Defense
PROTECT - Parent Receives Operating Tax Efficiency Claims Today
[Verse 2]
Eighty-five percent makes you qualify
For the small business tax benefits that fly
Dividend refundable tax comes back
When you pay it out, stay on track
Integration system keeps it fair
Tax at corporate or personal layer
Choose your timing, plan your flow
Let the holding structure help you grow
[Chorus]
Hold and protect, direct and collect
Dividends flowing up the chain
Tax defer, risks transfer
Holding companies ease the pain
HOLD - Hierarchy of Liability Defense
PROTECT - Parent Receives Operating Tax Efficiency Claims Today
[Bridge]
Creditors can't reach what's held above
Operating risks stay where they're of
Capital gains exemption at the top
Succession planning never has to stop
Professional corps need holding friends
When regulations make you bend
[Verse 3]
Set it up before you need the shield
Make sure substance over form is real
Corporate law and tax law align
Keep your documentation clean and fine
Board resolutions, proper flow
Let your holding structure help you grow
[Final Chorus]
Hold and protect, direct and collect
Dividends flowing up the chain
Tax defer, risks transfer
Holding companies ease the pain
Build your castle in the sky
Let your holding structure fly
36. Purification for Lifetime Capital Gains Exemption
[Verse 1]
Sarah's got a small business dream
Been building value through the years
But her corporation's not so clean
Mixed assets bringing tax fears
Active business income flows
But passive investments also grow
To claim the lifetime capital gains
She needs to purify the show
[Chorus]
Purify before you sell
Clean the corp and do it well
Twenty-four months is the rule
Active business is the tool
Purge the passive, keep what counts
Every dollar matters amounts
LCGE waiting at the end
Clean your house and cash transcends
[Verse 2]
Investment income's got to go
Rental properties must leave
Portfolio stocks can't steal the show
Active business you must achieve
Ninety percent of assets fair
Market value test with care
Look back two years from the sale
Clean books tell the winning tale
[Chorus]
Purify before you sell
Clean the corp and do it well
Twenty-four months is the rule
Active business is the tool
Purge the passive, keep what counts
Every dollar matters amounts
LCGE waiting at the end
Clean your house and cash transcends
[Bridge]
Timing is everything they say
Plan the purge the proper way
Dividends to clear the slate
Don't leave purification late
Asset sales and wind-up plans
Eight hundred thousand in your hands
Tax-free gains for qualified shares
Preparation always pays
[Verse 3]
Connected corporations too
Must meet the active business test
Fifty percent ownership through
The chain ensures you'll pass the rest
Small business corporation status
Required before the sale
Purification apparatus
Sets you up to never fail
[Chorus]
Purify before you sell
Clean the corp and do it well
Twenty-four months is the rule
Active business is the tool
Purge the passive, keep what counts
Every dollar matters amounts
LCGE waiting at the end
Clean your house and cash transcends
[Outro]
Twenty-four months back in time
Active business paradigm
Purify and organize
Claim your lifetime capital prize
37. Surplus Stripping Techniques
[Verse 1]
When a corporation holds too much cash inside
Shareholders want it out but taxes they must hide
Dividends get hit hard with personal rates so high
But capital gains treatment makes the profits fly
Safe income calculations show us what we can take
Before the CRA decides our planning was fake
[Chorus]
Strip it smart, strip it clean
Keep it safe, stay between
The lines of law, avoid the trap
Safe income is your map
Capital gains, not dividend pain
That's the surplus stripping game
[Verse 2]
Start with after-tax income earned since sixty-five
Add up all the safe amounts that keep your plan alive
Investment income taxed at rates below the threshold
Subtract distributions made, that's how the rules unfold
One hundred percent connected corps can share the wealth
But watch for attribution rules that hurt your stealth
[Chorus]
Strip it smart, strip it clean
Keep it safe, stay between
The lines of law, avoid the trap
Safe income is your map
Capital gains, not dividend pain
That's the surplus stripping game
[Bridge]
Fifty-five brings the hammer down
Anti-avoidance turns your smile into a frown
If your main purpose was to get the dividend rate
Your capital gain becomes ordinary fate
Bona fide business purpose you must clearly show
Or watch your tax planning benefits all go
