What's New -> What's New 2012
What's New by Month in 2012December 2012
The TD1 forms for 2013 are now available from Canada Revenue Agency. If there have been changes which will affect your tax exemptions (see our article), you should ensure that you complete these forms so that your employer (or other payer) will deduct the appropriate amount of income tax from your employment income or pension income. New employees should always complete these forms. For those working only part time, if your total income for the year will not exceed your exemptions, you should tick the appropriate box on the back of the form, so that your employer will not deduct any income tax from your pay cheques.
Dec 31st is the last day to withdraw from a TFSA and have it create additional contribution room in 2013.
The table of 2013 corporate income tax rates for Canada, provinces and territories is now available.
Our table of sales tax rates (GST, HST and provincial retail sales taxes) for 2013 is now available. Quebec's QST rate increases from 9.5% to 9.975% on January 1, 2013. BC returns to PST, and Prince Edward Island implements HST on April 1, 2013.
Are you required to register to collect PST? The PST is being re-implemented on April 1, 2013. You can register as early as January 2, 2013.
The rate for calculating the operating cost benefit portion of automobile taxable benefits increases by 1 cent to $0.27 per km. The rate for automobile sales people increases by 1 cent to $0.24 per km. The automobile standby charge remains unchanged.
The limits for tax-free vehicle allowances paid to employees by their employers increase by 1 cent, to $0.54 per km for the first 5,000 kms, and $0.48 for additional kilometres. Allowances for the Territories are 4 cents higher, and also increase by 1 cent.
The cost ceiling for CCA purposes remains at $30,000, leasing cost limit remains at $800 per month, and maximum interest deduction remains at $300 per month.
Effective February 4, 2013, the Royal Mint will no longer distribute the one cent coin. Cash transactions will be rounded to the nearest nickel, non-cash transactions are not affected. POS equipment may require reprogramming.
It is usually best for the highest income spouse to claim the tax credit for all donations of both spouses. However, sometimes not all donations are utilized, and can then either be carried forward or split between spouses. Our tax calculators will help with this.
The calculator includes the tax bracket for over $100,000, and the progressive health contribution, both new for 2013. Tax rate tables have also been revised.
For 2013, the flat health tax is being eliminated, and replaced by a progressive health contribution based on net individual income.
The last trading date for 2012 for Canadian publicly traded stocks is Dec 24th, and for US publicly traded stocks is Dec 26th.
The Department of Finance announced the TFSA contribution limit increase to $5,500 in a news release November 26, 2012.
This act clears a backlog of outstanding income tax and sales tax amendments from 2009 to 2011.
New tax bracket for 2013 for income over $100,000, with a tax rate of 25.75%. New refundable tax credit for children. Tax Holiday for Investments (THI) provides a 10-year corporate tax holiday for new projects of $300 million or more approved within the next 3 years.
We'll now be providing our What's New information on Twitter, in addition to Facebook and Google+.
The Canadian Income Tax Calculator and Quebec Income Tax Calculator are now available for 2012/13.
We have added a table of WITB factors for 2013 for all provinces and territories except Quebec. Once we can confirm the Quebec 2013 factors, we will publish them - they don't follow the regular QC indexation.
The tables of personal tax credits for 2013 are now available.
The table of personal tax credits and deductions subject to automatic indexation has been updated for 2013.
We compare income taxes for a senior with OAS, CPP, pension income, and either Canadian eligible dividends or "other" income. Significantly less tax is paid with eligible dividends, even though the OAS is partially clawed back.
The Basic Canadian Income Tax Calculator has been updated to include 2013. This calculator shows average tax rate as well as marginal tax rates for capital gains, Canadian eligible and non-eligible dividends, and other income. It also shows a summary table of taxes by province for 2008 to 2013.
The MSP rates for 2013 are increased by approximately 4% from 2012, but for those people paying less than the full rate, premiums do not increase.
