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Before making a major financial decision you
should consult a qualified professional.
The Life in the Tax Lane video for January discusses the 2016
federal tax rate changes, donation tax credit rate change for high income
taxpayers, revised Tax Free Savings Account contribution limit, and change in
tax rate for corporate investment income, as well as the proposed Canada Child Benefit.
Investing is a life-long pursuit that will help you
achieve financial independence. We
think that the best way to start investing is through buying ETFs.
The TD1 forms for 2016 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 per-kilometre
amounts that
may be paid
tax-free to employees or officers as reimbursement for
motor vehicle expenses incurred while travelling for
business purposes using their personal vehicle have been reduced by 1 cent for
2016, to 54 cents per km for the first 5,000 km and 48 cents per km for each
additional km. For the Territories, the rates have also been reduced by 1
cent, to 58 cents per km for the first 5,000 km and 52 cents per km for each
additional km.
The prescribed rate used
to determine the operating cost taxable benefit to an employee for an
employer-owned vehicle is reduced for 2016 by 1 cent, to 26 cents per
kilometre. The standby charge taxable benefit factors for automobiles
remain unchanged.
The
prescribed rate used to determine the operating cost taxable benefit to an
automobile sales person for an employer-owned vehicle is reduced for 2016 by 1
cent, to 23 cents per kilometre. The standby charge taxable benefit
factors for automobiles remain unchanged.
The 2016 expense
limitations for passenger vehicles for interest expense, monthly lease costs,
and capital cost allowance (CCA) will remain unchanged from 2015.
If you made RRSP contributions from March
1, 2014 to March 1, 2015, this should have been included on Schedule 7 which
was filed with your 2014 tax return. Check our article to find out what
to do if the contribution wasn't recorded.
Many brokerages are now providing registered accounts
denominated in US dollars, which eliminates the significant cost of converting
US dividends to Canadian currency.
The 2015/2016
Quebec Tax Calculator is a great planning tool - use it to see if you should be
deferring income to 2016 due to the reduced federal tax rates for middle income.
See the big
difference in taxes payable on different types of investment income.
Even when the age credit and Old Age Security are clawed back, Canadian
dividends and capital gains result in the least taxes payable when
compared to other types of income such as foreign dividends and
interest.
Legislative
proposals were introduced on December 7th that would enact for 2016 the
middle-income tax rate reduction and the high-income tax rate increase, cancel
the Family Tax Cut, revise the TFSA limit to previous levels (but leave 2015 at
$10,000), increase the donation tax credit rate (but only for high income
earners), and other provisions for CCPCs related to the new highest tax rate.
The Life in the Tax Lane video for December includes
discussion of possible changes coming for Professional Corporations, audits of
owner managed companies, related to the Small Business Deduction, Gifting Tax
Shelters where even the cash donation was disallowed, Standby Charge of
employer-branded vehicles, and a poor review for Revenue Quebec from the Quebec
Ombudsman.
Compare taxes and marginal tax rates for both types of
Canadian dividends, capital gains, and other income, for all provinces and
territories, for 2011 to 2016.
We've added 2016 to the calculator - based on our
calculations of indexation factors, and based on Liberal platform. We
should be able to verify indexation factors and much other 2016 data soon.
Haven't filed your 2005 tax return yet? Taxpayers are running out of time to file requests under the taxpayer relief provisions for the
2005 tax year and any reporting period that ended in the 2005 calendar year.
As a result of a Federal Court of Appeal Case, Bozzer v
Canada, the taxpayer relief provisions (fairness provisions) can apply to
reduce interest and penalties which have accumulated in the 10 taxation
years preceding the request for leniency, even if the tax debt causing the
interest arose prior to that period. So, if a tax debt arose from
the 2003 tax year, penalties and interest that have accumulated from 2005
to 2015 could still be reduced as a result of a 2015 request for leniency.
