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Before making a major financial decision you
should consult a qualified professional.
The rate for calculating the operating cost benefit
portion of automobile taxable benefits remains at $0.27 per
km. The rate for automobile sales people remains at $0.24 per km. The automobile standby charge remains unchanged.
The limits for tax-free vehicle allowances paid to
employees by their employers remains at $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 are also unchanged.
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.
A donation must be received by the charity on or before
December 31, 2013 in order for them to issue a charitable donation tax
receipt for the 2013 taxation year.
This tax credit can be claimed if spouses are living
apart, even in another country. It is increased by the family
caregiver amount if the spouse has a mental
or physical infirmity.
This is an interesting case which allowed a taxpayer to
claim her mother as an eligible dependent for the years that her father
also claimed a spousal credit, but the spousal credit did not reduce the
father's taxes.
A small supplier ceases to be a small supplier immediately
with the sale that causes the $30,000 annual limit (calculated at the end
of each calendar quarter) to be exceeded, and must charge GST or HST on
that sale. For this reason, it is important to track sales so that
you can anticipate when the threshold will be exceeded.
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 TD1 forms for 2014 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.
The last trading date for 2013 for Canadian publicly traded stocks is December 24th, and for US publicly traded stocks is December 26th. The Canadian stock exchange closes early on the 24th, so don't leave things to the last minute!
The refundable tax credit for residents of a northern village, which is
part of the Solidarity Tax Credit, will increase from $810 per adult in
2013 to $1,620 per adult in 2014.
The investment income tax calculator now includes 2014.
It's a simple to use calculator that shows how Canadian dividends are much
more tax efficient than interest or other income, even if the dividends
increase the OAS clawback.
Compare taxes and marginal tax rates for both types of
Canadian dividends, capital gains, and other income, for all provinces and
territories, for 2009 to 2014.
The detailed 2013 and 2014 Canadian Tax Calculator is
now available. It includes changes to the Ontario surtax and dividend tax
credit calculations for 2014.
When filing 2013 tax returns, the option will be
available for a Trillium Benefit annual payment. If the annual amount is
more than $360, there will be a one-year wait for the payment.
Ontario's Nov 7/13 Economic Outlook announced revisions
to legislation for dividend tax credits for both eligible and non-eligible
dividends. As well, the ON surtax will be revised to be calculated
before deduction of the dividend tax credits.
We've updated our article to include the dates of
application of legislation which received Royal Assent on June 26, 2013
regarding gifts to qualified donees.
The Canadian Tax Calculator now has a line where the
user can select from a list of refundable tax credits, and input a
refundable tax credit amount. The input is not checked by the
calculator.
The maximum insurable earnings for 2014 is $48,600, up
from $47,400 in 2013. The rate is frozen at 2013 levels, so the employee
maximum for 2014 is $913.68, up from $891.12.
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
2013 you should act fairly soon.
Source documents re fixed asset purchases must be kept
for 6 years after disposal of the asset. Many records must be kept until
long after a business ceases. Know your records retention rules!
New refundable personal tax credit for green home
renovations. New refundable tax credit for manufacturing SMEs
investing in new software, and increase to another tax credit for
manufacturing SMEs.
September 2013
The OAS pension is clawed back if income exceeds a
certain level. Capital gains can trigger this clawback, even if they are
offset by losses carried forward.
We've added a link to the application forms, so you can
see exactly which income from your tax return is included in calculating
your eligibility for GIS.
If you own both a home and a cottage, and sell one of
them at a profit, you have to decide whether to designate the sold
property as your principal residence for some or all of the years it was
owned.
Use our Investment Return Calculator to do a 6 month
check on your investment returns, for a particular stock, one brokerage
account, or all your investments.
US Stocks in RRSPs/RRIFs are subject to US estate tax,
as are ETFs in or out of an RRSP. Due to the tax treaty, however, if
a Canadian's worldwide estate doesn't exceed $1.2 million US, US
investments are not subject to US estate tax.
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.
Do you know your rights and responsibilities as an
employee or employer? Learn about labour laws, including minimum
wages rates, vacation and statutory holiday entitlement.
Wages paid to some shareholders and family members are
not insurable, and these employees cannot collect employment insurance
benefits. Some other types of earnings are also not insurable.
Comparison of total taxes by province for a single
senior with OAS, CPP and pension income, plus either eligible dividends or
other investment income such as interest or foreign dividends.