Tables of personal tax rates are now available for 2013 for all provinces and territories, showing the marginal tax rates for capital gains, eligible and non-eligible Canadian dividends, and other income.
The EI rate for 2013 will be 1.88%, with maximum insurable earnings of $47,400, up from 1.83% and $45,900 in 2012.
This refundable tax credit is available to seniors, or family members sharing their home, for costs incurred on or after April 1, 2012. The credit is 10% of eligible expenditures, to a maximum of $1,000 per year.
The RRSP contribution limits for 2014 will be 18% of 2013 earned income, to a maximum of $24,270, up from a maximum of $23,820 for 2013.
CRA announced that the 2013 pensionable earnings for 2013 will be $51,100, up from $50,100 in 2012. The maximum contribution for 2013 will be $2,356.20 for employees, and $4,712.40 for self-employed.
Those who have participated in aggressive gifting tax shelter donation arrangements in 2012, which provide donation receipts much greater than the actual donation amount, should probably not claim the donation on their initial tax return filed in 2013, because CRA apparently will not assess these returns until the tax shelter has been audited, which could take up to 2 years. A Ways and Means Motion was tabled in October, including income tax amendments regarding non-cash donations, even if they are not part of a tax shelter donation arrangement.
Spousal RRSPs are a great way of ensuring both spouses will have similar taxable income upon retirement. However, it is important to know the attribution rules regarding withdrawals from a spousal RRSP or a spousal RRIF.
PST will be re-implemented in BC effective April 1, 2013. Check to see if you are required to register as a vendor, which can be done online as early as January 2, 2013. Our PST articles have been revamped regarding the return to PST.
A Notice of Ways and Means Motion and Explanatory Notes have been tabled to implement tax provisions which are part of the March 29, 2012 Federal Budget. On October 18th this became Bill C-45, Jobs and Growth Act.
The March 2012 Federal gross debt is $46.8 billion higher than March 2011. The gross debt as a % of GDP has declined slightly from March 2011. Gross debt per person has increased slightly.
Capital gains can be eliminated by donating capital property, such as securities, to charitable organizations which are qualified donees. This should be done by November or very early December to avoid the busy season and ensure the transactions are completed before year end.
The superficial loss rules provide a method for capital losses to be transferred to a spouse. The spouse must hold the shares for more than 30 days for this to work, so to do this for 2012 you should act fairly soon.
Are you 65 or older at the end of 2012? If you don’t already have pension income which is eligible for the federal and provincial pension income tax credits, you can generate some eligible income by transferring a portion of your RRSPs to a RRIF, and making a withdrawal this year. You can also use the pension splitting rules to shift up to 50% of the RRIF income to your spouse’s tax return. If your spouse is also over 65, this will generate a pension tax credit for him/her.
If you have capital losses carried forward and unrealized capital gains, and are not going to be collecting your OAS pension for a year or so yet, you may be able to do something now to avoid or reduce an OAS clawback in the future.
Capital gains, even when eliminated by capital losses carried forward, can trigger or increase a clawback of OAS benefits or EI benefits, and can reduce the age amount tax credit and medical expense tax credit, GST/HST credit, and child tax benefit. Non-taxable income such as workers' compensation benefits and social assistance benefits can have the same effect.
Direct sellers can apply to CRA to use the Alternative Collection Method (ACM), which is a simplified method of collecting GST or HST. The direct seller then collects GST/HST from independent sales contractors (ISCs) based on the suggested retail price.
In most cases, a small supplier is not required to register to collect GST/HST. A quarterly revenue calculation must be done to check to see if your business has exceeded the small supplier limit.
Surprisingly, you cannot always rely on results obtained from CRA's GST/HST registry, because it only checks the first 10 characters of the business name.
Our table of BC provincial debt, GDP and population has been updated with the data for March 2012.
If you make a withdrawal from a TFSA, it will increase your contribution room, but not until the following year. Canada Revenue Agency doesn't track your deposits during the year, so it's important for you to do this yourself, to avoid costly errors.
