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  • 枫下家园 / 理财投资税务 / 关于投资收益税收问题，如何能少交点capital gain tax？能不能注册个公司，投资收益作为公司收入来交税？那样上网啊，买书啊，买电脑啊，broker那边的费用啊都可以拿来抵点税，就和contractor那样？ -falcon(令狐葱); 2006-11-23 (#3336745@0)
    • don't make money on capital gain, then u can keep claiming capital loss without gain...lol just kidding..:P -speed(如风); 2006-11-23 (#3336935@0)
      • that's more painful ;-) -falcon(令狐葱); 2006-11-23 (#3337248@0)
    • 记得在什么书上看过这么做占不了便宜。有特别的规定。不好意思具体记不起了。 -dusk(~小桥~流水~); 2006-11-23 (#3337258@0)
      • 从TSX挣的钱交税也就算了，从美国鬼子那里挣来的钱还要给加拿大政府抽头，没道理啊。 -falcon(令狐葱); 2006-11-23 (#3337407@0)
        • 没办法。征world income。我不舒服的是美国的dividend还要跟interest一样算100%征税。 -dusk(~小桥~流水~); 2006-11-23 (#3337413@0)
          • Do I miss something here? What abut the imputation credit in US? -registereduser(立牌坊); 2006-11-24 (#3340202@0)
            • 在加拿大买，US stock的dividend是作为foreign income 100% taxable. Broker会withold 15%的tax交给IRS，在加拿大交税时可以计算credit. 但是美国那边的imputation credits是美国人才享有的，外国人没有份。这是我的理解。 -dusk(~小桥~流水~); 2006-11-24 (#3340238@0)
              • BTW, 我的Broker寄来的T?表上这种dividend就是列为foreign income的。 -dusk(~小桥~流水~); 2006-11-24 (#3340242@0)
                • That is contradict to double taxation treaty. I understand if the taxpayer is individual, foreign imputation credit plus foreign withholding tax is claimable. If the taxpayer is compay, foreign dividends are exempted income. Can anyone confirm this? -registereduser(立牌坊); 2006-11-24 (#3340251@0)
                  • Sorry, I simplied the issue. I am studying now will post late of my study. -registereduser(立牌坊); 2006-11-24 (#3340277@0)
                  • I am wrong and you are right. -registereduser(立牌坊); 2006-11-24 {571} (#3340486@0)
                    I got following words from http://www.cra-arc.gc.ca/:

                    Foreign-source dividends are not subject to the 1/4 gross-up (dividends are not multiplied by 125%) and they do not qualify for the dividend tax credit. Report foreign dividends at line 121 of your tax return.

                    I am still not sure what amount do I need to report, gross dividends (accouts for net proceeding before withholding tax plus imputation credit), or net dividends (accouts for net proceeding before withholding tax), or net proceeding (amount you have received). How to treat the 15% US withholding tax?
                    • It should be the amount before withholding tax. The calculation of credit is a bit complicated, there's a formula in the tax schedule/forms. Actually I just copy numbers from the T5 form into tax software and it does all the work. -dusk(~小桥~流水~); 2006-11-25 {97} (#3341896@0)
                      Box 15 foreign income earned: the dividend received
                      Box 16 foreign tax paid: the withholding tax
                      • Do I need to report capital gain from US stock exchange? Thanks. -registereduser(立牌坊); 2006-11-25 (#3341996@0)
      • You MUST get yourself remember it, because we all rely on you. PLEASE! -registereduser(立牌坊); 2006-11-25 (#3341104@0)
        • I am flattered :-). Yeah sometimes I just remember the conclusion if I don't think I will go with it... -dusk(~小桥~流水~); 2006-11-25 (#3341900@0)
    • 给你点专业看法 -gabriel(游山玩水); 2006-11-23 {245} (#3337937@0)
      1。你每年股票赚多少钱? 花多少时间交易? 做多少次交易? CRA税务局可不是傻瓜。他们有核实的标准。

      2。capital gain 的一半才要交税？ 你为何要交100%的税呢？ 我估计你赚的不够多。 所以想找一些费用抵税要比capital gain划算。 你如果这样， 肯定是不可以的。
      • 如果挣一万，那么5000交税，按41％算就是2000来块，每一万交2000觉得很肉痛啊，，，想是不是注册成公司可以交公司税，是不是会比20％少，还有公司是不是避税方法多些 -falcon(令狐葱); 2006-11-23 (#3338182@0)
        • Incorporate investment gain = 100% taxable. -ra_95(小人*无聊一族); 2006-11-23 (#3338224@0)
        • 按公司保税， 就是10000的41%， 4100要交税。 -gabriel(游山玩水); 2006-11-24 {116} (#3340129@0)
          你问问你自己是否有办法由抵扣：4100- 2050 = ~2000。