If you turned 71 this year, your RRSP must be converted to a RRIF, or used to purchase an annuity, by
Thursday December 31st, 2015. If you turned 65 this year, you may want to convert some of your RRSP to a RRIF before December 31st, to take advantage of the pension income tax credit, and perhaps pension splitting with your spouse.
There is no deadline for contributions to a TFSA, as
the unused contribution room is carried forward into the next year.
However, a withdrawal in any year increases the TFSA room in
the following calendar year. Thus, if you are thinking of making a
withdrawal soon, make sure it is done by December 31st, in
order to have your TFSA room increased by the withdrawal amount on January
1, 2016.
The last trading date in 2015 for Canadian publicly
traded stocks is Thursday December 24th, because the Canadian stock markets
are closed on December 25th and 28th. Canadian stocks purchased or
sold after this date will settle in 2016, so any capital gains or losses
on sale will apply to the 2016 tax year. The last trading date in
2015 for US publicly traded stocks is Monday December 28th.
Have you had your farm status revoked, or are you considering
applying for farm status? Best to read this article and the Classification
of Land as a Farm Regulation, and pay little attention to the BC Assessment
Guide.
The maximum insurable earnings for Quebec is $50,800 for
2016. The employee rate is 1.52%, reduced from 1.54% in 2015. The
employee maximum EI is $772.16, and the employer maximum is $1,081.02.
The maximum pensionable earnings for QPP for 2016 is
$54,900. The rate increases from 5.25% to 5.325%, 10.65% for
self-employed. This results in maximum QPP contributions of $2,737.05 for
employees/employers, or $5,474.10 for self-employed.
Alberta's Bill 4 has been tabled, changing the dividend tax
credit rate for non-eligible dividends for 2016 and later years. The
effect of the legislation is that the tax credit will remain at 3.1% of the
taxable dividend. The Alberta 2016 marginal tax rates have been revised to
reflect the change.
The maximum pensionable earnings for 2016 will be $54,900, up
from $53,600 in 2015. The rate will remain unchanged at 4.95%, 9.9% for
self-employed. This results in maximum CPP contributions of $2,544.30 for
employees/employers, or $5,088.60 for self-employed.
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 new Liberal government included in their platform
the reversal of the increased contributions for TFSAs. We expect
this would mean replacing the $10,000 limit with the previous $5,500
limit.
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.
The 2016 tables of non-refundable tax
credits for all provinces (except Quebec) and territories are now
available. We've eliminated the education and textbook tax credits, as per
the Liberal platform. This automatically eliminates these credits in all
provinces (except Alberta) and territories, due to the wording of their
legislation. The amounts in the tables are indexed, using indexation
factors that are our calculations. Most of the amounts will be confirmed
when Canada Revenue publishes the 2016 TD1 forms.
We've published the tables of marginal tax rates for
2016. The Federal tax rates for 2016 are as stated in the Liberal
platform. As usual, the indexation
factors and increases to tax brackets are our calculations, and will be
confirmed when Canada Revenue Agency publishes their 2016 payroll tables.
Alberta announced a new Alberta Child Benefit (ACB), enhanced
Family Employment Tax Credit (AFETC), new Job Creation Incentive Program, and
tax increases for tobacco, insurance and locomotive fuel.
The November issue of
Life in the Tax Lane includes information on medical travel expenses; the
requirement for withholding tax when payment is made to non-residents;
international tax planning vs tax evasion; the collections power of CRA; Foreign
Account Tax Compliance Act (FATCA); and a BC Supreme Court case regarding the
tax liability of a former spouse.
The Liberal Party was elected with a majority government on October 19,
2015. We've summarized much of the information from their platform,
hopefully addressing most or all of the tax-related points.
The 2014/2015 calculator will now retain all
data entered, on your computer, for the next time you use it. If you are on a public
computer or don't want this to happen, simply click the reset button before
closing the calculator.
