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Before making a major financial decision you
should consult a qualified professional.
Automobile deduction limits (passenger vehicle expense
limits) remain unchanged for 2010. This includes capital cost
allowance, interest expense and leasing cost limits.
The prescribed rates used to calculate the operating
cost benefit for the personal portion of automobile operating expenses
paid by employers remain unchanged for 2010.
Taxable capital employed in Canada is used in the
calculation of Capital Tax, and is used to determine eligibility for the
Small Business Deduction (SBD).
We have published a table of WITB amounts for 2010 for
all provinces and territories except Quebec. The amounts in the
table are calculated by using the Federal indexation factor for 2010,
applied to the 2009 amounts. We have revised the 2009 table, which
now shows the correct amounts for Alberta, BC and Nunavut. We have
created a new table for Quebec for 2009, as it is structured somewhat
differently from the other provinces. The amounts for Quebec for
2010 are not yet available, as a different indexation factor is used.
We have published the Canadian Tax Calculator for 2010
and 2009, including the updated Working Income Tax Benefit (WITB) factors
for 2009 and 2010 for all provinces and territories. A separate Tax
Calculator for 2008 is also available.
Bill C-56, the Fairness for the Self-Employed Act,
received Royal Assent on December 15, 2009. This legislation allows self-employed persons to
pay EI premiums on a voluntary basis, in order to qualify for EI
special benefits.
Bill C-51 received Royal Assent on December 15, 2009,
implementing tax measures from the 2009 Budget, including the Home
Renovation Tax Credit (HRTC), Homebuyers' Tax Credit, and enhancements to
the Working Income Tax Benefit (WITB). The Bill also includes
legislation for changes to the Canada Pension Plan (CPP) retirement
benefits.
The Government of Canada has started pre-budget consultations, and is looking
for input from Canadians. Comments can be submitted online on the
Consulting with Canadians web page.
The marginal tax rate tables for 2010/2009 have been
expanded, to add the provincial/territorial basic tax brackets and rates,
in a table above the combined Federal and provincial/territorial marginal
tax rates.
Most of the time, only 50% of the cost of meals and
entertainment expenses that are incurred for a business purpose are
deductible, but there are exceptions to this, including for long-haul
truck drivers.
Ontario Power Authority Cool Savings
Rebates Expiring Soon
Rebates of $25 to $400 are available for residents and
businesses (with residential-type systems) of Ontario who purchase and
install their new central heating or cooling equipment through a
participating contractor. This rebate program ends December 31,
2009.
Ontario Rebates of Retail Sales Tax for Purchase of
Alternative Fuel Vehicles
People who purchase or lease new or used vehicles may
qualify for an RST rebate, if the vehicles operate or are converted to
operate on an alternative fuel.
Ontario
Home Energy Savings Program (Retrofit Program)
This program provides rebates of up to $5,000 for
home energy improvements, which is matched by the Federal government ecoENERGY
Retrofit Grants and Incentives, for total rebates of up to $10,000.
The RRSP vs Mortgage Calculator has been updated with 2010 income tax
thresholds and rates. This calculator helps you to decide whether to increase your
monthly mortgage payment, or contribute the extra
monthly amount to an RRSP.
The Borrow to Invest calculator has been modified to apply the changing
eligible dividend gross-up and dividend tax credit rates from 2010 to
2012. Years after 2012 use the 2012 rates. All years use 2010
income tax thresholds and rates. This calculator lets you see the
advantages of borrowing to invest in stocks and exchange traded funds (ETFs).
The Sheltering RRSPs 2010 calculator is now available. The
calculator has been modified to apply the changing eligible dividend
gross-up and dividend tax credit rates from 2010 to 2012. Years
after 2012 use the 2012 rates. All years use 2010 income tax
thresholds and rates. This calculator shows you how to reduce your
taxes while withdrawing from your RRSP.
The province is proposing to increase the threshold for
the BC new housing rebate for primary residences and rental housing from
$400,000 to $525,000. Where there is a written agreement for the
sale of a new home prior to November 19, 2009, the sale would generally
not be subject to the provincial portion of the HST, even if ownership
and/or possession are transferred after June 2010.
Bill 218 was introduced in the Legislative Assembly on
November 16, 2009, and includes remaining income tax changes from the 2009
Budget, as well as legislation related to the HST implementation.
The personal income tax surtax thresholds in Bill 218 differ from those
presented in the Budget.
BC will retain a provincial sales tax on the private sale of used
vehicles, aircraft and boats. These sales are currently subject to
PST, but not GST, and will not be subject to HST.
Ontario has announced that newspapers and qualifying
prepared food and beverages costing $4.00 or less will also qualify for a
point-of-sale exemption for the provincial portion of the HST.