          可能可以， 那如果你赚50000，想想把。 还是交capital gain划算。
          • where does your 41% come from ? corporate tax rate for non-day trader investment return ? -falcon(令狐葱); 2006-11-24 (#3340943@0)
            • 就是你刚才讲的个人的税率, 个人公司是合起来一起报税的. -gabriel(游山玩水); 2006-11-25 (#3341088@0)
              • Why "个人公司是合起来一起报税的"? -registereduser(立牌坊); 2006-11-25 (#3341102@0)
    • 会计说了，公司的交易每一笔进出都要详细记录，很是麻烦，我只敢作长线。 -hut112(SaveEveryPenny); 2006-11-23 (#3338150@0)
      • 这个反正broker会寄每比交易的明细过来，应该不难track -falcon(令狐葱); 2006-11-24 (#3338954@0)
        • That is right. Indeed, record-keeping requirement is higher for individual than for company. -registereduser(立牌坊); 2006-11-24 (#3340192@0)
          • Are you indian? " That's right." -zellers(昵称); 2006-11-27 (#3345089@0)
            • No. I am Chinese Canadian. Why these words links to Indian? -registereduser(立牌坊); 2006-11-27 (#3345190@0)
    • 经验交流，请批评。 -registereduser(立牌坊); 2006-11-24 {2158} (#3340246@0)
      本文发表在 rolia.net 枫下论坛1. If use company as a vehicle to invest, the capital gain tax would be charged on 100% of the gain, as discussed above. If all your investment related expenses does not over 50% of capital gain, it means it is not wise to use this vehicle, for this purpose only. There is another benefit, which is deferring to pay the dividends to yourself as the shareholder. Deferred dividends means your company pay dividends only at years that you have lower marginal tax rate. Company is a vehicle not only can averaging rate between different individual/entities, but can over the years. Honestly, I tried and find it is very hard to operate. It requests you have very long time taxation planning. So I abandoned this vehicle now.

      2. If use concept of "day-trader", actually you can claim you are runing the business. As the result, you can claim all business related expenses and pay 100% of net income (there is no longer a captial nature). Finally, it is same to option 1. I did this too and no longer use it.

      3. If you made some gain from some shares and you do have some unrealised loss from other shares, then realised these losses. For example, you buy a share at $5.00, the share price at end of this year is about $3.00, then you try to sell at $3.05 and then buy back at $2.95. In this example, 10c difference between $3.05 and $2.95 used to cover your transation cost. The result is you have realised $1.95 loss. By this way, you can defer the payment years and thus archiev the averaging purpose. I am still doing this way nowaday and it does happy me drop the capital gain.

      4. Open at least two account, one is in your wife's name and one is in your name. Choose one to buy depended on each's taxation situation for purpose of averaging two's marginal rate. If this option is used together with option 3, your tax imposed on the investment will be dropped dramtically. I am still using this option.

      Conclusion: basically, I am using option 3 and 4 now. The result is acceptable for normal years. In some years, I really made too such gain and still need to pay petty much tax. At least, my wife and me archeived averaging marginal rate.更多精彩文章及讨论，请光临枫下论坛 rolia.net
      • great inputs.....探讨一下 -falcon(令狐葱); 2006-11-25 {870} (#3340981@0)
        Regarding your #1. Is this deferred dividened a way to defer tax payable as well ? say I start with 100k, make 20k this year, then next year if I do not pay out dividened, does this mean next year I can start with 120k without paying tax on 20k gain from this year ? I only pay tax when I pay out dividened from comany ?

        For your #2, now I understand why broker always charge different fees for non-professional trader and day trader, day trader have to pay for higher brokage fees on pretty much everything. My question is , is this the only difference between non-professional trader vs day trader , or how to make myself an day trader ...I can pay a little more to be come a day trader if that's all.