Another Ontario taxpayer has successfully appealed the limit
on the attendant care expenses claimed as medical expenses, and has very kindly
provided us his (sanitized) documentation in order to help more taxpayers
affected by this issue. We have asked CRA to correct their documentation
on this.
If a Registered Education Savings Plan beneficiary is a
non-resident at the time of receiving Educational Assistance Payments (EAP), the
Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB) portions of the EAP will not be paid.
This non-refundable tax credit, new for 2016, allows a senior
or an individual eligible to claim the disability amount tax credit, or certain
supporting individuals, to claim a tax credit of 15% of up to $10,000 of
expenses per year for costs incurred to improve the mobility of the person in
and around their principal residence.
This tax credit is available for those who have custody and
control over a person with a physical or mental infirmity. The person need
not be eligible for the disability amount tax credit, but a signed statement
from a medical doctor is required to support the infirmity.
After much thought and discussion, we have made the decision to discontinue the Business Directory. We’ll be removing it from TaxTips.ca at the end of September. Unfortunately, trying to keep it current just takes too much time away from the development of useful content for
TaxTips.ca. We considered charging for the listings, but this still leaves the problem of the Directory taking up too much time.
We have sent emails to all Business Directory clients to extend our apologies.
Employers and employees should be aware of minimum wage rates
and current employment standards. BC's minimum wage increased Sep 15th,
and increases are coming on Oct 1st for AB, MB, NL, ON, and SK.
The October issue of
Life in the Tax Lane from the Video Tax News team is now available, with a
discussion of select recent developments in Canadian tax. This issue
includes several interesting topics including denial of a request for an
extension to file a notice of objection when a person moved out of the family
home and the ex-spouse did not pass on a CRA notice of assessment subsequently
received in the mail. Make sure you let CRA know when you move, and use My
Account!
The RRSP/RRIF Withdrawal Calculator allows you to put
in an estimated inflation rate. To help with this, we've added the
historical Consumer Price Index inflation rates for the past several
years, on the calculator information page.
Many people have received emails or phone calls this year
from someone claiming to be from CRA. CRA will not request payments by
credit card, and will not send email with a link and ask you to divulge personal
or financial information. If you have received a call and are in doubt,
either phone CRA (look in our Links page for a link to telephone numbers) or
check your information in CRA's "My Account".
Do you qualify for the Disability Tax Credit? See
our article, which explains the requirements to qualify for this tax
credit. We have a link to very detailed information on
the Canada Revenue website, which describes qualifying impairments, in
text and video format. If you have qualified for this credit for a
number of years but have not claimed it, adjustments to your tax returns
can be filed to claim it for up to 10 years.
Financial hardship unlocking, one of the several
unlocking methods available for federally locked-in accounts, can be done 1x per year
unless the maximum is not withdrawn - then a 2nd unlocking can be done but only
within 30 days of the 1st unlocking.
The superficial loss rules provide a method for capital losses to be transferred to a spouse.
Your spouse must hold the shares for more than 30 days
after your disposition of the shares for this to work, so to do this for
2015 you should act fairly soon.
We're pleased to be able to share informative videos from the Video Tax News Team. The videos are 10-minute rapid-fire discussions of recent developments in Canadian tax. They cover a wide range of topics, and are quite entertaining!
The September video is now available.
There are many tax issues for students and/or their
parents, such as eligibility for tuition, education and student loan
interest tax credits, private school tuition fees, deducting moving
expenses, and child care expenses.
There will likely be a fee from your financial
institution/brokerage to transfer your TFSA to a new one, but at least the
transfer doesn't count as a withdrawal. There may also be a fee to
make a full withdrawal from your TFSA. Make sure you know what fees
would be involved before liquidating the investments for a full
withdrawal.
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.
We compare taxes paid on varying levels of employment income for all
provinces/territories, for a single person, and for a family with 2 children.
Ontario, Alberta and BC are the lowest tax provinces for a single person earning $50,000. For a single income family with 2 kids
aged between 6 and 17, and $50,000 employment income, Saskatchewan is the lowest tax province.