[Verse 3]
Related party sales need extra care and thought
Arm's length fair value or your plan comes to naught
Look through rules will catch you if you try to hide
Behind corporate structures with no business pride
Document your reasoning, make your intentions clear
That business purpose keeps the taxman's fear
[Chorus]
Strip it smart, strip it clean
Keep it safe, stay between
The lines of law, avoid the trap
Safe income is your map
Capital gains, not dividend pain
That's the surplus stripping game
[Outro]
Calculate with care now
Plan with purpose, take your bow
Safe income guides the way
To surplus strip today
38. Tax Residency and International Implications
[Verse 1]
Sarah moved from Toronto down to Dallas last July
Kept her cottage and her RRSP, now she's wondering why
Tax letters keep arriving at her Canadian door
CRA says residential ties matter more than before
One-eighty-three days is the magic number line
But ties that bind can make you Canadian by design
[Chorus]
Residential ties, where do you belong
Primary ties are strong, secondary play along
Spouse and home and kids, that's the primary three
Secondary ties like banks and cards, they add complexity
One-eight-three days or ties that bind
Tax residency's defined, keep the rules in mind
[Verse 2]
Mike's corporation started here but moved to Bermuda's shore
Board meetings held remotely, but where's the central core
Mind and management location, that's the corporate test
Place of incorporation matters, but control's the real quest
Canadian source income follows you around the world
Even when your residency flag has been unfurled
[Chorus]
Residential ties, where do you belong
Primary ties are strong, secondary play along
Spouse and home and kids, that's the primary three
Secondary ties like banks and cards, they add complexity
One-eight-three days or ties that bind
Tax residency's defined, keep the rules in mind
[Bridge]
Deemed resident rules can catch you by surprise
Sojourning more than half the year, despite your foreign ties
Non-resident withholding tax on Canadian source pay
Treaty shopping won't protect you if the substance doesn't stay
Part-year residents must split their income streams
Nothing's ever simple in these international schemes
[Verse 3]
Lisa works for Global Corp, they sent her overseas
Three year posting to Hong Kong, but kept her health plan fees
Primary ties are severed, secondary ties reduced
Tax treaty says she's foreign now, from Canadian tax excused
But rental income from her condo still gets taxed at source
Twenty-five percent withholding follows its prescribed course
[Final Chorus]
Residential ties, where do you belong
Primary ties are strong, secondary play along
Spouse and home and kids, that's the primary three
Secondary ties like banks and cards, they add complexity
One-eight-three days or ties that bind
Tax residency's defined, keep the rules in mind
[Outro]
When borders blur and money flows
Tax residency rules expose
Where you live and where you pay
CRA will have their say
39. Tax Treaty Benefits and Applications
[Verse 1]
When business crosses borders wide
Two countries want their tax divide
But double taxation hurts the flow
So treaties help the commerce grow
Bilateral agreements signed with care
Define which nation gets their share
[Chorus]
Treaty benefits, reduce and plan
Withholding cuts from thirty to ten
Tie-breaker rules when residence is unclear
Common benefits for cross-border years
Remember BEAT: Benefits, Exemptions, Allocations, Tie-breakers
Treaty planning makes the path much clearer
[Verse 2]
Source country wants to tax the income
Residence country claims it too
Without a treaty, double burden
Falls on taxpayers, me and you
The withholding tax gets slashed in half
When treaty provisions clear the path
[Chorus]
Treaty benefits, reduce and plan
Withholding cuts from thirty to ten
Tie-breaker rules when residence is unclear
Common benefits for cross-border years
Remember BEAT: Benefits, Exemptions, Allocations, Tie-breakers
Treaty planning makes the path much clearer
[Bridge]
When residency's in question, tie-breakers take the stage
Permanent home first, then center of life
Management place for corps engaged
Individual or business strife
The competent authority decides
When multiple tests collide
[Verse 3]
Dividends, interest, royalties too
Get preferential treatment rates
Capital gains and business profits
Follow what the treaty states
Foreign tax credits complement
The relief that treaties represent
[Chorus]
Treaty benefits, reduce and plan
Withholding cuts from thirty to ten
