Deemed disposition of business inventory

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taxquestions
Posts: 39
Joined: Tue Dec 18, 2018 6:31 pm

Deemed disposition of business inventory

Post by taxquestions »

•My 2020 return will be a single day (Jan 1st).
•inventory cost basis on departure is $17k
•Primary ties & most secondary ties severed.
•After emigrating, sole-prop will continue under the same BN (Business Number), but now US based (no CDN permanent establishment)

I will:

•Enter T1 departure date: 01/01/2020
•Enter $17k on T2125 gross revenue & COGS (zeros out).
•Collect GST on deemed disposition (T2125 Part 3A).
•File T2061a & T1243 with cost basis & FMV of $17k (zeros out, no schedule 3)
•Continue to operate under the same BN, but now as a US sole prop
•Mail my return (software doesn't support T2061a & T1243)

Questions:

1. FMV is subjective. I sell "used textbooks". Im treating my inventory as a 1:1 basis to FMV with an argument that its mostly outdated. Is CRA aggressive & will they question this?

2. Is the $2.5k penalty (failing to notify CRA of disposition) only for Form T1161?

3. Does a 1 day return raise flags?

3. Do I Include the deemed disposition GST & ITC on the US sole props 2020 GST return?
taxquestions
Posts: 39
Joined: Tue Dec 18, 2018 6:31 pm

Re: Deemed disposition of business inventory

Post by taxquestions »

Tried to keep it as short as possible, was hoping for some nelsona knowledge!
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