Income from UCCB is included in the analysis, as well as the Family Tax
Cut. Taxes include BC MSP premiums, ON Health Premium, and QC health
contribution and prescription drug premiums.
See the taxes paid at varying levels of eligible and non-eligible dividends
and interest for all provinces and territories. The lowest-tax provinces
for higher levels of eligible dividends are AB and SK. AB is the
lowest-tax province at $100,000 of non-eligible dividends.
We compare taxes paid in each province/territory by a senior with eligible
dividends vs other income (foreign dividends, interest, etc.) - see how the
taxes (including OAS clawback) are significantly lower with eligible dividends.
The Quebec Tax
Calculator (également disponible en français), is now up to date, including
revised prescription drug plan premiums. The change to the federal Family Tax Cut
regarding spousal
transfers of tuition and education tax credits, retroactive to 2014, is also
included.
The WITB is
a federal refundable tax credit for low income individuals and families with
working income over a base amount of $3,000 for most provinces and
territories. Our tables of 2015 factors are now available.
Want to know what
the future value will be of an amount invested today, or what rate of return is
required to achieve a desired future value? This calculator can help you
answer those questions and more.
Should you borrow to invest in
RRSPs? Our calculator provides 4 alternatives, 2 of which don't involve
borrowing, so you can see what the results would be. If you've never
invested before, don't start by borrowing for RRSPs!
The
CPP Retirement Pension Calculator can help you decide at what age to start
receiving your CPP. You'll need your CPP Statement of Contributions for
this.
On
July 31, the Federal government released draft legislative proposals for
consultation. The proposals relate to personal and business income tax,
charities, international taxation, and Canadian exploration expenses.
Free in 30 is a plan to help you go from having
nothing to being financially independent in 30 years or less. Live below your
means and borrow to invest, never to consume!
If you are having problems with a
service being provided by Canada Revenue Agency, there are steps you can take,
and there is a Taxpayers' Ombudsman you can contact.
The detailed
Canadian Tax and RRSP Savings Calculator, which includes most deductions and tax
credits, has been updated for the increased 2015 Alberta personal income tax
rates enacted in June. The change to the Family Tax Cut for spousal
transfers of tuition and education tax credits, retroactive to 2014, is also
included.
The Basic Canadian Tax
Calculator has been updated for the increased 2015 Alberta personal income tax
rates. This calculator displays the taxes payable and marginal tax rates
for the amounts of Canadian eligible and non-eligible dividends, capital gains
and other income that is entered, as well as the taxes payable for the current
and past 5 years for the same income.
The Investment Income
Tax Calculator, which includes the increased 2015 Alberta tax rates,
demonstrates the big difference in taxes payable depending on the type of
income. It shows that, even if the Old Age Security is clawed back due to
Canadian dividends, the net tax payable will be much less than with interest or
"other" income.
The TFSA vs RRSP Calculator
has been updated for the increased 2015 Alberta tax rates. This calculator
may help you decide between investing in TFSAs or RRSPs. If you're in the
lowest tax bracket, choose TFSAs.
The Borrow to Invest
Calculator now includes the increased 2015 Alberta tax rates. This
calculator
helps you to see the
advantages of borrowing to invest in stocks and exchange traded funds (ETFs).
However, if you've never invested, don't start by borrowing!
The RRSP vs Mortgage
(or other loan) calculator, which includes the increased 2015 Alberta tax rates,
helps you to decide whether to increase your
monthly loan payment, or contribute the extra
monthly amount to an RRSP. When in doubt, pay down your debt!
The Alberta general
corporate income tax rate was increased from 10% to 12% effective July 1,
2015. The small business tax rate remains unchanged at 3%.
Several
provinces provide rebates for fuel-efficient or electric vehicles, and there is
a Canadian excise tax of up to $4,000 on the most fuel-inefficient
vehicles. Natural Resources Canada provides lists of the most
fuel-efficient vehicles.
