As an IRS acceptance agent we can help you obtain an ITIN (Individual Taxpayer Identification Number) for US tax purposes. This will require the completion of form W-7 and a signature from our acceptance agent.

Who needs an ITIN?

• Non resident aliens required to file a US 1040NR income tax return
• Deemed US residents required to file a 1040

Please call today at 250-661-9417 in order to obtain your ITIN.

Forming a business in British Columbia can be accomplished in one of three ways. The first is to file for a sole proprietorship, the model used by the majority of small business owners, the second is to form a partnership and the third—the model to be discussed here in more detail—is to form a corporation.

In British Columbia businesses are incorporated according to the rules and provisions of the Business Corporations Act. Once a business is granted corporate status, not only will they acquire the ability to go public—to sell stock in the company—there business will also take on all the powers of an individual, or an independent existence apart from their shareholders. What this means is that the act of incorporation gives life to a completely new legal entity—the corporation (also known as a company)—and that company can now acquire assets, go into debt, enter into contracts and sue—as well as be sued.

The registration process and upkeep for businesses seeking incorporation in British Columbia can be much more expensive than it would be for a sole proprietorship or partnership. Not only are startup costs higher, for fees ranging from legal to accounting services, corporations are also required to complete more annual filings to the Corporate Registry. For example, each corporation in British Columbia is required to file (and pay for that filing) an annual corporation report and to inform the Corporate Registry of any changes in the company’s, or its members, addresses.

Persons wishing to incorporate their business in British Columbia must follow four mandatory steps. These are:

• Reserve the corporation name with the Corporate Registry
• Enter into an incorporation agreement
• Establish the corporation’s articles; and
• File an Incorporation Application with the Corporate Registry

Step One: Reserving the Corporation Name

Once a company decides to incorporate, the name of that business must be approved by the Corporate Registry. This is to ensure that first, the name being chosen is not the same as—or so similar that it may lead to confusion—that of another company doing business in British Columbia, and second, to ensure the name meets the established guidelines of the Corporate Registry.

To reserve a corporation name, businesses must complete a Name Approval Application and list their top three name choices in order of descending preference. Once the application is filed, the applicant will have 56 days to complete the other steps in the incorporation process. Failure to do so will result in a null and void application and the process will have to be restarted.

Name Approval Applications can be completed online at the Corporate Registry website (www.corporateonline.gov.bc.ca) and there is an electronic filing fee of $30.

Step Two: Entering into an Incorporation Agreement

Prior to forming a corporation in British Columbia, the incorporators—even if it’s a lone individual—must sign an incorporation agreement. This agreement must contain all of the following:

• A written statement of agreement that each incorporator of the company will take at least one share of the new corporation.
• The full name of each incorporator, their signature(s) and the date each signed the agreement.
• The number of shares in each class being taken by each incorporator.

This incorporation agreement must be maintained by the corporation and kept on file as part of the company’s permanent record.

Step Three: Establish the Corporation’s Articles

Every business wishing to incorporate in British Columbia must first establish articles of incorporation. In essence, these articles are a set of rules or conduct guidelines which must be followed by the company’s incorporators, employees, directors and shareholders. The information that must be included in these articles of incorporation can be found in detail on the Corporate Registry website, and contains information such as how and when company financial information will be shared, how often Directors’ and shareholders’ meetings will be held and how employees will be evaluated.

Step Four: File an Incorporation Application

The final step to forming a corporation in British Columbia is the filing of an Incorporation Application. This application, which will ask basic questions such as the names, addresses and other demographic information of each person applying, and other information regarding the business in question, can be filed electronically at the Corporate Registry website. It is recommended, however, that filers initially complete a paper version of the application, first as a permanent record of their filing, and second, to assist them in filling out their electronic application.

The cost for filing an Incorporation Application is $350 dollars.

Once incorporators have completed the four steps towards forming a corporation, it is required that they keep any and all documents permanently on file. Also, before even beginning the incorporation process, it is “always”, according to the Corporate Registry, “wise and recommended to seek the legal and tax advice of a corporate accountant and an accounting specialist respectively.”

Annual Corporate Income Returns (T2 Income tax return)

Of course once you have incorporated your business you will be required to file T2 corporate income tax returns on an annual basis. With proper tax planning you will be able to legally reduce your overall tax bill every year. Give me a call today to discuss your particular tax situation and we can devise a plan to help you minimize your overall tax bill each year. I can be reached by email at phil@philhogan.com or by phone at 250-661-9417.

Question

Dear Sir

This year I am eligible to claim a UK state pension for myself and my wife (as a dependent).

Over the last ten years, I have made voluntary contributions to the UK National Insurance, so as to maintain that eligibility for a pension.

How do I offset the total cost of those contributions made to that foreign pension scheme, so as to limit the amount of Canadian income tax that foreign pension might incur?

Regards
XXXXXX

Answer

Hi XXXXXX

The taxes you pay in Canada on the US pension can be offset by any withholding taxes the UK representative withholds e.g. foreign tax credit. However it’s not going to be possible to get a foreign tax credit for the voluntary payments to the government plan. The only way that would be possible would be if you were a short-term resident of the UK and your paid “social taxes” to the UK and never intended to collect a government pension when you left.

