QUESTION:
Hello,
I earn income from 2 separate business activities (both non incorporated), I
consult and invoice clients (and live) in Vancouver and I also have an
internet based business selling a digital product to americans receiving
payment by credit card into U.S. based PayPal account. PayPal labels the
account as a Canadian Business Account but funds are held in the U.S. and
accessed by U.S. debit card in my name.
Can I file separate returns in both Canada and the U.S. based on the 2
sources of income and is there any advantage? Or would I be best just
reporting "all" income on my CDN return?
Thanks,
---------------------------------------
david ingram replies:
as long as the product you are selling is not warehoused in the US and you
have no employees there packaging and mailing it, you have a Canadian
business. I am assuming that you are selling a digital software which you
deliver over the INTERNET.
As a Canadian resident, you are taxable in Canada on your world income.
If the American business has a NEXUS (i.e. warehouse in the US with your own
employees) you would have to file a US return to report that profit and then
report it again in Canada.
If you are warehousing the product in the US and selling from there, you
also have to watch out for State sales Taxes.
The State of Washington, for instance, has no State income tax but does have
a tax on gross sales for businesses in the State.
And, as a self employed person with a proprietorship, I am assuming that
your personal mortgage on your house is deductible. Almost everyone can
make a Canadian Mortgage deductible and it is very easy when you are a
proprietorship. If not, pay attention to the following.
Every Thursday Evening, Fred Snyder of Dundee Wealth Management conducts one
of 17 different financial seminars at his office
Time: 7:00 to 9:30 PM
Date: Every Thursday evening
Place 1764 West Seventh
Vancouver (corner of Burrard)
Phone (604) 731-8900 to register
No cost - no obligation
Topics always cover mortgage interest as a deduction
other topics - getting the mortgage, estate planning, critical care
insurance, income taxation, differences between stocks and bonds, and
usually the most innovative HELOC mortgage offered in Canada.
A N D
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show
called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Call (604) 280-0600 to have your question answered. BC listeners can also
call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
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