The
PEI budget announced that the threshold would be increased for the 2015 tax
year. The amounts of the credit have also been increased, and now include
an amount for seniors.
This
tax credit is available for the 2015 and later tax years, and provides a tax
credit of 10% of eligible renovation expenses, to a maximum of $1,000.
Naming a successor
holder for a TFSA and a beneficiary for your RRSP can help to avoid
probate fees. Joint ownership of assets is also helpful, but care must be
taken to put into writing the intentions of the joint tenancy.
See our Business page for articles for self-employed people
and incorporated businesses - taxes, expenses, employees, payroll, keeping
records, whether to incorporate, and many other topics.
If you have children under 18 for whom you have not
previously applied for the UCCB or the Canada Child Tax Benefit (CCTB), you will
need to apply for the enhanced UCCB. Application can still be made anytime
to receive the benefit, which is retroactive to January 1, 2015. For
applications received after May 15, 2015, the first payment will be later
than the July 20, 2015 UCCB payment date.
The 2015 budget received Royal Assent on June 23,
2015. This means that the proposed tax changes which affected the
2015 taxation year are now in effect, including changes to RRIF withdrawal
factors, TFSA maximum contributions, increased Universal Child Care
Benefit, and other changes.
You may want to know, prior to the end of the year,
approximately what your total income tax, CPP and EI costs will be for the
year. Perhaps you would like to check the deductions on your payroll
cheque to ensure that they are accurate. There are free calculators
available for these purposes.
The ACES Plan will contribute $500 to the RESP of children
born to Alberta residents between Jan 1, 2005 and Mar 31, 2015, with $100 grants
payable to children who turn 8, 11 or 14 between Jan 1, 2015 and Mar 31,
2015. Applications must be submitted by July 31, 2015.
Some vehicles are not considered passenger vehicles, and
don't have expense limitations. Corporations expense motor vehicle costs
differently from unincorporated businesses. Employer provided parking may be a
taxable benefit to employees. Benefits from the personal use of an
employer's vehicle are included in the employee's taxable income, but a tax-free
per kilometre allowance can be paid to an employee for business use of their
vehicle. Trip logs are required when a vehicle is used for both business
and personal use, and expenses must be tracked for the entire year!
It's possible that a private health care plan is not
financially worthwhile for you, especially if it doesn't cover your pre-existing
medical conditions. If you are leaving a job with health coverage, see if
you can continue the coverage without a lapse so that your pre-existing
conditions will be covered.
Registration is required to receive BC PharmaCare
benefits. Every BC resident should register, even if they would
currently receive no benefits, because if income drops or prescription
costs increase, they will already be covered.
If your adjusted family net income was $30,000 or less
in 2014, you should be applying for reduced premiums for your MSP.
Net income is reduced by $3,000 for each senior, child under 18, or
disabled person, to calculate adjusted net income. You won't get reduced premiums without
applying. If you are a financial planner, accountant or tax
preparer in BC, please make sure your clients know this!
It's important to keep a record of the adjusted cost base of
your primary home as well as a cottage or 2nd home, in order to be able to
calculate the gain on sale.
Effective July 1, 2015, feminine hygiene products such
as sanitary napkins, tampons, etc. will be zero-rated for GST/HST.
This means that no GST/HST will be charged when these products are
purchased. Zero-rated products are still included as taxable sales
when calculating whether a business has reached the small supplier
threshold.
To qualify as a principal residence, a property does
not have to be the place where the taxpayer lives all the time, as long as
it is occupied at some time in the year by the taxpayer, taxpayer's
spouse, common-law partner, or child.
The income tax varies greatly depending on the type of
investment income you earn, whether Canadian eligible or non-eligible dividends,
capital gains, or other income such as interest or foreign dividends.
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.
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.
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.