Tie-breaker rules when residence is unclear
Common benefits for cross-border years
Remember BEAT: Benefits, Exemptions, Allocations, Tie-breakers
Treaty planning makes the path much clearer
[Outro]
Cross-border planning needs the treaty map
To avoid the double-taxation trap
OECD model shows the way
For international tax today
40. Foreign Tax Credits: Basics and Calculations
[Verse 1]
When you earn income across the border line
Two countries want to tax what should be mine
The home country claims it all as theirs to take
While source country taxes for revenue's sake
This double burden needs a fair solution
Foreign tax credits bring resolution
[Chorus]
Calculate and allocate, don't pay it twice
Foreign tax credits are your best device
Lesser of foreign tax or domestic rate
On foreign income, let the credits relate
F-T-C, the formula's key
Avoid double tax, keep more money free
[Verse 2]
Start with foreign source income as your base
Multiply by domestic tax you face
Divide by total worldwide income earned
That's the limit credit that you've learned
But if foreign tax paid is less than this
Take the smaller amount, you cannot miss
[Chorus]
Calculate and allocate, don't pay it twice
Foreign tax credits are your best device
Lesser of foreign tax or domestic rate
On foreign income, let the credits relate
F-T-C, the formula's key
Avoid double tax, keep more money free
[Bridge]
Business income, investment gains
Rental income, all the same
Separate baskets, different rules
Active and passive, use the right tools
Carryback three, carryforward ten
When credits exceed, use them again
[Verse 3]
Planning strategies help you optimize
Treaty shopping isn't always wise
Check-the-box elections change the game
Foreign corporations lose their name
Timing matters for the credit year
When tax is paid, when income's here
[Chorus]
Calculate and allocate, don't pay it twice
Foreign tax credits are your best device
Lesser of foreign tax or domestic rate
On foreign income, let the credits relate
F-T-C, the formula's key
Avoid double tax, keep more money free
[Outro]
From passive income to business gains
Foreign tax credits break the chains
Of double taxation's heavy cost
Without them, too much wealth is lost
41. 1 Registered Accounts
[Verse 1]
RRSP time, building up your future nest
Eighteen percent of income, that's your yearly test
Contribution room rolls over, never goes to waste
Spousal plans can split the tax, keep more money in your space
Home Buyers' Plan lets you borrow twenty-five
Pay it back in fifteen years to keep your savings alive
[Chorus]
Registered accounts, they're your tax-free friends
RRSP, TFSA, the benefits never end
RESP for education, RDSP for those in need
FHSA for your first home, plant that money seed
Remember the room, watch the limits tight
Registered accounts will make your future bright
[Verse 2]
TFSA grows tax-free, that's the sweetest deal
Six thousand yearly limit, but the gains are real
Over-contribute and they'll charge you one percent each month
Qualifying investments, stocks and bonds you want
Withdrawal room comes back next year, flexibility's the key
Build your wealth without the tax, financial liberty
[Chorus]
Registered accounts, they're your tax-free friends
RRSP, TFSA, the benefits never end
RESP for education, RDSP for those in need
FHSA for your first home, plant that money seed
Remember the room, watch the limits tight
Registered accounts will make your future bright
[Verse 3]
RESP for kids' schooling, twenty-five hundred max
Government adds twenty percent, those CESG facts
Low income families get CLB for free
Two thousand lifetime bonus for post-secondary
Withdraw the grants first, avoid that penalty cost
Education planning wins when strategy's not lost
[Bridge]
FHSA launched in twenty-three, eight thousand contribution space
Tax deduction going in, tax-free coming out with grace
RDSP for disability, grants and bonds so sweet
Matching funds from government make the deal complete
[Chorus]
Registered accounts, they're your tax-free friends
RRSP, TFSA, the benefits never end
RESP for education, RDSP for those in need
FHSA for your first home, plant that money seed
Remember the room, watch the limits tight
Registered accounts will make your future bright
[Outro]
Five accounts to master, each one serves a goal
Registered account wisdom, financial control
42. 2 Retirement and Estate Planning
[Verse 1]
When you reach retirement age, there's planning to be done
Pension income splitting helps when two becomes as one
Section sixty point oh three lets spouses share the load
