Answers · Canada-US
Straight answers to the questions owners actually ask.
One question per page, the short answer first, then the detail that matters. 200 answers across 10 topics, from GST/HST on haircuts to departure tax, reviewed by our team and kept current.
By the AnalytIQ Accounting team · Last reviewed: September 6, 2026
Topic 1 of 10
E-commerce, Creators and US Sales Tax.
Selling online and earning from platforms: GST/HST, US sales tax nexus, platform withholding and how marketplace income is taxed in Canada.
Are book royalties taxable in Canada, and how are KDP royalties reported?Yes, book royalties are taxable income in Canada.Are brand deals and gifted products taxable income for Canadian influencers?Yes.Can I deduct a home office for my online business in Canada?Yes, if your home is your principal place of business, meaning you run the business from there or use the space regularly and exclusively to meet clients.Do Canadian Amazon FBA sellers owe US income tax?Usually not, at the federal level.Do Etsy sellers in Canada need to register for GST/HST?Yes, once your worldwide taxable sales, including zero-rated exports to the US and elsewhere, exceed $30,000 over any four consecutive calendar quarters, the small supplier threshold no longer protects you and registration becomes mandatory.Do I charge GST/HST on sales to US customers?Usually no.
Topic 2 of 10
US Citizens and Cross-Border Personal Tax.
Filing on both sides of the border as a US citizen, green-card holder or Canadian with US income: what applies, what the treaty fixes, and what it does not.
Are Canadian mutual funds and ETFs PFICs for US citizens?Yes, in almost every case.Can Canadians owe US estate tax on US stocks and other US assets?Yes.Can I file FBARs for previous years I missed?Yes - late FBARs can be filed for any past year through the same free BSA E-Filing System used for current ones, and the IRS provides two routes that keep penalties off the table.Do Canadians pay tax on an inheritance from the US?Not on receiving it.Do Canadians working in the US pay tax in both countries?Often you file in both countries, but you rarely pay full tax twice.Do US citizens living in Canada have to file US taxes every year?Yes.
Topic 3 of 10
GST/HST.
When to register, what is taxable, zero-rated or exempt, how input tax credits work, and the HST answers for specific services from haircuts to rent.
Are dance lessons and music lessons GST/HST exempt?Music lessons are exempt from GST/HST under a specific carve-out in the Excise Tax Act, regardless of whether they are private one-on-one lessons or group classes.Can I claim input tax credits on meals and entertainment?Generally, you can claim an input tax credit for only 50% of the GST/HST paid on meals and entertainment, the same 50% limit that applies to deducting these expenses for income tax purposes.Do nail salons and estheticians charge HST?Yes.Do veterinarians charge HST on their services?Yes.How do I file and pay my GST/HST return?Most registrants file a GST34 return online through the CRA’s My Business Account or GST/HST NETFILE, on a monthly, quarterly, or annual schedule the CRA assigns based on revenue.How do input tax credits work?An input tax credit, or ITC, lets a GST/HST-registered business recover the GST/HST it paid on purchases used in its commercial activity by netting that amount against the GST/HST it collected from customers on the same return.
Topic 4 of 10
Bookkeeping and Deductions.
Records, receipts and software for a small business, plus the personal deductions people ask us about most.
Are funeral expenses tax deductible in Canada?No.Are investment advisor fees tax deductible in Canada?Fees you pay separately for investment advice or for managing a non-registered investment account are deductible on line 22100 of your personal return, as long as the fee is charged and paid on its own rather than embedded in the investment itself.Can house cleaning be claimed on taxes in Canada?For most people, the cost of cleaning your own home is a personal expense and cannot be claimed on your tax return, no matter how the cleaning is billed.Can physiotherapy and massage be claimed as medical expenses in Canada?Physiotherapy always qualifies as an eligible medical expense because physiotherapists are authorized medical practitioners in every province.How do I catch up on years of unfiled bookkeeping?Start by gathering every bank and credit card statement for the missing years; most banks can produce up to seven years of statements on request, which is usually enough to rebuild a full history.How do I record owner draws and contributions?A sole proprietor records money taken out of the business as an owner draw and money put in as an owner contribution, both equity entries rather than expenses or income, since the owner and the business are the same taxpayer.
Topic 5 of 10
Payroll and Contractors.
Hiring in Ontario: employee versus contractor, remittances, WSIB, EHT, tips, vacation pay, T4s and what an employee really costs.
Can a sole proprietor hire employees in Canada?Yes.Can I pay my children or spouse a salary from my business?Yes, a business can pay a spouse or child a salary, and the CRA generally accepts the deduction as long as the work performed is genuine, the pay is reasonable for the type and amount of work done, and the payment is actually made rather than just recorded on paper.Do I need WSIB coverage for my Ontario business?Your business must register with the WSIB within 10 days of hiring your first worker if it operates in an industry Ontario classifies as mandatory.Employee or contractor: how does the CRA decide?The CRA weighs the overall working relationship using a set of common law factors: who controls how, when, and where the work is done; who owns the tools and equipment; whether the worker has a genuine chance of profit and risk of loss; and how integrated the worker is into the business.How and when do I issue T4 slips?Every employer must issue a T4 slip to each employee who received employment income, taxable benefits, or had CPP, EI, or income tax withheld during the calendar year, and file those slips with the CRA together with a T4 Summary by the last day of February following the year.How do I pay a US contractor from a Canadian business?If the US contractor performs all their work from the United States, you generally pay them like any other vendor invoice: there is no Canadian tax to withhold and no T4A to issue, since Canadian contractor information-return rules are built around payments to Canadian residents.