Your employees may work in one province and be paid from another province. Whether they report to the employer's place of business (temporary or not) is one of the factors affecting which provincial or territorial tax tables are used.
There are many tax issues for students and/or their parents, such as eligibility for tuition and education and student loan interest tax credits, private school tuition fees, deducting moving expenses, and child care expenses.July/August 2012
The rates for the donation tax credit include a lower rate for the first $200 of donations and a higher rate for donations in excess of $200. The higher rate federally and for each province is the highest personal tax rate, except for Alberta, Ontario and New Brunswick.
We've updated our tables which show how much can be earned in Canadian eligible or non-eligible dividends without attracting income tax, when the dividends are the only income earned.
GIS is available to low-income Old Age Security (OAS) recipients. It is usually based on the prior year income, but if an OAS pensioner has a reduction in income, Service Canada may base GIS on estimated current year earnings.
Wages of some shareholders and employed family members are not insurable, and employment insurance cannot be collected.
Whether you are a non-resident employee or actor, or a non-resident provider of services, it is important to know the tax consequences of working in Canada as a non-resident.
Bill C38, the Jobs, Growth and Long-term Prosperity Act, also known as the omnibus bill, received Royal Assent on June 29, 2012.June 2012
Now that school's out, make sure you keep receipts for day camps and other activities that qualify as child care expenses. If they don't qualify as child care expenses, they may qualify for the children's fitness or children's arts tax credits.
CRA announced in a June 27, 2012 news release that it is discontinuing its Telefile service. No date was indicated for the discontinuation, and there was no indication whether this included the Telefile for Seniors service.
The borrow to invest calculator helps you see if would be advantageous for you to borrow to invest in stocks and exchange-traded funds (ETFs). It has been updated for tax changes in the 2012 provincial budgets.
US Citizens Residing in Canada (on USTaxTips.net)
The IRS has announced efforts to help US citizens residing outside the US, including dual citizens and those with foreign retirement plans, such as Registered Retirement Savings Plans in Canada. The new procedure will go into effect on September 1, 2012.
Not sure which taxable benefits are subject to CPP and EI deductions, and which ones must have GST or HST included in the taxable amount? CRA has a chart to guide you on this, as well as a payroll deductions calculator and automobile taxable benefits calculator.
This table compares total taxes payable for 2012 for different levels of income from eligible dividends vs non-eligible dividends vs other investment income, for all provinces and territories.
The new 2012 tax comparison tables show the total income taxes payable or refundable at various levels of employment income for each province and territory, for a single person, and for a single-income family with 2 children.
Now is the time to get organized, and start planning so that you are prepared to file your tax return next year without too much difficulty.
The TFSA vs RRSP Calculator has been updated for tax changes in provincial 2012 budgets. This calculator is a tool to help you decide which type of account is better for your situation.
The RRSP vs Mortgage Calculator has been updated for tax changes in provincial 2012 budgets. This calculator can help you decide whether to increase your monthly mortgage payment, or contribute the extra monthly amount to an RRSP.May 2012
Our article on unlocking pension accounts includes links to pension regulators, both provincial and federal. Contact the regulator of your pension plan to determine what you can do with your locked-in account - don't rely solely on information from your financial institution.
RRSPs must be converted to RRIFs by the end of the year in which the holder turns 71, but they can be converted earlier. Converting some of your RRSP at age 65 allows you to take advantage of the pension income tax credit, and pension splitting with a spouse. If making regular withdrawals before age 65, you may save fees by converting to a RRIF.
An "in kind" withdrawal is a withdrawal of investments. The total withdrawal amount will include the market value of the investments, plus applicable withholding tax.
The Detailed Canadian Tax Calculator has been updated for changes from provincial budgets, including enhanced dividend tax credit changes (BC and MB), new Ontario tax bracket, new SK home buyers' tax credit, BC and ON seniors' renovation tax credits, and BC child arts and children's fitness tax credits.