We have expanded the article on the tax treatment of
investments in non-interest paying bonds, or strip bonds, and include a
link to a Canada Revenue Agency technical interpretation.
Bill C-56, the Fairness for the Self-Employed Act,
was introduced in the House of Commons and passed first reading on November 3, 2009.
This proposed legislation would allow self-employed persons to pay EI
premiums on a voluntary basis, in order to qualify for EI special
benefits.
On October 16, 2009 the Minister of Finance
announced proposed amendments to the Income Tax Act to strengthen the
rules applicable to Tax-Free Savings Accounts.
We have added the Home Renovation Tax Credit and the
First-Time Homebuyers' Tax Credit to the Canadian Tax Calculator. We
have also added links within the calculator to information on some of the
non-refundable tax credits. The links open in the same window,
replacing the calculator, but when the browser Back button is clicked, the
previously entered information is still available in the calculator.
To open the links in a new window, right-click on the link, and
select "Open in New Window".
Quebec Tax Credit for
Home Improvement and Renovation
The Quebec Revenue Ministry has published new
information regarding this refundable tax credit, including definitions
for qualifying work, qualified contractor, eligible residential units, and
eligible expenses.
There is normally no requirement to withhold tax from
interest paid to an arm's length non-resident, but Part XIII withholding
tax must usually be deducted when interest is paid to a non-arm's length
non-resident.
The Ontario Ministry of Finance has published proposed HST Transitional
Rules, which are required to determine which tax - RST or the Ontario
component of the HST - would apply to transactions that straddle the July
1, 2010 implementation date.
The BC Ministry of Finance has published proposed HST Transitional
Rules, which are required to determine which tax - PST or the BC component
of the HST - would apply to transactions that straddle the July 1, 2010
implementation date.
We have added more detail to our article on the
equivalent to spouse tax credit, which is available to a single person for
a dependent child or other eligible dependent. The Canadian
Tax Calculator has been modified to include the ability to claim this
tax credit for other eligible dependents.
We have expanded our article on borrowing to invest in
stocks and ETFs, to include information on what to do with the dividends,
and how things work when leveraged investments are sold.
On October 5th, Canada Revenue Agency started a new
online service that allows individuals and businesses to make payments to
CRA directly from their bank accounts. This applies to income tax,
GST/HST remittances, payroll deductions and many other types of payments.
Think you may have forgotten about some money on
deposit somewhere? In our article on unclaimed property, we have
added links to databases of unclaimed property for Alberta and Quebec.
Bill C-51 passed first reading in the House of Commons
on September 30th. As well as containing proposed legislation
regarding the 2009 Budget, it also includes proposed changes to the Canada
Pension Plan, and a change to the Broadcasting Act that increases the
borrowing limit of the CBC to $220 million from $25 million.
There are several changes proposed for the CPP
retirement pension. The proposed changes will not
affect anyone who is currently collecting the CPP retirement, disability or survivor benefits. It will also not affect anyone who
starts to collect their pension prior to 2012.
Selling goods on eBay may result in taxable income. CRA has
obtained a court order which requires eBay to disclose information on
certain eBay sellers.
Much has been said against the implementation of HST in
BC. We believe that the elimination of PST in favour of HST will
increase the productivity of businesses and will be good for the BC
economy.
The May 2009 budget was not passed before the NS
government was defeated in June. The September 24 budget is
substantially the same as the May budget. The budget includes a new
Graduate Retention Rebate, and expanded HST rebates on household
electricity and new home construction.
We have published the table of factors for the enhanced
WITB for 2009, using the amounts in the recently tabled Notice of Ways and
Means Motion. The enhanced WITB amounts for AB, BC, NU and QC are not
yet available, and will be updated in the table when they are known.
The Canadian Tax Calculator has
been updated with the revised WITB amounts.
Canada Revenue Agency has published a Notice re
Harmonization of the Ontario Retail Sales Tax with the GST, with Questions
and Answers on Housing Rebates, Transitional Rules for Housing and Other
Real Property Situated in Ontario.
We have created a new page which talks about capital
gains and losses and links to related articles, including those articles
which discuss methods of reducing, eliminating, and deferring capital
gains.
When proceeds from the sale of capital property are
received over a number of years, a reserve may be claimed to spread the
gain over up to 5 years, or up to 10 years for dispositions of certain
property to a child. The capital gain on donations of non-qualifying
securities to a qualified donee can be deferred for up to 5 years, and
sometimes eliminated.
When capital property is donated, the taxpayer can
reduce the capital gain (and the eligible donation amount) by electing to
designate an amount lower than fair market value as the proceeds of
disposition.