We've added a table of the donation tax credit rates for
2015. Usually the rate for the first $200 of donations is the lowest
personal tax rate, and the rate for donations over $200 is the highest personal
tax rate. However, this is not always the case.
The deadline is May 15th, 2015, for applications to receive
the enhanced UCCB. If you have children under 18 for whom you have not
previously applied for the UCCB or the Canada Child Tax Benefit (CCTB), you will
need to apply for the enhanced UCCB.
The Canadian Tax Calculator has been updated for changes from
2015 budgets that have been tabled thus far. Other calculators that have
been updated include the Basic Tax Calculator, TFSA vs RRSP (new TFSA limit,
revised RRIF factors), Borrow to Invest, Investment Income Tax, and RRSP vs
Mortgage.
2 new high income tax brackets/rates effective July 1, 2015;
HST to increase for 2016; Residential Energy Rebate program ending; Financial
Corporations Capital Tax rate increase.
Seniors' School Tax Rebate increased and expanded, new
Volunteer Firefighter and Search and Rescue Tax Credit, Primary Caregiver Tax
Credit increased, Small Business Limit increased, tobacco sales tax increased,
business tax credits enhanced and extended, capital tax rate increase.
CRA has announced that the increase in the maximum
contribution to a TFSA effective for 2015 and later years can be acted on
immediately, even though the legislation is subject to parliamentary
approval. The $10,000 limit will not be increased for indexation in future
years. If you were age 18+ in 2009, have filed your tax returns, and have
never contributed, your contribution room is now $41,000.
The table of non-eligible dividend tax credit rates for 2015
is available. The only changes are for NB, NS and YT, but the 2015 budgets
for MB, NL and PE have not yet been tabled.
For most taxpayers, their gains and losses from the sale of securities are treated as capital gains and losses. This means 50% of the gains are taxed instead of 100%.
For some taxpayers, such as day traders, the gains and losses are determined to be business income, not capital.
The calculator has been updated for the provincial budgets
that have been tabled thus far. Great for your 2015 tax planning or
checking your 2014 tax return.
There are no proposed changes to the personal income tax
(PIT) system. Changes to business tax credits, including apprenticeship
training tax credit; paralleling Federal measures re the taxation of trusts and
estates; Provincial Land Tax reform.
The RRSP/RRIF Withdrawal
Calculator now includes the rates proposed in the Federal 2015 Budget, with an
option to use the old rates instead. The new rates, if they receive Royal
Assent, will apply to all RRIFs, LIFs, and LRIFs, no matter when the plan was
set up. The option for the old rates in this calculator only applies to
plans set up after 1992. To use old rates for plans set up prior to 1993,
you must use the RRIF Withdrawal Calculator.
A simplified form for 2015 and later taxation years is being
developed for taxpayers for whom the total cost of specified foreign property is
less than $250,000 throughout the year.
Dispositions of certain private corporation shares and real
estate occurring after 2016 will be exempt from capital gains tax when the
proceeds are donated to a qualified donee.
A charitable donation
that was initially reported on one spouse or common-law partner's return can be
transferred to the other spouse or common-law partner in a subsequent year.
Don't miss out claiming medical expenses. Private travel
medical insurance may qualify if nothing but eligible medical expenses are
covered by the plan. Home renovations may qualify if they enable a
disabled person to be more mobile within the dwelling.
The Yukon surtax was repealed effective January 1, 2015.
There was a change to both the eligible and non-eligible dividend tax credit
rates, as a result of the new highest personal income tax rate of 15%. The tax
rate tables have been revised to include these changes.
If an eligible expense also
qualifies as a medical expense, you can claim both the Seniors' Home Renovation Tax
Credit and the medical expense tax credit for the same expense.
If an eligible expense also qualifies as a
medical expense, you can claim both the Healthy Homes Renovation Tax Credit and
the medical expense tax credit for the same expense.
To go into business for yourself, you can either start from
scratch or buy the shares or assets of an existing business - see some of the
advantages and disadvantages of each.