        Your #3/4 are easier approaches which I'm using now as well.....I'm trying to find a better way for those "better years" as you said in the last paragraph.
        • My reply. -registereduser(立牌坊); 2006-11-25 {1226} (#3341098@0)
          本文发表在 rolia.net 枫下论坛#1. Deferred dividends in my post means the company file tax return, pay income tax, but does not pay out the dividends. The profit after tax thus accumulated as shareholder's fund balance sheet. I understand when to decide to pay dividends is a matter of corporation law rather than taxation law. You should be able to accumulate years, and then, at a particular year, you decide to start pay dividends. Because dividends will accompany by imputation credit, you may use it in that year. So, the answer is deferred dividends do not mean deferred payment of income tax. You will need to pay income tax every year. When use this approach, you should be very carefully and be fully understand the laws because as I know, there is some special sections in law to provent you use the imputation credit. It means you may waste the credit.

          #2. There is no clear line to say which is investor, which in day trader. There should be some tests set to exam every case. Sorry I did not study very much of Canadian taxation law. Those tests should include such as how many deals you have, how long on average holdings, etc. I am not sure if margin lending a part of these tests because to me, both investor and day trader would us it.更多精彩文章及讨论，请光临枫下论坛 rolia.net
      • #3 doesn't work. The capital loss you create is called "superficial loss" that is not allowed by CRA unless the shares you buy back is after 30 days of disposal. -sunbeamcga(二月鱼飞); 2006-11-28 (#3346006@0)
    • Why not wait and see whether Conservative will change tax law to defer capital gain? -rea1(rea1); 2006-11-24 (#3340535@0)
      • I'm sure everybody on this board will be quite happy if this becomes true -falcon(令狐葱); 2006-11-25 (#3340984@0)
    • You can always deduct the broker fees no matter if you earn the capital gain personally or through a corporation. One point to correct, capital gain earned through a corporation is only 50% taxable as well. -mitten(mitten); 2006-11-24 {256} (#3340587@0)
      However the corporate tax rate for investment income is around 49%. Unless you are qualified as a day trader, then the capital gain would be treated as active business income and will be taxed at the lower corporate tax rate for amount under certain limit.
      • 49%是flat rate还是也分段收税？如果是day trader那么corporate tax rate是多少，amount under certain limit这个amount又是多少呢？ -falcon(令狐葱); 2006-11-25 (#3340995@0)
        • I do not think the concep of "day trader" could be applied onto the company. -registereduser(立牌坊); 2006-11-25 {421} (#3341100@0)
          The reason is all incomes of a company is of income nature, expect some incomes are regulated as differently, such as capital nature, exempted income, etc. All expenses are naturally income nature unless regulated as capital nature, fringe benefit, etc. In our case, dividends and interest income are about income nature. General expenses are about income nature too, such as accounting fee, software, Internet costs etc.
          • I did not make it clearer. -registereduser(立牌坊); 2006-11-25 {730} (#3341103@0)
            I means, you do not need to make your corporation a "day trader" to qualify your income is income nature, because it is, except for the capital gain. The problem here is I could be see there is any benefit for your capital gain being income nature, according to "mitten".

            However, if you want your captial gain still remains as capital nature, you should not be "day trader". While, day-trader tests may still be applied to corporation, taxpayer shoud have plenty room to play with. I believe for capital gain remains capital nature is much easier to make it income nature - "day trader".

            Now the focus of the questions is how correct is the "mitten"'s informaiton. "mitten", do you have any links? Many thanks.
        • 49% is flat rate. -mitten(mitten); 2006-11-25 {1108} (#3341587@0)
          本文发表在 rolia.net 枫下论坛If you earn the capital gain through a CCPC (Canadian Controlled Private Corporation) and are qualified to report the income as active, then currently taxable income up to $300,000 will be taxed at 18.62%.

          A world of caution, first it is not easy to establish your investment activity as a day trader. There are certain criteria to be met and must be accepted by the tax authority. Second, once you elect to be a day trader, it can not be reversed(? I need to double check this point). Third, remember when the corporation pays dividend to you as a shareholder, you need to pay taxes on the dividend at the personal level.

          In general, the foundamental concept of Canadian taxation system is "Integration", which means the income earned through a corporation vs personal should be taxed more or less the same. Active income earned through a corporation can achieve significant tax deferral, not tax savings. Investment income earned through a corporation does not even provide the deferral benefit.

          However a corporation can be a great vehicle to achieve income splitting, credit risk proofing etc.更多精彩文章及讨论，请光临枫下论坛 rolia.net
          • I think falcon(令狐葱) will be happy to hear this. My question is CCPC is not defineted solely as investment corporation, which means whether it is a "day trader" corporation or not seems not relavent to CCPC. -registereduser(立牌坊); 2006-11-25 {80} (#3341931@0)
            For instance, dividends pay at 18.62% and capital gain pay at 24.5%. Am I right?
      • I feel really good to hear that company also have 50% concession on capital gain. Many Western countries do not offer this concession. -registereduser(立牌坊); 2006-11-25 {434} (#3341099@0)
        Thanks "mitten". It also means I need to study more about Canadian laws.