The Basic Canadian Tax Calculator has been updated for changes from provincial budgets, including changes to the enhanced dividend tax credit for Manitoba and BC, and the new Ontario tax bracket for income over $500,000.
There were no income tax changes announced in the NWT 2012 Budget.
Every employee must provide a completed TD1 form to a new employer, and must update it when a change in circumstances will cause a change in personal tax deductions. The form will be completed differently when there are multiple employers, as deductions can only be claimed once. For deductions that are available but are not on the TD1, a Letter of Authority can be requested from CRA so that the employer can reduce the tax withholdings.
If income-producing property, or money to purchase income-producing property, is transferred or loaned to a spouse or related minor child, attribution rules will apply to tax the income in the hands of the transferor. This will not apply to business income from business assets transferred, and will not apply to loans which are considered "genuine" loans.
Up to $25,000 per person can be withdrawn from an RRSP in order to buy or build a qualifying home, without attracting withholding tax. If all conditions of the HBP are not subsequently fulfilled, cancellation can be requested and funds repaid within a time limit, in order to not be included in income in the year of the withdrawal.April 2012
Bill C-38, Jobs, Growth and Long-term Prosperity Act, was introduced on April 26, 2012, including key elements of the Federal 2012 Budget, as well as other previously announced measures.
Taxpayers can voluntarily correct inaccurate, incomplete, or unreported information, and do so without penalties or prosecution, if a valid disclosure is made to Canada Revenue Agency (CRA). A voluntary disclosure can be made on a no-name disclosure basis.
No tax changes were announced in the NL 2012 Budget.
Prince Edward Island plans to implement the HST, with a rate of 14%, effective April 1, 2013. A refundable volunteer firefighter tax credit is being introduced.
The Ontario government announced that it would revise the budget to implement a 2% surtax on personal taxable income in excess of $500,000, as a concession to the NDP opposition party. See our table of the resulting rates.
Even if you don't owe any tax or have any taxable income, there are many reasons to file a return - applying for the GST/HST credit, establishing TFSA and RRSP contribution room, receiving refundable tax credits, to name a few.
Manitoba's 2012 Budget reduces the enhanced dividend tax credit rate starting in 2012, and introduces retail sales taxes on certain personal services and some insurance products. Tobacco taxes and fuel taxes are increased.
The answer differs for each person, but we have some tools to help you figure it out. Our advice: Plan to live off your dividends.
It is important to have your will reviewed occasionally to ensure that it will fulfill your wishes under current provincial legislation. In some provinces, a will is automatically revoked upon the marriage of the testator (will writer), or after the testator has been in a marriage-like relationship continuously for 2 years.
Increases in spouse, equivalent to spouse, and disability tax credit amounts for 2012. Affordable Living and Poverty Reduction credits to increase July 1, 2012, HST reductions in 2014 and 2015, doubling of New Home Buyers HST Rebate, corporate tax reduction, Equity Tax Credit and Labour-Sponsored Venture Capital Tax Credit extended.
Application forms are now available for the BC First-Time New Home Buyers' Bonus, available for eligible new homes built or purchased on or after February 21, 2012 and before April 1, 2013. A refund of up to $10,000 is available. Application must be made to the Ministry of Finance - it is not done on the income tax return.
One of the easiest ways to lower the cost of insurance on your house is to increase your deductible.
Futures contracts are not qualified investments for RRSPs, RRIFs or TFSAs. The gains or losses on futures contracts may be capital or income, depending on the circumstances.March 2012
All provinces except Ontario and Quebec use the Federal medical expense total to calculate the provincial medical expense tax credit, but the base amount is different from the Federal for most provinces. Quebec has their own calculation. Ontario follows the Federal calculation but has limitations on amounts for attendant care, and higher limitations than the Federal for vehicles adapted for disabilities, and for moving expenses for a patient's move to more accessible dwelling.