Usually contest and raffle prizes are not considered
taxable income, unless the circumstances in which they are received cause
them to be considered employment, business or property income, or a prize
for achievement. For instance, the prizes from an employer-promoted
contest or draw could, in some circumstances, be considered employment
income.
The Federal government tabled a Notice of Ways and
Means Motion on September 14th to implement items remaining from the
February 2009 Budget, including the Home Renovation Tax Credit (HRTC) and
enhancements to the Working Income Tax Benefit (WITB).
We have published a table showing the 2009 Federal and
Provincial/Territorial tax rates applicable for the donations tax
credit. The table also shows the total combined tax credit amount
for a donation of $1,000 in each province and territory.
This rebate is available for eligible rental
accommodation and for land leased for a residence. The rental
accommodation or land must be intended for long-term use as a residence.
BC presented their Budget Update on September 1st. There are
increases to personal income tax credits effective January 1, 2010.
Medical Services Plan (MSP) rates will increase effective January 1, 2010,
but adjusted net income thresholds are also increased. This results
in lower premiums for individuals and families with adjusted net income of
$30,000 or less. The small business threshold for corporate income
tax is increased to $500,000 effective January 1, 2010. The plan to
have a provincially administered HST exemption for residential energy use
was also announced.
If a transaction would have tax implications if money
changes hands, it will have the same tax implications if it is a barter
transaction. These transactions can result in taxable income or
tax-deductible expenses, or can result in the acquisition or disposition of capital
property, eligible
capital property, personal-use
property, listed personal
property, or inventory. GST/HST may be payable, and input tax credits
may be available.
Most intangible assets are considered eligible capital
property, as are incorporation costs. These costs are not fully
deductible, but can be partially deducted through the cumulative eligible
capital deduction.
The LiveSmart program has reached its target, and is no longer
available to homeowners unless the pre-retrofit assessment was completed
before August 16th. The Federal EcoEnergy incentives are still
available.
Taxpayers were able to make a recontribution to their
RRIF in order to take advantage of the minimum withdrawal being reduced by
25% for 2008. This had to be done by April 14, 2009. If the
tax return was filed without claiming the recontribution on line 232, an
adjustment should be requested.
BC proposes to harmonize its 7% PST with the 5% GST to
result in 12% HST, effective July 1, 2010. Many items that are
currently PST exempt will not be subject to the provincial 7% portion of
the HST.
On June 19, 2009, regulatory changes were filed which
increased the amount of unlocking permitted from Ontario Life Income Funds
(LIFs) from 25% to 50%. Changes were also made for old LIFs.
Rules were also changed to provide pension plans with solvency funding
relief.
Filing a return is the easiest way to establish your
contribution room for a Tax-Free Savings Account (TFSA), even though the
contribution room is not affected by taxable income.
Nunavut presented their budget on June 4, 2009. The Business
Training Tax Credit is being implemented in 2009 to provide support for
enhancing education. There were no other income tax changes
announced, either personal or corporate.
When an individual earns income from the rental of real property, it
may be considered business income instead of property income. When
it is considered business income, the due date of the tax return is June
15th instead of April 30th.
Some vehicles, such as certain pickup trucks, do not
fit the definition of an automobile (passenger vehicle). When
company-owned vehicles such as this are used by an employee for personal
use, a taxable benefit usually must be included in the employee's
income. This calculation differs from the usual standby charge and
operating cost benefit calculation done for automobiles. Effective
for 2009, a reduced taxable benefit will be allowed for
these types of motor vehicles in certain circumstances.
May 2009
Federal Business Credit
Availability Program (BCAP)
The Federal Government is providing assistance for
Canadians and Canadian businesses to obtain financing.
We have added the Federal Children's Fitness Tax Credit
to the calculator, as well as the Manitoba and Yukon Children's Fitness
Tax Credit, and the Nova Scotia Healthy Living (Sport and Recreation) Tax
Credit.
Nova Scotia presented their 2009 budget on May 4th. The small
business tax rate will be cut in half over 3 years starting in 2011.
Tobacco taxes have been increased by $10 per carton, the extension of the
Healthy Living Tax Credit to include expenses of adults has been deferred,
and the implementation of a provincial Transit Tax Credit has been
deferred.
PEI presented their 2009 budget on April 16th.
There were no income tax changes. The only tax measure announced was
an increase in tobacco tax, of $5 per carton.
Premiums paid for private health plans, such as
extended health benefits and dental plans, are eligible medical expenses
for purposes of the medical expense tax credit. If you are an
employee, part or all of these premiums are often deducted from your
pay. Make sure you include them when calculating your total medical
expenses.
