Income Tax Act

Home Office or Work Space Expense Deductions #414

Legally Speaking

By Jennifer Clee Section 18(12) of the Income Tax Act permits a self-employed individual to deduct expenses associated in using part of the home as a place of business. However, no claim may be made in respect of any “work space” in a “self-contained domestic establishment” (dwelling house, apartment or similar place in a residence

Independent Contractor or Employee – The Tests For #228

Legally Speaking

By Gerry NeelyB.A., LL.B. When the Homelife/Victoria case was decided in 1992, the conduct required to establish independent contractor status was not common knowledge among the licensees who claimed this status at the hearing. However, Revenue Canada reports that the returns of licensees claiming to be independent contractors continue to be rejected, either because of the terms

Independent Contractor Status v. Employee Status #227

Legally Speaking

By Gerry NeelyB.A., LL.B. As most licensees must be aware, while the Supreme Court of British Columbia has held in three cases that under the Real Estate Act a salesperson can only be an employee of an agent, the policy of Revenue Canada under the Income Tax Act, is to recognize the independent contract status of a salesperson. That

Satisfactory Financing #214

Legally Speaking

By Gerry NeelyB.A., LL.B. Subject to “satisfactory financing”, while not a whim and fancy clause, has been analyzed in several earlier cases and again in a recent decision involving the cash purchase of a business. The purchaser’s offer was subject to his arranging satisfactory financing. He intended to do this through an institutional lender, whom

Tax Deductibility of a Real Estate Training Course #133

Legally Speaking

By Gerry NeelyB.A. LL.B. A real estate salesperson in Ontario paid $525 in 1985 to attend a four-day course “List More – Sell More,” which she found to be useful in increasing her commission income. Her deduction of this amount on her tax return was disallowed and she appealed. Her grounds of appeal were that

Principal Residence – Exemption or Taxable Gain #131

Legally Speaking

By Gerry Neely B.A. LL.B Where the lands surrounding a principal residence exceed one acre, the excess area only falls within the principal residence exemption if the owner can prove that the excess is necessary to the use and enjoyment of the housing unit as a residence. The standard of proof required of an owner

Professional Incorporations – Continued #123

Legally Speaking

By Gerry Neely B.A. LL.B The response to the previous column discussing the lower rate of tax paid by a corporation carrying on an active real estate business confirmed that while everyone agrees that the federal deficit is too high, no one wants to be first in line to reduce it. The response also warrants

Principal Residence Exemptions #42

Legally Speaking

By Gerry NeelyB.A. LL.B. In the first case, the question was whether or not the sale of 9.3 acres made by the taxpayers under threat of expropriation by a municipality, leaving 7/10ths of an acre upon which the taxpayers’ house was situated, was exempt from taxation as falling within the principal residence exemption. Fourteen years

Income Tax, Income or Capital Gain #31

Legally Speaking

By Gerry NeelyB.A. LL.B. The intention of the taxpayer as the determinative factor in whether one hundred per cent of the profit realized on the sale of property is taxed as income, or only fifty per cent as capital gain, is described in the following two cases. In the first one, the taxpayer stated that

Income Tax #25

Legally Speaking

By Gerry NeelyB.A. LL.B. One of the results of the reduction in residential sales has been an increase in the number of trades of residential properties between people who can’t find a satisfactory cash buyer. For any one entitled to deduct moving expenses under Section 62 of the Income Tax Act, the question of how the