The 2012 Federal Budget confirms that the age of eligibility for the OAS/GIS will be increased from 65 to 67, on a gradual basis, starting in 2023. Starting in 2013, voluntary deferral of the OAS will be allowed, resulting in a higher pension.
Return to a balanced budget is planned for the 2015-2016 budget year. The penny will no longer be produced, but this will only affect cash transactions. Starting in June 2012, Canadian travellers can bring home a higher value of duty- and tax-free goods after travelling abroad. There are many other changes, including RDSPs, Employee Profit Sharing Plans, Retirement Compensation Arrangements, Accelerated Capital Cost Allowance, and much more.
The province is taking measures to control costs, including pay freezes for MPPs and executives at hospitals and educational institutions. The Corporate Income Tax rate is being frozen at 2011 levels, and Business Education Tax reductions will be discontinued.
There were no increases announced to personal income taxes or HST. Rate increases were announced for Real Property Transfer Tax and Financial Corporation Capital Tax.
The Office of the Taxpayers' Ombudsman released their first newsletter in March 2012, describing some of the complaints they have resolved.
New tax credit for first-time home buyers, corporate income tax rebates for income from newly constructed multi-unit rental projects, and some other tax measures that were previously announced in the December throne speech.
There were no new personal income tax measures in the Quebec 2012 budget.
This article deals with temporary relocations, or living in one province and working in another.
You might qualify to use the HBP to help buy or build a home, even if you own a rental home, as long as the rental home has not been your principal residence during the previous four years. If you qualify to make use of the HBP, you will probably also qualify for the First-Time Home Buyer's Tax Credit.
When investments such as stocks, bonds, etc. are purchased or sold, there are two important dates - the trade date, and the settlement date. You need to know this to record your transactions in the appropriate tax year.
These must be reported in Canadian dollars. Our article explains how to convert the amounts to Canadian dollars. We also have an article detailing the non-business foreign tax credit.
The receipt of a warrant or right to acquire additional shares may or may not be considered a taxable distribution.
The Yukon 2012 Budget was tabled on March 15th, and we now have the scheduled dates for 2012 budgets for most of the provinces.February 2012
CRA now requires the NAICS code for a corporation to be entered on the T2 tax return. Statistics Canada has a drill-down table which makes it easier to find the appropriate code.
CRA has published a Notice with questions and answers on the elimination of the HST, and there is also a PST in BC website providing information on the return to the PST.
Starting in April, you will be able to ask questions about your tax accounts online, and CRA will answer electronically, so you'll have the answer in writing. You can get answers to specific tax account-related questions for certain business accounts.
Home energy audits must be completed by March 31, 2012 to qualify for a rebate of up to $150. Receive up to $650 when replacing your old central heating and cooling systems with the saveONenergy HEATING & COOLING INCENTIVE.
In December, the Throne Speech announced that SK would be implementing a First-Time Homebuyer's Tax Credit for 2012. This tax credit will also be available to people with disabilities looking to purchase a home that is more accessible. See the Throne Speech highlights for details of further initiatives.
Prior to 2011, there was a limit on the amount of medical expenses that could be claimed for other eligible dependants. The amount was $10,000 per person claiming the expenses, for most provinces and territories. This limit has been removed for 2011 for most provinces and territories, and is being removed for BC for 2012. Only Ontario and NWT still have a limit for 2012.
The BC HST will be eliminated effective April 1, 2013, and BC will return to a GST plus PST system. The federal Department of Finance has published proposed transitional rules, which describe how and when the HST would cease to apply to transactions that straddle the BC HST end-date.
The Nunavut 2012 Budget was tabled in the legislature on February 22, 2012. There were no income tax changes announced, but the tax on tobacco products will increase in an effort to reduce tobacco consumption.
The 2012 BC budget was tabled in the legislature on February 21, 2012. New tax measures include a Seniors' Home Renovation Tax Credit, Children's Fitness and Arts Tax Credits, and a New Home Buyers' Bonus.
La calculatrice de revenus du Quebec est maintenant disponible dans une version française, l'aide de Google Translate.