Yukon changed personal income tax rates, added a high income
tax bracket, will mirror the Federal Child Fitness Credit (refundable in 2015),
is increasing Yukon Child Benefit and increasing political contribution tax
credit to match federal tax credit.
If you are receiving
severance or retiring allowance in relation to employment that was started
prior to 1996, then a portion of amounts received can be transferred directly to an
RRSP. This eligible retiring allowance is not taxable.
2 new high-income tax brackets were introduced effective
January 1, 2015, with rates of 21% and 25.75%, bringing the highest marginal tax
rate to 54.75%. A Seniors' Home Renovation Tax Credit was announced,
details to follow in the coming weeks. Fuel taxes increased. Many other
changes and cost-saving measures not affecting taxes.
Our Wills and Estate Planning page has many articles, including what happens to debts of the deceased, what happens if you die without a will, is a lawyer needed to write a will, who can challenge a will, and much more.
We have lots of articles related to your registered accounts,
including contribution limits, minimum withdrawals, withholding taxes, unlocking
locked-in accounts, and much more.
When an employer's vehicle is used by an employee, officer or
shareholder, a taxable benefit is calculated and included on the T4 as income to
the employee. Even the parking for an employee's own vehicle can be
considered a taxable benefit.
CRA has launched a new app, so
that tax information can be accessed on your tablet or smartphone. Check
the status of your tax return and RRSP and TFSA contribution limits.
When a taxpayer qualifies for the disability amount tax
credit but does not claim it, there is
no limit on the amount of attendant care expenses that can be claimed - the
Ontario claim amount would be the same as the federal claim. See the
letter from CRA confirming this.
2 new income tax brackets, new health care contribution levy,
lower charitable donations tax credit rate, increased gas/diesel and tobacco
taxes, increased support for working families.
Enhanced tax credit for experienced workers, gradual
elimination of health contribution, other tax credit changes. Reduced
eligibility for small business deduction, gradual reduction of general corporate
income tax rate.
Effective April 1, 2015, the Province of BC will offer
incentives of up to $5,000 for the purchase or lease of a new battery electric
or plug-in hybrid electric vehicle, and up to $6,000 for a hydrogen fuel cell
vehicle.
Whether Part XIII withholding tax from interest payments must be deducted depends on
whether the payment is to an arm's length or non-arm's length payee.
What is deductible and what is not - safety deposit box fees
are no longer deductible. Disappearing source rules - investment sold at a
loss for less than loan balance.
Make sure you calculate the maximum child care costs
correctly. For 2014, if you have 3 children ages 6, 9 and 15, the annual
allowable maximum is $15,000 ($7,000 + 2 x $4,000). If you spend $8,000 each on
the 6 and 9 year olds and zero on the 15 year old (total $16,000), you can
deduct the lesser of $15,000, and 2/3 of earned income. This is deductible
by the spouse with the lower net income before deducting the child care costs.
The budget announced changes to the Seniors' Drug Plan (lower
income threshold), Active Families Benefit (now income tested), and Graduate
Retention Program, which will become a non-refundable credit.
An employee can complete the CPT30 election to stop paying CPP
contributions on the date that they turn 65. This election applies to both
employment and self-employment earnings. If the person only has
self-employment earnings the form is not needed - the election is done later, on
the tax return for that year.
More than one tax return may be filed for a deceased
taxpayer, allowing the taxpayer's income from the year of death to be
split among different returns.
Reinvested distributions are not paid in cash, are
taxable, but also increase your adjusted cost base so that your capital
gain is less when you sell. These distributions may not be
identified on your T3 - how to find the information you need!
Maximum monthly premium rates will increase by 4.2% for 2016. The increase was 4.1% for 2015. Those receiving assistance will not be affected by the increase. However, someone who manages to increase their adjusted net income from under $30,000 to over $30,000, thus now paying the full premium, will face a 46% increase.