Split that pension income, lighten up the tax code
[Chorus]
Plan ahead, save the day
OAS clawback stays away
Deemed disposition when you die
Spousal rollover helps you fly
Six oh point oh three for splitting
Seventy five for rollover fitting
Estate planning, don't delay
Plan ahead and save the day
[Verse 2]
Old Age Security has a clawback trap to fear
When your income gets too high, benefits disappear
Keep your income under threshold, use your RRSP
Withdraw strategically, keep more OAS for free
[Chorus]
Plan ahead, save the day
OAS clawback stays away
Deemed disposition when you die
Spousal rollover helps you fly
Six oh point oh three for splitting
Seventy five for rollover fitting
Estate planning, don't delay
Plan ahead and save the day
[Verse 3]
Section seventy subsection five says when you pass away
Everything you own is sold at fair market value that day
But your spouse can take a rollover, defer the tax until
They dispose or pass away, keeping money in the family still
[Bridge]
Graduated Rate Estates get special treatment for three years
Lower tax rates help the transition, calm the beneficiaries' fears
Testamentary trusts can split the income, spread it all around
Twenty-one year rule applies, keep those tax savings sound
[Verse 4]
Charitable giving at your death can save your estate tax
Donate appreciated assets, get the credit benefits back
Family business succession needs a careful structured plan
Freeze the value, gift the growth, pass it while you can
[Chorus]
Plan ahead, save the day
OAS clawback stays away
Deemed disposition when you die
Spousal rollover helps you fly
Six oh point oh three for splitting
Seventy five for rollover fitting
Estate planning, don't delay
Plan ahead and save the day
[Outro]
From pension splitting to estate gifts
Canadian tax law offers many shifts
Plan your legacy, plan it right
Keep your family's future bright
43. 3 Immigration and Emigration Tax Issues
[Verse 1]
Sarah packed her bags to move to Montreal
Left her life in London, heard the maple call
But the tax man's waiting at the border line
Says "Welcome to Canada, now your assets are mine"
Fair market value on your arrival day
Deemed acquisition is the price you pay
[Chorus]
Cross the border, change your fate
Immigration, emigration, calculate
FMV when you arrive
One-twenty-eight-one when you say goodbye
Foreign credits, T-eleven-thirty-five
Keep your records clean and stay alive
[Verse 2]
Five years later, Sarah's moving back to Leeds
Canada says "Hold on, there's a departure fee"
Deemed disposition on your leaving day
Capital gains on everything you can't take away
Principal residence gets to slide on through
But your stocks and bonds, they're coming due
[Chorus]
Cross the border, change your fate
Immigration, emigration, calculate
FMV when you arrive
One-twenty-eight-one when you say goodbye
Foreign credits, T-eleven-thirty-five
Keep your records clean and stay alive
[Bridge]
Tax treaties save you from the double hit
When two countries want their piece of it
Foreign tax credits ease the pain
So you don't pay taxes twice again
But file that T-form every year
Or CRA will make your wallet disappear
[Verse 3]
Cross-border living means you're playing two games
Different countries, different rules, different claims
Track your foreign income, every single dime
Declaration time comes every filing time
Residency determines where you'll pay your share
Substantial presence test will get you there
[Chorus]
Cross the border, change your fate
Immigration, emigration, calculate
FMV when you arrive
One-twenty-eight-one when you say goodbye
Foreign credits, T-eleven-thirty-five
Keep your records clean and stay alive
[Outro]
When you're moving north or heading south
Keep these tax rules in your mouth
Deemed acquisition, disposition too
Cross-border taxes, they'll find you
44. 1 Choice of Business Structure
[Verse 1]
Sarah starts a business, keeps it simple and clean
Sole proprietorship, she's living the dream
Reports on T-one form, no separate tax
Personal liability, that's just the facts
But when she brings in Tom, the structure must change
Partnership formed, profits they'll arrange
[Chorus]
Sole, partnership, corporation too
Choose your structure, what's best for you
Deferral advantage, integration game
Professional corps have rules not the same
Business structure matters, get it right
Tax implications keeping you up at night
[Verse 2]
Tom and Sarah file T-five schedules now
Split the income based on partnership vow
But if they incorporate, the game will shift