Alberta's 2012 budget was tabled in the Alberta Legislature on February 9, 2012. There were no personal income tax changes. Education property tax rates will be frozen at 2011 levels. The Scientific Research and Experimental Development (SRED) Tax Credit will be enhanced by eliminating the "grind" (no longer deducting the federal investment tax credit when calculating Alberta's credit).
There are some types of employment payments and other payments from which CPP or QPP contributions do not have to be deducted. Also, if a person has more than one employer in the year and earns total employment income which is less than the maximum pensionable earnings, this will have the result that the basic exemption used to withhold CPP or QPP contributions is more than $3,500, resulting in an underpayment of contributions. There is no obligation to remit the underpaid amount, but a person can elect to do so, or to pay Canada Pension Plan contributions on certain types of income from which no CPP contributions have been deducted.January 2012
This article discusses which tax deductions or credits can be claimed by either spouse. In some circumstances, the income from dividends from taxable Canadian corporations can all be claimed by one spouse.
This article includes pension splitting as well as other methods of splitting income.
If you have a parent or grandparent over the age of 65 living with you, even if they are not your dependent you could be eligible for the caregiver amount of $4,282, if their net income is less than $18,906 in 2011. This can also be claimed for dependent relatives over the age of 17 who are living with you, if they are dependent on you due to mental or physical impairment. Each province and territory also has a caregiver tax credit.
December 2011 wages, if not paid until January 2012, will be reported on a T4 for 2012, not 2011. There are some cases in which it is not necessary to prepare a T4 for an employee. Learn about filing T4 slips online - this can be done for up to 50 T4s, without any software required.
Our new basic Canadian income tax calculator is very simple - just input your income from capital gains, eligible and non-eligible Canadian dividends, and other income. The results include taxes payable, and marginal tax rates for the 4 different types of income, for every province and territory, as well as a table of taxes payable for 2008 to 2012 for each province and territory. The only tax credits deducted from taxes are the basic personal amount and dividend tax credits. Use the e-mail link at the bottom of the calculator to tell us how you like it.
We have published the table of WITB factors for 2012. The WITB is a federal refundable tax credit which is available for low-income individuals or families with working income over $3,000 for most provinces and territories. The Quebec 2011 WITB table has some factors revised by small amounts. The previous factors were estimated based on the QC indexation factor for 2011. The 2011 factors for other provinces and territories have been adjusted for rounding differences from the previous estimates.
The Ontario Trillium Benefit is applied for by completing form ON-BEN as part of the 2011 personal income tax return, as well as by applying for the GST/HST credit on page 1 of the personal income tax return. This benefit is a combination of the Ontario Sales Tax Credit (OSTC), Energy and Property Tax Credit (OEPTC), and Northern Ontario Energy Credit (NOEC), and will be paid on a monthly basis starting July 2012.
We've updated our investment return history to show results to December 31, 2011, and have added a column for results for 1 year.
The Federal Guaranteed Income Supplement (GIS) is a tax-free benefit available to low-income seniors living in Canada, who are receiving (or are eligible to receive) the Old Age Security Pension (OAS). An application must be filed to receive this supplement - it is not done automatically when you file a tax return. If you are already receiving the GIS, if there is a reduction in your pension or employment income, you should contact Service Canada, as they may calculate your GIS benefit by estimating your pension and employment income for the current year, instead of using last year's pension and employment income.
A loan by a corporation to one of its shareholders, or to a person or partnership who does not deal at arm's length with the shareholder, may result in a deemed taxable benefit for the amount of the loan, or may result in a deemed interest benefit. Care must be taken in the timing of salary or dividend payments to clear shareholder loans. If the amount of the loan is significant, it could put a small business in a position where it is not a qualified small business corporation, and thus not eligible for the $750,000 lifetime capital gains exemption for the shareholder, on disposal of the shares.See also Prior Years:
Revised: September 19, 2017
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