This new non-refundable tax credit, available for 2015
and later tax years, provides a tax credit equal to 50% of the BC child
fitness credit. No need to keep additional receipts - just retain
the receipts for the child fitness credit.
Effective today, Feb 18th, lift chairs designed to
facilitate standing up or sitting down, when sold on the prescription of a
practitioner, are exempt from PST. Check the list of PST exempt
items - not all retailers provide the exemptions properly.
The 2015 budget announced the usual MSP increase for 2016; new non-refundable
tax credits for 2015 for education coaching and child fitness equipment;
increase to the low income tax reduction; immediate PST exemption for lift
chairs prescribed by a practitioner; extension of training tax credits;
extension of mining flow-through share tax credit.
There are several ways of splitting income, either with a spouse or
child. Some methods of splitting income with a spouse are done only
on the tax return, such as pension splitting and the Family Tax Cut.
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.
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 always be prepared or reviewed by a
professional accountant.
BC's
budget will be tabled on Tuesday Feb 17th. Alberta expects to table
their budget by the end of March, and they and Manitoba have pre-budget
consultations available online until Feb 28th (27th MB). The Northwest Territories budget was
tabled on Feb 5th, with no tax changes. Other budget dates are unknown as
yet.
Did you own foreign property with a cost exceeding $100,000
Canadian at any time in 2014 or earlier years? You (Canadian resident
individual, corporation, certain trusts or partnerships) may have to file the
T1135 foreign income verification report. The penalties for not filing are
onerous. Types of foreign property include securities, real estate, life
insurance policies, and more. Learn what is included and how to complete
the T1135. If your foreign real estate had additions/renovations done that
were capital in nature, did this increase the adjusted cost base to over
$100,000 Canadian?
With the Service Canada Tax Slips Online service, you can
access your official 2014 tax slips online. A
My Service Canada Account (MSCA) is required to do this. It may take 5 to
10 business days to receive your Personal Access Code to register for MSCA.
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,
depending on their net income. 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.
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 $800,000+
lifetime capital gains exemption for the shareholder, on disposal of the
shares. Shareholder loan interest must be paid by January 30th to
avoid deemed taxable benefit.
Contribution limits, qualified investments, RRSP/RRIF
withdrawal calculator, RRSPs and borrowing, getting your money out of
RRSPs, withholding tax and more.
This article discusses which tax deductions or credits can be claimed by either spouse. In some circumstances, the income from dividends from taxable Canadian corporations can all be claimed by one spouse.
The RRSP vs Mortgage (or other loan) Calculator has been
updated with 2015 tax rates. Unless the return on your RRSP will be
consistently higher than the interest rate on your debt, it's better to pay down
your debt.
NetFile will be available from Feb 9 2015 to Jan 15 2016 for
filing 2014 tax returns. Dates for EFile are usually the same, but have not yet
been announced.
Our table of investment returns on stocks, bonds and T-bills
has been updated to include 2014. The CPI All Items inflation rate for 2014
was 1.5%, but the inflation rate for food was 3.7% and shelter 2.4%. The
TSX was up 7.4% in 2014. The S&P 500 increased by only 13.7% in US$, but
24% in Cdn$.
Employees previously claiming the child amount must file new
Federal TD1 forms. If the minor child is mentally or physically infirm, the
Family Caregiver Amount can still be claimed.
T4 slips for 2014 must be distributed to employees on or
before March 2, 2014, because February 28th falls on a Saturday. They can be filed online, no need to wait for a web access code.
The Ontario expense limit for attendant care only applies if
the federal limit also applies, when the disability amount is being claimed,
contrary to what is published in a CRA document.
The LCGE is increased for indexation to $813,600 for
2015. Quebec announced an increase in their LCGE to $1 million for
qualified farm and fishing property for 2015 and later years.
Users of "My Business Account" can now authorize
CRA to withdraw pre-determined amounts from their business bank account on a
specific date in order to pay many different types of taxes.
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