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Timely tax tips from our friends at BDO Canada

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We’d like to pass on a couple of timely tax tips from our friends at BDO Canada. If you had a low-interest loan from your employer during any part of the year, you’re deemed to have received a taxable employment benefit.

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bdo canada tax

Additional Information:

Company: BDO Canada
Website: http://www.bdo.ca/en/pages/default.aspx
Date Published: Jan 22, 2016
Transcript: Available

Video Transcript:

I’m Tia Borden for InvestmentPitch Media

We’d like to pass on a couple of timely tax tips from our friends at BDO Canada. If you had a low-interest loan from your employer during any part of the year, you’re deemed to have received a taxable employment benefit.

This is calculated as interest at the Canada Revenue Agency’s prescribed rate for the period during which the loan was outstanding, which remained at1% during 2015.

The amount of your benefit is reduced by any interest you actually paid on the loan if you pay the interest within 30 days of the end of the calendar year.

However, if you have received a loan in order to purchase shares, rather than employment, the amount of the loan will be included in your income, even where interest is charged at the prescribed rate.

There is an exception to this rule if the loan is repaid by the end of the taxation year of the lender following the taxation year in which the loan was received, in which case the loan balance will not be included in your income.

If you make an investment loan to your spouse, common-law partner, minor child or a family trust for them, the investment income from investing the loan proceeds will be taxed in your hands, rather than in the hands of the family member who received the loan, unless certain rules are followed.

If the loan bears interest at the prescribed interest rate in effect when the loan was made, these attribution rules will not apply, provided conditions are met.

January 30th is also the deadline for paying this interest.

For more information or to subscribe to BDO Canada’s newsletter, please visit www.bdo.ca.

These tax tips are general in nature and should not be relied upon to replace professional advice.

I’m Tia Borden for InvestmentPitch Media