Hope that helps and don’t hesitate to give me a call if you need more clarification.

Regards

Phil Hogan, CA
250-661-9417

Question

Hello there

My husband and I are planning on moving to Vancouver next year between October and December. My husband is a Citizen of the US and I am a Green Card holder. I’ll be receiving Social Security payment while in Canada and some investment income. I understand (from reading your website) that green card holders are also required to file a US tax return. I’m considering giving up my green card to avoid having to file both a Canadian and US tax return.

If I do give up my green card will I have to file a US return still for my social security?

Hope you can help with my tax questions.

Thanks

XXXXXX

Answer

Hi XXXXXX

The short answer to your question is no. You won’t have to file a US tax return if you relinquish your US green card. In fact, your social security income would only be taxable in Canada even if you were a US citizen or green card holder.

I would suggest that you consider keeping your green card and the possibility of naturalizing into Citizenship before entering Canada. In most cases filing a dual Canadian/US return (especially in your situation) is not terribly complicated or expensive. Considering that your husband is a citizen it would be a shame to lose your citizenship opportunity while you had it. Once you give up your green card there’s no way of getting it back.

Hope that helps

Regards

Phil Hogan, CA
250-661-9417

The CRA will be providing almost 3 million in contribution funding for innovative education and training projects carried out before March 31 2011. The projects chosen will educate charities on complaint fund raising practices and about tax donation arrangements and false receipting, and will promote transparency and accountability in the sector. To find out which organizations submitted successful proposals and to read more click.

http://www.cra-arc.gc.ca/nwsrm/rlss/2010/m06/nr100611-eng.html

Self employed individuals and their spouses/common law partners have until midnight on Tuesday, June 15 to file their income tax returns. Any outstanding balances for 2009 had to be paid on or before April 30/2010.

Click here to read more:

http://www.cra-arc.gc.ca/

The CRA has revoked the Canadian Lacrosse Association as a registered Canadian amateur athletic association (RCAAA). RCAAA’s have the authority to issue donation receipts for income tax purposes. To read more click http://www.cra-arc.gc.ca/nwsrm/rlss/2010/m06/nr100607-eng.html

Question

Hi Phil

My US accountant told me that my Canadian RRSPs are not taxable in the US, however someone told me that I need to file a TD9022 to report the RRSPs. Does this form exempt tax on the RRSPs? I moved to the US from Canada 3 years ago.

Thanks

XXXXXX

Answer

Hi XXXXXX

Your friend was correct that you would have to file a TDF 90-22.1 with your US tax return to claim the RRSP as long as you had foreign accounts that totaled more than $10,000 USD. If the value of your total accounts (including non-registered accounts) does not exceed $10,000 the TDF 90-22.1 is not required. Be sure to file this form as the penalty associated with not filing is $10,000 (I haven’t actually seen the IRS impose this penalty, however I’ve heard of other that have).

Possibly more important is the required filing of a form 8891. The deferral of RRSP income is not automatic for US purposes and this form needs to be filed to defer such income.

If you haven’t been filing these forms I suggest you discuss it with your current accountant and get caught up.

Hope that helps

Regards

Phil Hogan, CA
250-661-9417

The CRA has revoked the Canadian Lacrosse Association as a registered Canadian amateur athletic association (RCAAA). RCAAA  had the authority to issue donation receipts for income tax purposes but know they have been suspending by CRA.

For issuing more than $60.7 million in donation receipts for abusive transactions arising from its role as a participant in tax shelter arrangements that, in the opinion of the Minister, do not qualify as gifts, notice is hereby given, pursuant to paragraph 168(1)(d) of the Income Tax Act, that I propose to revoke the registration of the organization listed below. In accordance with subsection 168(2) of the Income Tax Act, the revocation of registration is effective on the date of publication of this notice.

To read more click here :

http://www.cra-arc.gc.ca/nwsrm/rls
s/2010/m06/nr100607-eng.html

Question

Hi Mr. Hogan

I’ll be moving to the US to take up a permanent job. I plan on getting my green card and remaining in the US for an extended period of time. I am aware of the need to sever my ties from Canada (i’m currently in the process of doing so) but I’m concerned about the need to file a “dual status return”. My legal representative advised me to contact a cross border tax expert to get some advice on such a return(s).

Do you prepare these type of returns?

XXXXXX

Answer

Hi XXXXXX

Yes I do prepare dual status returns and I’ll be able to guide you through the process. You can read the article I wrote on the subject of entering the US and filing a dual status return here.

But let me give you an overview:

You are considered a dual status tax filer if you move to the US from Canada at anytime in the year. As such you have to file both a non-resident 1040 return (1040NR) and a regular 1040 income tax return.

The 1040NR will include any US source income you earned before entering the US and the 1040 will include all your income for the portion of the year you were a resident alien.

You can however elect under IRC 6013(g) to be deemed a full year resident alien which helps to simplify the filing of the 1040NR.

As married couples are required to file married filling separately when filing dual status returns it may be wise to elect under IRC 6013(h) to elect to file the returns on a married filing joint basis. The down side to this of course is that both spouses income will be included on the return for the full year regardless of when they entered the country.

Hope that helps and please give me a call so we can discuss the filings of your dual status returns.

Regards

Phil Hogan, CA
250-661-9417