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Common Tax Myths That Could Be Costing You Money
Personal Tax Myths
Myth: “Your primary residence becomes taxable once it’s worth over $1 million”
Reality: There is no dollar cap on the Principal Residence Exemption in Canada. A qualifying primary residence can be worth $300,000 or $3 million. The exemption applies as long as it qualifies and is properly designated.
Where people do get tripped up:
- Property flips
- Short-term rentals (Airbnb)
- Multiple properties
- Change in use (rental vs personal)
Myth: “If my spouse doesn’t work, I can just split my income with them”
Reality: Canada has strict attribution rules. Income splitting is limited and highly structured (pensions, prescribed rate loans, dividends via corporations). Simply “moving income” can backfire.
Myth: “Selling personal-use items (cars, boats, collectibles) is never taxable”
Reality: Some personal-use property can trigger capital gains, especially items over $1,000 or collectibles (art, jewelry, coins). The exemption isn’t a blanket.
Business & Corporate Tax Myths
Myth: “If I leave money in the corporation, CRA doesn’t care how I use it”
Reality: CRA watches shareholder benefits, loans, and personal use of corporate funds closely. Using corporate money personally without proper treatment can create:
- Taxable benefits
- Shareholder loan inclusions
- Denied deductions
Myth: “If my corporation doesn’t owe tax, I don’t need to file”
Reality: A T2 return is required every year, even if:
- There’s a loss
- No activity occurred
- No tax is payable
Penalties for not filing exist even when tax = $0.
GST / HST Myths
Myth: “Non-profits don’t register for GST until $30,000”
Reality: The small supplier threshold is still $30,000, and non-profits and other public service bodies do not have to register until they have over $50,000 in taxable supplies and services (For additional reading, refer to: GST/HST Information for Non-Profit Organizations
Myth: “If my customer is GST-exempt, I don’t need to track it”
Reality: You still need proper documentation and classification. Exempt vs zero-rated affects Input Tax Credits (ITCs) and reporting, even if no tax is charged.
Myth: “If I didn’t collect GST, CRA can’t make me pay it”
Reality: CRA can assess uncollected GST and expect you to pay it, whether or not you recover it from the customer.
The Bottom Line
Many tax myths don’t come from bad advice — they come from outdated rules, partial truths, or “what worked once.” At Accent CPA, we help clients move past assumptions and make informed decisions based on current legislation and real-world impact. If you ever find yourself unsure about a CRA rule, a tax strategy, or something you’ve heard along the way, reach out to our team for trusted advice and personal service you can rely on.