Topic 6 of 10
Moving, Residency and Departure.
Leaving Canada, arriving from the US, or living between the two: departure tax, residency tests, non-resident filings and retirement accounts.
Can I keep my TFSA if I move to the US?You can keep a TFSA after moving to the US, and Canada will never tax it.Do Canadians working remotely from Canada for a US company pay US tax?No, in the normal case.Do I pay into both CPP and US Social Security if I work in both countries?No.Do non-residents of Canada need to file a Canadian tax return?Not automatically.Do US stocks held in a Canadian brokerage account count for T1135?Yes.Does departure tax apply to my principal residence?No.
Topic 7 of 10
Corporate Tax and Owner Pay.
How a Canadian corporation is taxed and how owners take money out: the small business deduction, salary versus dividends, loans, deadlines and penalties.
Can I pay my spouse dividends from my corporation?Yes, but only tax-efficiently if your spouse is a genuine shareholder who fits one of the tax-on-split-income (TOSI) exclusions, since otherwise the dividend is taxed in your spouse’s hands at the top personal rate no matter how little other income they have.Can my corporation deduct life insurance premiums?Generally, no.Can my corporation pay for my car, and how is it taxed?Yes, a corporation can own or lease a vehicle and pay all its costs.Do I issue myself a T4 or a T5 as an owner-manager?A salary you pay yourself is reported on a T4, which requires a payroll account, source deduction remittances, and CPP contributions from both you and the corporation.How does passive investment income reduce my small business deduction?Once a Canadian-controlled private corporation, together with any corporations it is associated with, earns more than $50,000 of adjusted aggregate investment income in the prior fiscal year, its $500,000 small business limit for the current year shrinks by $5 for every $1 of investment income above that threshold, reaching zero once passive income hits $150,000.How does RDTOH work when my corporation earns investment income?RDTOH stands for refundable dividend tax on hand, an account that tracks the refundable portion of the extra tax a corporation pays on investment income like interest, rental income, and taxable capital gains.
Topic 8 of 10
CFO, Cash Flow and CRA Problems.
Cash flow, margins, budgets and financing, plus what to do when the CRA audits, you are behind on filings or you need a payment plan.
Can I set up a payment plan with the CRA?Yes.How do I build a 13-week cash flow forecast?A 13-week cash flow forecast starts with a business's actual opening cash balance, then adds expected receipts and subtracts expected disbursements in weekly buckets, one column per week, for the next thirteen weeks.How do I build a small business budget?Build a budget from last year's actual revenue and expenses rather than a blank spreadsheet, then break revenue into the drivers that actually produce it and split costs into fixed and variable, adjusting for known seasonality.How do I calculate my break-even point?Break-even is the point where total revenue equals total costs; in revenue terms it is fixed costs divided by the contribution margin ratio, and in unit terms it is fixed costs divided by the contribution margin per unit.How do I choose an accountant for my small business?Choosing an accountant comes down to a handful of practical questions: are they a CPA with actual experience in your industry, do they work on the cloud accounting stack you use or want to use, do they quote fixed fees or bill hourly, and are they proactive about planning rather than focused only on compliance.How do I hand a family business to the next generation tax-efficiently?A tax-efficient handoff usually combines an estate freeze, which locks in today's value and lets future growth pass to the next generation, with the intergenerational transfer rules that took effect in 2024, which can allow the lifetime capital gains exemption on a genuine sale to a child's corporation.
Topic 9 of 10
US Real Estate, Investments and Trading.
Owning US property, holding US investments, trading and crypto as a Canadian: withholding, elections, estate exposure and how gains are taxed.
Can the CRA tax my TFSA for day trading?Yes.Do Canadians pay capital gains tax when selling US property?Yes, twice over, though a foreign tax credit stops it from being double tax.Do Canadians pay US tax on US dividends and stock gains?Dividends and capital gains are treated very differently.Do Canadians with US brokerage accounts need to file US taxes?Usually no.Do I need an ITIN to sell US property as a Canadian?Yes.How does the CRA tax income from a US LLC?The CRA treats a US limited liability company as a foreign corporation, regardless of how the IRS classifies it, which means a Canadian member is generally not taxed on the LLC’s income as it is earned but only when the LLC actually distributes a dividend.
Topic 10 of 10
Incorporation and Not-for-Profits.
Incorporating a business, a professional corporation or a not-for-profit in Ontario, registering a charity, and keeping the corporation compliant.
Do I need a shareholders’ agreement?Yes, if your corporation has, or is about to have, more than one shareholder.Do not-for-profits pay tax in Canada?Most Canadian not-for-profits pay no income tax under paragraph 149(1)(l) of the Income Tax Act.Federal or Ontario incorporation: which should I choose?If your business operates only in Ontario, provincial incorporation through the Ontario Business Registry is usually simpler and cheaper, and it protects your name only within Ontario.How do I bring a partner into my incorporated business?There are two basic mechanics: the corporation issues new shares to the incoming partner in exchange for cash, assets, or services, which brings in new capital without you selling anything personally, or you sell some of your existing shares directly to them, which is a personal sale that can trigger a capital gain and may qualify for the lifetime capital gains exemption.How do I dissolve a corporation in Ontario?Voluntary dissolution follows a set order.How do I incorporate a not-for-profit in Ontario?You incorporate an Ontario not-for-profit by filing articles of incorporation under the Ontario Not-for-Profit Corporations Act, or ONCA, through the Ontario Business Registry.
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