Losses on shares and other capital property may be
considered superficial losses and disallowed if they are repurchased
within 30 days by the taxpayer or persons affiliated with the taxpayer,
which includes the spouse, or an RRSP, TFSA, or RRIF of which the taxpayer
or the taxpayer's spouse is the beneficiary. However, this rule can
also create the transfer of a capital loss from a taxpayer to the
taxpayer's spouse.
We have added the disability tax credit and public
transit tax credit to the tax calculator, as well as the option of
choosing whether the taxpayer or the spouse claims any dependent
children. Previously, the calculator would have the dependent
children claimed by the lower income spouse, and any unused amount was
transferred to the higher income spouse. This worked in most
situations, but there were cases where the claim for dependents was not
properly utilized. We have also added comments that appear when the
user hovers over certain input fields, to provide explanations for those
items.
Cash rebates are available for energy efficiency improvements by
homeowners, and for taxi operators who are transitioning their fleet to
hybrid vehicles. This program ended March 31, 2012.
Our tables compare taxes payable by province in 2009 for three
different types of income - dividends eligible for the enhanced dividend tax
credit, small business (non-eligible) dividends, and interest income.
Manitoba has many programs to help homeowners, renters
and landlords, including assistance with home repairs/renovations, rent,
co-operative housing, and much more.
We have added a link to the Residential Access Modification
Program (RAMP), which provides grants of up to $5,000 for eligible
wheelchair users to modify their home to be more wheelchair accessible.
Ontario presented their 2009 budget on March 26, 2009,
announcing a tax reduction for the lowest personal tax bracket, and
corporate income tax reductions. They also propose to combine their
retail sales tax with the GST for a single value-added tax.
NL presented their 2009 budget on March 26, 2009,
announcing enhancements to their low-income tax reduction, increases to
their enhanced dividend tax credit, and an increase to the corporate
income tax small business threshold.
We have added a table of 2009 corporate income tax
rates, including business limits for small business deduction. This
table will be updated as provincial budgets are released.
New Brunswick presented their 2009 budget on March 17,
2009, announcing both personal and corporate tax reductions.
Quebec Refundable Home Renovation Tax
Credit
Quebec residents, besides being eligible for the
Federal home renovation tax credit, can also benefit from the new
provincial refundable home renovation tax credit (for 2009 only), for
eligible spending in excess of $7,500.
The Economic Statement announced two tax measures,
including the provincial home renovation tax credit, as well as an
increase in the minimum wage, and three other measures to help stimulate
the economy.
Quebec presented their 2009 budget on March 19, 2009. They
announced improvements to the refundable tax credit for child care
expenses, introduction of a 10-year income tax holiday for certain new
corporations, and an increase in the rate of the Quebec sales tax (QST).
US estate tax may be payable by Canadian residents who own assets
situated in the United States at the time of death. These assets
could include real estate, stocks in US corporations, or personal
property.
On our Ontario Government Benefits page, we have added
a link to the OSCA website. The OSCA members are not-for-profit
health and social service organizations that help people live at home.
Just a reminder that there are many tax shelter gifting
schemes, for which the donations claimed are being reassessed and denied
by Canada Revenue Agency. A "tax shelter number" does not
guarantee that the donation amount will be allowed.
If you earned employment income and paid taxes in two
provinces, you would file a tax return for your province of residence on
December 31. We have updated this article with more detail regarding
those who have worked and paid taxes in Quebec, but do not reside there.
The Canadian Tax Calculator has been modified to allow the user to
indicate that they are or are not eligible to receive the WITB. In
the calculator, a link has been provided to our article on the WITB.
The article explains eligibility requirements for this refundable tax
credit.
The British Columbia 2009 Budget announced further
reduction of the general corporate tax rate, reduction of the small
business dividend tax credit rate, extensions of some temporary PST
exemptions and introduction of some new PST exemptions.
The HRTC is a proposed tax credit which will only be available for the
2009 tax year, for eligible expenditures made after January 27, 2009 and before February 1, 2010.
We have added a new glossary item on self-employment
income, discussing how it is reported on the tax return, with links to
articles which will help you determine if your income is from
self-employment, employment, or property.
Both tax calculators have been updated for 2009 tax changes from the January
27 Federal Budget. The Quebec Tax Calculator has been modified
to include provision for the age amount and disability amount tax credits.
The Marginal Tax Rate Tables and Non-refundable Personal Tax Credit Tables for
2009 have been updated for tax changes from the January 27 Federal Budget.
We have updated the table of WITB factors for amounts that will apply
on the 2008 tax return. A 2009 table will be prepared once the
changes resulting from the 2009 Federal Budget have been finalized.
The PEI 2008 and 2009 dividend tax credit rates for
small business dividends have been revised as per legislation passed in
2008. The tables of marginal tax
rates have also been revised, as has the Canadian
Tax Calculator.
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