Corporate tax rates, that's the gift
Small business rate at eleven percent
While personal rates leave your wallet bent
[Chorus]
Sole, partnership, corporation too
Choose your structure, what's best for you
Deferral advantage, integration game
Professional corps have rules not the same
Business structure matters, get it right
Tax implications keeping you up at night
[Bridge]
Doctors, lawyers, professionals take note
Provincial rules determine what they wrote
Some allow corporations, some do not
Check your province, give it careful thought
Joint ventures temporary, partnerships last
Choose your structure, make the right forecast
[Verse 3]
Integration theory keeps it fair
Corporate and personal taxes share
Eligible dividends get the credit boost
While other income gets the regular boost
Deferral lets you time when taxes are due
Corporate structure giving options to you
[Final Chorus]
Sole, partnership, corporation too
Choose your structure, what's best for you
Deferral advantage, integration game
Professional corps have rules not the same
Business structure matters, get it right
Tax planning guidance shining bright
[Outro]
From sole proprietor to corporate crown
Canadian tax law won't let you down
Structure wisely, plan ahead
Keep more money, less tax instead
45. 2 Corporate Reorganizations
[Verse 1]
When property moves to a corporation's door
Section eighty-five opens up the floor
Tax-deferred transfer, keep the basis the same
Roll it over smooth, defer the capital gain
Boot received in cash might trigger some tax
But shares for assets keep you on track
[Chorus]
Eighty-five, eighty-six, eighty-seven, eighty-eight
Corporate reorganizations, don't hesitate
Roll it over, freeze it up, merge and wind it down
Canadian tax law spinning all around
Eighty-five, eighty-six, eighty-seven, eighty-eight
Plan it right and seal your fate
[Verse 2]
Section eighty-six for share exchanges clean
Estate freeze planning, best you've ever seen
Convert your commons to preferred shares
Lock in value while the next gen prepares
Growth potential shifts to new class shares
Estate freeze magic, handling future affairs
[Chorus]
Eighty-five, eighty-six, eighty-seven, eighty-eight
Corporate reorganizations, don't hesitate
Roll it over, freeze it up, merge and wind it down
Canadian tax law spinning all around
Eighty-five, eighty-six, eighty-seven, eighty-eight
Plan it right and seal your fate
[Verse 3]
Eighty-seven brings amalgamation rules
Two corporations become one, no tax tools
Assets and liabilities transfer clean
Continuity maintained in this legal scene
Cost basis carries over, no deemed disposition
Perfect merger with tax-free transition
[Bridge]
Eighty-eight winds up subsidiaries neat
Parent takes assets, makes the structure complete
Butterfly transactions split the company apart
Section fifty-five rules must play their part
Divisive reorgs need careful attention
Anti-avoidance rules need your mention
[Verse 4]
Estate freezes lock your value in time
While growth potential flows down the line
Preferred shares hold your current worth
Common shares give the next generation birth
But watch for attribution and kiddie tax traps
Careful planning fills all the gaps
[Chorus]
Eighty-five, eighty-six, eighty-seven, eighty-eight
Corporate reorganizations, don't hesitate
Roll it over, freeze it up, merge and wind it down
Canadian tax law spinning all around
Eighty-five, eighty-six, eighty-seven, eighty-eight
Plan it right and seal your fate
[Outro]
From rollover to wind-up, the sections align
Corporate restructuring, planned by design
Tax-deferred transfers when you need them most
Canadian corporate law from coast to coast
46. 3 Acquisition and Sale of a Business
[Verse 1]
When a business changes hands today
Two paths you need to know
Asset purchase or share purchase way
Different tax winds blow
Assets mean you buy the parts inside
Shares mean you own the whole
Each one has a different tax divide
Let me tell you how it rolls
[Chorus]
Asset or share, buyer beware
Tax consequences everywhere
Due diligence, find exposures there
Section twenty-two, receivables to share
Remember fifty-six point four
Non-compete payments at the door
Asset or share, prepare with care
Canadian tax law everywhere
[Verse 2]
Asset purchase means depreciation
Buyer gets a fresh new start
Seller pays on capital appreciation
But goodwill plays its part
Share purchase keeps the tax year going
Buyer inherits all the pain
Seller gets capital gains flowing
If the structure's not in vain
[Chorus]
Asset or share, buyer beware
Tax consequences everywhere
