The Small Business Tax Help Blog

Posts Tagged ‘overseas employment tax credit canada’

Question: Line 363 Canada Employment Amount Federal Tax Sch. 1?

okay i should probably repeat grade 7 but i’m not getting how this helps me. in the guide it states that the non refundable tax credits reduces your federal tax but if the total of these credits is more than my federal tax i will not get a refund for the difference. if i hadn’t entered the amount of $1,019 on line 363, i would be getting WAY more of a refund. as it stands, i now owe, as it’s more than the federal tax i paid. also, if you entered an income of over $1,019 (and like who wouldn’t…) on line 101 of the return, then you enter the maximum ($1,019) on line 363 of the federal tax schedule? sorry if i sound dumb, but this is the first time i’ve done my own taxes. somebody tell me how this helps me out, this line 363 amount, thanks!!
actually, i checked it over and it was just my calculater display that screwed up and missed a number….so yes, with the $1,019 included, i saved $150, wooohooo! now i only have to pay $6 instead of …. well you do the grade 5 math, lol

Answer: >>if i hadn't entered the amount of $1,019 on line 363, i would be getting
>>WAY more of a refund

This is impossible.

Either a Non-Refundable Tax Credit reduces your taxes by 15% of the line amount (in this case 15% x $1019) (see line 38 of Schedule 1), or they are more than the total tax liability, in which case they do nothing since line 23 can't be negative.

It's actually grade 5.

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Question: Capital Gain Taxes – Sell & Buy immediately – Impact ?

I am currently a Canadian Resident (fiscally) but I am working outside of Canada on an Engineering project. I qualify for the Overseas Employment Credit (T626), so my tax rate is currently excellent (no provincial tax paid, reduced Cdn rate). Because of this tax rate, I want to sell my current holdings (Cdn stocks) to create capital gains and immediately buy back the same stocks…
does the 30-day rule apply, or does it apply only in the case of capital losses ? Any other rules I need to be aware of in my case ? Thanks !

Answer: No, there is no reference in the ITA to specifically discuss what is essentially a superficial gain (unlike the superficial loss rules).

The only other rules you might consider are General Anti Avoidance Rules, under Section 245 of the Income Tax Act, since the only reason for this transaction is tax related. IC 88-2 has more information on that. I don't think you are really avoiding tax in this case, though, just taking advantage of the tax rates you are currently subject to, similar to if you moved to the lowest tax rate province (Alberta) and did some transactions there.

Are you sure you aren't subject to Provincial tax? Residents file using the tax return of the Province they have the most ties to (if they aren't actually living in a Province at December 31). Deemed residents actually have to pay an additional surtax to compensate for the fact they don't pay provincial tax.

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