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Email this11:10 pm
December 21, 2018
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Jan 20th I departed Canada and severed ties and became a US resident.
My taxable Canadian self-employed sole-prop income was about $25k Jan 1st-20th, 2020. My "closing" inventory on Jan 20th for my T2125 is about $10k, ie inventory I did not sell.
Can I expense this remaining $10k inventory when I file my Canadian partial return for Jan 1st-20th , 2020? Or do I not get to do this?
Note: My business continues but now domiciled in the US and I am no longer subject to Canadian income tax starting Jan 21st 2020.
12:52 am
October 21, 2013
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We had a bunch of stuff left when we closed our corporation but it wasn't a lot and we have given it away over time. The expenses involved in creating it was charged when it was produced but there was no corresponding sale later. I don't see that you could count it again at the end just because it wasn't sold. It doesn't seem reasonable to me, but that may not be the right answer.
What did you do with the stuff, given that you've left Canada and cut ties etc?
1:18 am
December 21, 2018
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The inventory is still being stored at the same location at warehouses in Canada and sold to Canadian customers with business as usual. The only difference is I stopped being a tax resident Jan 20th, 2020 in Canada. I am now a tax-resident of the USA. (I am a dual US/Canada citizen so I have been filling returns for both countries this entire time).
I just want to see if there is a way to "expense" the remaining inventory i have on the books. If I cant, my 2020 partial return on my T2125 will simply have a "closing inventory" value of ~$10,000 and none of it will be "expensed".
***Having inventory stored in Canadian warehouse does not constitute a physical presence in Canada nor does it subject you to Canadian income taxes if you are wondering***
8:52 am
October 21, 2013
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I must admit, I really have no expertise on this. I can only suggest what seems reasonable to me.
It still doesn't sound like an expense to me. It sounds more like "US you" acquired it from "Cdn you" with the expectation of selling it and making a profit. Therefore it was an asset of you or the Cdn business when you left Canada.
I would think that , on the books, "Cdn you" would sell it to "US you". "Cdn you" would declare the cost of production as an expense but the selling price as income. "US you" would pay tax on whatever is sold at a profit after you leave Canada and would claim any losses, depending on how much you sold it to yourself for.
If you have an accountant, they might know the answer.
9:03 am
April 26, 2019
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mapleleafman said
The inventory is still being stored at the same location at warehouses in Canada and sold to Canadian customers with business as usual. The only difference is I stopped being a tax resident Jan 20th, 2020 in Canada. I am now a tax-resident of the USA. (I am a dual US/Canada citizen so I have been filling returns for both countries this entire time).I just want to see if there is a way to "expense" the remaining inventory i have on the books. If I cant, my 2020 partial return on my T2125 will simply have a "closing inventory" value of ~$10,000 and none of it will be "expensed".
***Having inventory stored in Canadian warehouse does not constitute a physical presence in Canada nor does it subject you to Canadian income taxes if you are wondering***
Are your goods in a BONDED WAREHOUSE?
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