        It means invest/trade under company's setting has more benefit than loss. By saying that, I mean the capital gain can enjoy the concession, dividends income can be used against general expenses - both are of income nature.

        What is the loss then? Anyone can help? The only weakness I can see for the company is accounting and report works - Extra works.
      • 'mitten", would you please confirm my query: -registereduser(立牌坊); 2006-11-25 {293} (#3341101@0)
        You mentioned "capital gain earned through a corporation is only 50% taxable", then you mentioned "However the corporate tax rate for investment income is around 49%." Is that means the capital gain tax for a corporation is:

        (100%-50%)x49% = 24.5%, fixed

        Is my understanding correct?
    • To answer registereduser's question: Your understanding about the tax rate now is correct. However be aware that taxation rule related to investment income is very complicated. -mitten(mitten); 2006-11-25 {227} (#3341556@0)
      Whether you want the income earned through a corporate vs personal and taxed as passive vs active requires detail analysis. It is very difficult to explain fully here. If you have sepcific question, you can try to send me a PM.
      • Do you have any link? Thanks. -registereduser(立牌坊); 2006-11-26 (#3343086@0)
    • I try to keep silent on this topic but it's too misleading with all kinds of incorrect answers. -sunbeamcga(二月鱼飞); 2006-11-26 {1115} (#3343328@0)
      本文发表在 rolia.net 枫下论坛1. capital gain is 50% taxable no matter it is in personal or corporate 's hands
      2. capital gains calculation rules are different depending on what you are trading, shares, mutual funds, trust units, or options. The calculation and income tax implications can be
      very complicated.
      3. Tax rules are different for different investment income: interest, Canadian dividends, foreign dividends, dividend from related company, cash dividends, stock dividends, dividend reinvestment plan, etc.
      4. In order to minimize tax, both personal and corporate tax positions should be considered. There's no black or white answer. Every circumstance needs a careful tax planning.
      5. There are some tax saving or deferal vehicles that can't be done without a corporation. Some tax planning techniques are unique in a corporation.
      6. Corporate's taxation in investment income is very complicated and tax planning is totally different from income from business (which is called active business income that's qualified for small business deductions). Professional help is a MUST if you want to have an investment corporation.更多精彩文章及讨论，请光临枫下论坛 rolia.net
      • Ding. You seem a professional and we want to be too. Would you please tell us more about No.6? -registereduser(立牌坊); 2006-11-27 (#3345185@0)
        • I'm not sure if you have taxation background but it looks like you are a sophisticated investor. It's difficult to discuss every tax planning here and I don't think it worths discussion in details here. Simply put ... -sunbeamcga(二月鱼飞); 2006-11-27 {1892} (#3345741@0)
          本文发表在 rolia.net 枫下论坛If a corporation is CCPC and earns active business income, the tax planning would be focus on taking advantage of small business deduction. If a corporation earns investment income, tax planning would be focused on refundable dividend tax, dividend refund, capital dividend account, etc. A corporation will be taxed at higher tax rate on investment income if it retains investment income in the corporation. However, the above tax planning can reduce the effective tax rate for the corporation. This also answer the earlier discussion regarding flat tax rate on investment income: corporate investment tax rate is not fixed, actual effective tax rate can be reduced by tax planning.

          As to the discussion of whether gain on investments is capital gain or business income, the tests used by CRA & court decision are different and such is a grey area for now. For tax purpose, CRA expect a taxpayer to be consistent from year to year.

          Calculation of gain on investments can be very different for uncovered call or put options depending on capital gain nature or business income. Capital gain (or business income) treatement may be better for one year for tax purpose but may be worse for other years. That's why CRA expect you to be consistent.

          If a corporation is a day trader, all capital gains are business income, which means you lose 50% tax free capital gains. However, all other investment income such as interests, dividends are also business income that are qualified for small business deductions. In other words, 50% tax free capital gains and small business deductions are two sides of a coin, you can't have both of them.

          In conclusion, investment strategies determine sources of income. Sources of income determine tax bill. Tax bill affects and may determine investment strategies. Either way, tax planning is the key and that's why professional advice is a MUST.更多精彩文章及讨论，请光临枫下论坛 rolia.net
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