Due diligence, find exposures there
Section twenty-two, receivables to share
Remember fifty-six point four
Non-compete payments at the door
Asset or share, prepare with care
Canadian tax law everywhere
[Bridge]
Earnouts and contingent pay
Spread the tax across the way
When performance hits the mark
Additional tax will spark
Due diligence is the key
Find what liabilities you'll see
Hidden tax bombs waiting there
Better check with proper care
[Verse 3]
Section twenty-two election
For accounts receivable
Seller gets a deduction
Buyer's loss is credible
Fifty-six point four is clear
Non-compete income's here
Not a capital gain I fear
Regular income appears
[Chorus]
Asset or share, buyer beware
Tax consequences everywhere
Due diligence, find exposures there
Section twenty-two, receivables to share
Remember fifty-six point four
Non-compete payments at the door
Asset or share, prepare with care
Canadian tax law everywhere
[Outro]
When the deal is on the line
Read the tax code every time
Asset purchase, share purchase fine
But know where you draw the line
47. 4 Partnerships
[Verse 1]
When partners join to make their way
Computing income starts today
Section ninety-six will guide you through
Each partner's share of what is due
Take the partnership's total gain
Then allocate through sun and rain
Based on agreements they have made
Each partner's portion must be weighed
[Chorus]
Partnership rules, remember the four
Compute the income, then explore
Adjusted cost base, keep it right
At-risk rules shining bright
Limited partnerships need special care
Tax shelters lurking everywhere
Ninety-six point two point two
These partnership rules will see you through
[Verse 2]
Adjusted cost base starts with what you paid
Add income allocated, don't be afraid
Subtract the losses and withdrawals too
Capital gains and losses, they're part of you
Track every change throughout the year
Your ACB must be crystal clear
When partnership interest gets sold away
ACB determines gain that day
[Chorus]
Partnership rules, remember the four
Compute the income, then explore
Adjusted cost base, keep it right
At-risk rules shining bright
Limited partnerships need special care
Tax shelters lurking everywhere
Ninety-six point two point two
These partnership rules will see you through
[Bridge]
At-risk means what you stand to lose
Your investment and guarantees you choose
Limited partners can't deduct more
Than their at-risk amount for sure
Tax shelters face the toughest test
Limited partnerships assessed
Special rules apply with care
When tax avoidance fills the air
[Verse 3]
Limited partners have protection strong
But tax deductions can go wrong
Cannot exceed their investment true
Plus any debt that's guaranteed by you
Tax shelters under microscope
Complex rules beyond basic scope
Professional help you'll surely need
When these partnerships take the lead
[Chorus]
Partnership rules, remember the four
Compute the income, then explore
Adjusted cost base, keep it right
At-risk rules shining bright
Limited partnerships need special care
Tax shelters lurking everywhere
Ninety-six point two point two
These partnership rules will see you through
[Outro]
From computing income allocation
To ACB calculation
At-risk limits keep you sound
Partnership knowledge you have found
48. 1 Canada's International Tax Framework
[Verse 1]
If you're a resident of Canada today
Every dollar you earn, no matter where you stay
From Tokyo profits to London gains
Worldwide taxation runs through your veins
The maple leaf follows you everywhere
Global income, you must declare
[Chorus]
Residents worldwide, non-residents source
FAPI and dumping, stay on course
Part thirteen withholding, thirty percent rate
Controlled foreign affiliates, don't be late
Remember the rules, keep them in mind
Canada's tax net is globally designed
[Verse 2]
But if you're visiting from another land
Only Canadian source income, we'll take from your hand
Investment income flowing out the door
Part thirteen withholding, that's what it's for
Thirty percent on dividends and rent
Before it leaves, the tax is sent
[Chorus]
Residents worldwide, non-residents source
FAPI and dumping, stay on course
Part thirteen withholding, thirty percent rate
Controlled foreign affiliates, don't be late
Remember the rules, keep them in mind
Canada's tax net is globally designed
[Verse 3]
Foreign accrual property income's the name
When your foreign company plays the passive game
Interest, dividends, rental too
FAPI brings that income back to you
If you control more than fifty percent
Current taxation is what's meant
