The economical condition of Canada is going through rough phases these days. The Canadian dollar is dropped on the international market and the oil price is plunged as well. These scenarios favour the major losses in the businesses. And while going through losses, the taxes start appearing the biggest headache for the businessmen. But, under the Canadian Income Tax Act, necessary provisions are made to turn loss into tax refund.
Criteria for claiming the Tax Refund
Collectors, Wholesalers, Retailers and Importers can claim for Tax Refunds against bad debts and lost, stolen, contaminated and destroyed products under the Fuel Tax Act (FTA) and Gasoline Tax Act (GTA). The non-capital losses of taxpayers can be carried back 3 years and carry forward for 7, 10 or 20 years. The years for carry forwarding of taxes depend on the year the loss has incurred.
Under the Tax Act, points are mentioned below for which no refund is allowed for the tax payers.
● If any part of the asking price of taxable product is assigned by private contract to any person other than ministers. But if the assigning of the sale cost has been done for security purposes, it is an exception case.
● If the uncollectable debt has taken place between a Tax Refund amount claimant and the person or authority liable to pay the amount who were not dealing at arm’s length under the 251 section of the Canadian Income Tax Act at the time when the sale of the taxable product to which bad debt is related.
● If the applicant has not a valid license for handling fuel or gasoline at the time of sale or loss, theft or contamination and destruction of the taxable product.
● If the applicant has already received the Tax Refund.
Determination of Refund Amount
The refund amount is equal to the tax portion of the uncollectible debt. If the portion of the total sale price of the product has been paid, the refund amount is in proportion of the debt which is uncollectible to total sale price.
The Tax Refund is equal to the portion of tax paid that bankcruptcy debt bears on the total sale price for the product.
Lost, stolen, contaminated or destroyed product
The Tax Refund amount is equal to the tax paid on the identified product in the claim.
Importance of Tax Refunds for businessmen and preparednesses of filing the claim
The Tax Refunds are credited to the taxpayers within three months after filing the tax return. These refunds can save a company from bankruptcy. Therefore, all business owners should file a tax return even if their businesses are going through the losses as there is an expiration date on them. There are also certain documents required for the applicants to file the Tax Return. Some of the important documents in case your income is more than $500.00, are given below:
● Written confirmation issued by an insurance company.
● A copy of the police report in case the claim is being filed for a loss due to theft.
● Acceptable proof that claimed tax amount being remitted to the supplier or directly to the minister.
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