CRA has both a payroll tax calculator and auto
taxable benefits calculator. These can be used to check your payroll
deductions. Quebec has its own p/r tax calculator.
In kind withdrawals can be made from your RRSP or RRIF,
and the investment can be transferred to a TFSA if desired, subject to
contribution room. Taxable income results from the withdrawal, and any
withholding tax must be paid using cash from the RRSP or RRIF.
Changes are proposed to the Employer Health Tax (EHT),
Ontario Trillium Benefit (choice of annual or monthly payments), and non-eligible dividend tax credit.
If a transaction would have tax implications if money
changed hands, it will have the same tax implications if it is a barter or
BitCoin
transaction. Also, trading in BitCoins is taxable.
If you rent out one or more rooms in your home, or if you own a rental
property, there are many expenses that can be deducted in calculating your net
rental income.
Even if you have no income, it may be to your advantage
to file a tax return to qualify for certain benefits or tax credits, and
to create RRSP or TFSA contribution room.
Dividends from US and other foreign shares are fully
taxable to Canadians, even when a portion may be considered return of
capital or capital gains distributions to US taxpayers.
The MB budget increases the general sales tax rate,
revises non-eligible dividend tax credit rate, increases small business
limit, and introduces a fuel tax for natural gas used in motor vehicles.
Are you an employee or a self-employed
contractor? There are advantages and disadvantages to both, but it
is important to know the correct status for tax purposes.
Our table of 2013 donation tax credit rates has been
revised to show the amount of employment income required to fully utilize
the tax credit or First-Time Donor Super Credit for $1,000 of donations.
The budget proposes to reduce the non-eligible dividend tax credit,
provide a first-time charitable donor super credit, and extend the
manufacturing and processing accelerated CCA, among other tax measures.
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.
Interest expense incurred to earn investment income can be deducted as
carrying charges on your tax return. This could include mortgage,
loan, or line of credit interest, margin interest, or interest on your CSB
payroll savings plan.
It's important to track the adjusted cost base (ACB) for each Canadian
mutual fund and exchange traded fund (ETF) you own, so you don't pay too
much tax when you sell. See our Mutual Fund and ETF articles to
learn more.
Many services will again be exempt from PST in BC, including diagnostic
services, many services to vehicles, moving services, courier and freight
services, etc.
This credit, also known as the equivalent to spouse credit, may be
claimed for a dependent child or other eligible dependent, under certain
circumstances.
The age amount tax credit is available to taxpayers 65 and older.
The federal credit is reduced for income over $33,884 in 2012. The
provincial credit is also reduced, at a similar level in most provinces.
This will depend on whether your
business is incorporated. A corporation requires a separate T2 corporate
income tax return. Unless you are
trained in preparing corporate tax returns and are up to date on current
tax laws, a T2 corporate tax return should be prepared or reviewed by a
professional accountant.
RRSPs can be used to help purchase a home. Make sure repayments
are reported on Schedule 7 of your tax return, otherwise you'll lose RRSP
contribution room.
The 2013 budget announced a new personal income tax bracket, increased
general corporate income tax rate, and one-time
grants towards RESP plans for children over 6.
If you do not have enough income to utilize your total tuition costs,
education amount or textbooks amount, you can either carry forward these amounts
to
future years (no limit to carry-forward period), or you can transfer the costs to your spouse, common
law partner, or to a parent or grandparent of you or your spouse or common
law partner.
Currently, the GIS must be applied for. However,
proactive enrolment will be gradually implemented from 2013 to 2016, so
that applying will no longer be necessary. GIS is automatically
adjusted each year based on the tax return. However, if there is a
reduction in income, contact Service Canada, as they may calculate the GIS
by estimating the current year's income.
A loan by a corporation to a shareholder may result in
a deemed taxable 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 make a CCPC ineligible for the $750,000
lifetime capital gains exemption for the shareholder, on disposal of the
shares.
Contribution limits, qualified investments, RRSP/RRIF
withdrawal calculator, RRSPs and borrowing, getting your money out of
RRSPs, withholding tax and more.
When a CPP recipient age 65 to 70 has elected to
stop contributing to the CPP by completing and
submitting form CPT30,
box 28 on the T4 (CPP/QPP exempt) must be left blank.
Our table of investment returns on stocks, bonds and
T-bills has been updated to include 2012. Again updated on January
25th, to include December 2012 CPI. The inflation rate for 2012 was
0.8%.
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