[Bridge]
Section two twelve point three appears
When foreign affiliate dumping interferes
Canadian company buys a foreign friend
With borrowed money, but that's not the end
Anti-avoidance rules will apply
To stop the tax base flowing by
[Chorus]
Residents worldwide, non-residents source
FAPI and dumping, stay on course
Part thirteen withholding, thirty percent rate
Controlled foreign affiliates, don't be late
Remember the rules, keep them in mind
Canada's tax net is globally designed
[Outro]
From sea to sea and beyond the border
International tax keeps perfect order
Four key rules to guide your way
In Canada's global tax display
49. 2 Tax Treaties
[Verse 1]
Canada builds bridges across the world
Bilateral treaties, flags unfurled
To stop the double tax from taking hold
OECD Model guides the way we're told
Vienna Convention helps us read between
The lines of treaties, keeping meanings clean
[Chorus]
Treaties map the way, PPT to stay
Permanent establishment marks the day
MAP will solve disputes along the way
Bilateral bridges keep double tax at bay
Treaties map the way, that's how we play
In the global tax game every single day
[Verse 2]
Fixed place of business, six months or more
Permanent establishment opens up the door
For source country taxation rights to flow
But treaty shopping schemes, we have to know
Principal purpose test will block the game
When tax avoidance is the only aim
[Chorus]
Treaties map the way, PPT to stay
Permanent establishment marks the day
MAP will solve disputes along the way
Bilateral bridges keep double tax at bay
Treaties map the way, that's how we play
In the global tax game every single day
[Bridge]
When countries disagree on what the treaty means
Mutual Agreement Procedure cleans
The slate between the competent authorities
Working together to resolve uncertainties
Vienna rules guide interpretation's art
While OECD comments play their part
[Verse 3]
From residence to source, the treaty flows
Dividing up the tax that someone owes
But artificial structures won't succeed
When PPT examines the taxpayer's need
The network grows with each bilateral tie
Protecting taxpayers beneath the sky
[Chorus]
Treaties map the way, PPT to stay
Permanent establishment marks the day
MAP will solve disputes along the way
Bilateral bridges keep double tax at bay
Treaties map the way, that's how we play
In the global tax game every single day
[Outro]
Bilateral treaties, worldwide they spread
Keeping double taxation fears at bay instead
50. 3 What Would Strengthen the Argument
[Verse 1]
When the taxman comes knocking at your corporate door
Claims enrichment without consideration, what's your score?
Five pillars stand to fortify your case
Operational necessity in the marketplace
[Chorus]
Document, demonstrate, separate the streams
Corporate lease in company name, business themes
No division possible between work and play
Expert testimony lights the enrichment way
Five defenses strong, five defenses true
Build your fortress brick by legal brick, see it through
[Verse 2]
Was the arrangement essential to operations?
Not just convenient but core to your foundations
Show the board approved it for strategic gain
Not personal comfort masquerading as business terrain
[Chorus]
Document, demonstrate, separate the streams
Corporate lease in company name, business themes
No division possible between work and play
Expert testimony lights the enrichment way
Five defenses strong, five defenses true
Build your fortress brick by legal brick, see it through
[Verse 3]
Corporate lease executed, signatures aligned
Company letterhead, terms properly defined
When personal and business cannot be split
Mixed-use scenarios where both purposes fit
[Bridge]
Contemporaneous records tell the tale
Board minutes, memos, leave a paper trail
Don't reconstruct the story after audit time
Real-time documentation, reason and rhyme
[Verse 4]
Economic enrichment needs expert eyes
Accountants, valuators, cut through the lies
What constitutes benefit in dollar terms?
Professional opinion when the taxman squirms
[Final Chorus]
Document, demonstrate, separate the streams
Corporate lease in company name, business themes
No division possible between work and play
Expert testimony lights the enrichment way
Five defenses strong, standing tall and true
Your legal ammunition when they come for you
[Outro]
Operational need, corporate documentation
Mixed-use reality, expert consultation
Contemporary proof of business intention
Five pillars guard against tax intervention
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