TaxMatters@EY – September 2012

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Tax issues affect everyone. To help you get up to speed on the latest hot topics, the September issue of Canada’s TaxMatters@EY is now available. To be a successful entrepreneur, you need to ensure you’re planning for your future. In your business and in your personal life, you need a plan to manage your finances. We offer 10 helpful tips for developing good financial plans —to take you where you want to go.

This monthly bulletin includes recent tax news highlights, resources and publications.

The September issue also features:

  • If you make a loan, be careful to report your accrued interest income in your tax returns
  • The new and evolving tax considerations of cloud computing
  • A recent Supreme Court of Canada decision that brings welcome clarification to the deductibility of farming losses

You’ll find all this and more in the latest edition of TaxMatters@EY.

Ten steps to a successful financial plan
First published in the National Post’s 30-Second Mentor, 15 May 2012
Daniel Stern, Toronto

Entrepreneurs are the most powerful force in Canada’s economy. When it comes to stimulating economic growth and building a brighter future, you lead the way. You have the big ideas and take the risks to innovate, create jobs, generate wealth and invest in communities across the country.

To be a successful entrepreneur, you need to ensure you’re planning for your future. In your business and in your personal life, you need a plan to manage your finances. So, how do entrepreneurs successfully manage both a personal financial plan and a business plan? Very carefully.

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Don’t forget the interest!
Krista Fox and Yves Plante, Toronto

In this technical interpretation, the Canada Revenue Agency (CRA) was asked to comment on the tax reporting requirements for interest income earned on a “family member” interest-bearing note that remained outstanding for 20 years. The CRA’s response serves as a useful reminder of lender obligations for reporting (triennially or annually) accrued interest on such an investment contract, and the consequences of not doing so.

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Working in the cloud: tax considerations of cloud computing
An extract from our August 2012 EY Center for Tax Policy publication

In this recent publication, Channing Flynn, EY’s Global Technology Industry Tax Services Leader, stated: “Cloud computing is borderless by its very nature. One thing is certain, however — the world’s taxing authorities have not issued definitive guidance for its taxation. Moreover, the business nature of the overall offering is also evolving, which creates further technical uncertainty, as well as timing uncertainty, as to when taxpayers can expect actual guidance. Companies are forced to make decisions based on current rules and interpretations across all relevant jurisdictions, but will likely nonetheless encounter tax surprises.”

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When are farming losses deductible?
Supreme Court of Canada clears the air in overruling Moldowan
The Queen v Craig, 2012 SCC 43
Jennifer Smith, Ottawa

On 1 August 2012, the Supreme Court of Canada (SCC) overruled its 34-year-old decision in Moldowan v The Queen ([1978] 1 S.C.R. 480). In so doing, it set aside an interpretation of the restricted farm loss provisions of the Income Tax Act (the Act) that many commentators had viewed as placing undue restrictions on the deductibility of farming losses.

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