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Before making a major financial decision you
should consult a qualified professional.
Employment income is included on a T4 for the year in which it is received, not
earned. Payment made in Jan 2021 for wages earned in Dec 2020 is reported on a 2021 T4, not on a 2020 T4.
2020 amounts for iShares are now available. These are not paid to you
but are reinvested, requiring an increase to your ACB, reducing future capital
gains.
RRSP contributions from March
1, 2019 to March 2, 2020 should have been included on Schedule 7 filed with the 2019 tax return. Find out what
to do if the contribution wasn't recorded.
The rates for 2021 maximum withdrawals from
federally-regulated LIFs and LRIFs are now available on the website of the
Office of the Superintendent of Financial Institutions.
The CRB is clawed back at a rate of 50
cents for every $ of income over $38,000, to a maximum amount of CRB
received. Our detailed calculators include this clawback.
The per-km amounts that
may be paid
tax-free to employees or officers will remain at 59 cents per km for the first 5,000 km and
53 cents per km for each
additional km.
For the Territories, the rates are also unchanged, at 63 cents per km for the first 5,000 km and 57 cents per km for each
additional km.
2020/2021 standby charge rates will not change,
but employees will be able to use
2019 mileage to determine if they qualify for the standby charge reduction for
both 2020 and 2021.
The prescribed rate used
to determine the operating cost taxable benefit to an employee for an
employer-owned vehicle is reduced by 1 cent to 27 cents per km.
The
prescribed rate used to determine the operating cost taxable benefit to an
automobile sales person for an employer-owned vehicle is reduced by 1 cent to 24
cents per km.
The 2021 expense
limitations for passenger vehicles for interest expense, monthly lease costs,
and capital cost allowance (CCA) will remain unchanged from 2020.
CRA announced a simplified method for claiming employee WFH expenses, a
temporary flat rate of $2 per day to a maximum of $400. Detailed claims
can still be made instead.
The Canada Emergency Rent and Wage Subsidies (CERS and CEWS) are
included in income immediately before the end of the period to which they
relate. Subsidy for 4 wks ending Oct 24th = Oct 24th income, no
matter when received.
Applications for the $60,000 loan or the $20,000 expansion can now be made
through several financial institutions, but not yet all. Mar 31, 2021 is
deadline for applications.
- No personal or corporate income tax changes
- GST proposals re e-commerce transactions
- increased Canada Child Benefits for 2021
- CEBA deadline extended
- home office expenses simplified
- more CEWS details re periods 11 to 13
- changes to stock option benefits
This month's video discusses:
- Canada Emergency Rent Subsidy, lockdown support
- Canada Emergency Wage Subsidy - new information
- Employment Benefits - COVID-19
- Passing on the Family Cottage
- Capital Cost Allowance Retroactive Adjustments
A TFSA withdrawal increases the TFSA room in
the following calendar year. If you are thinking of making a
withdrawal soon, do it by Dec 31st, in
order to have your TFSA contribution room increased by the withdrawal amount on
Jan 1, 2021.
If you turned 71 this year, your RRSP must be converted to a RRIF, or used to purchase an annuity, by
Dec 31st. Your financial institution may automatically convert it if you don't.
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.
The last trading date in 2020 for Canadian and US publicly
traded stocks is Tuesday, December 29th. Stocks purchased or
sold after this date will settle in 2021, so any capital gains or losses
on sale will apply to the 2021 tax year.
Haven't filed your 2010 tax return yet? Taxpayers are running out of time to file requests under the taxpayer relief provisions for the
2010 tax year and any reporting period that ended in the 2010 calendar year.
Great for tax planning! For all provinces
and territories except Quebec (2020/2021 for QC coming soon). Includes inputs
for CRB etc, and calculates CRB clawback.
The Canadian Federation of Independent Business is asking the government to
freeze CPP premiums at current levels for 2021, instead of implementing the
planned increase of up to 9.3%.
$200 advance payments were provided to Manitoban seniors age 65+ earlier in
the year, but those who did not receive the credit already can claim it on their
2020 tax return.
The PBO indicates in this report that they are prevented from doing their job
properly because the government is no longer providing the necessary data to
them.
Employer Health Tax $1 million exemption continues to 2028, indexed
thereafter, instalment threshold increased to $1.2 million; Refundable Seniors'
Home Safety Tax Credit for 2021; other measures.
The maximum pensionable earnings for 2021 will be $61,600, up 4.94% from
2020. The contribution rate increases to 5.45%, with max per employee $3,166.45,
up 9.26% from 2020.
Bill C-9 was tabled November 2, 2020, providing the legislation for CERS, and
changes to CEWS. CERS will be administered by CRA in the same manner as CEWS.
The Jan 2021 prescribed rate will remain at 1% based on the average yields for 3-month t-bills in Oct 2020 (1/10th of
1%).
The rate can't go below 1% because it's rounded up to next higher whole
percentage.
This month's video discusses:
- New Canada Emergency Rent Subsidy (CERS)
- Expanded CEBA
- Extended CEWS
- Interactive tool for financial assistance for businesses
- Working from home
- Travel home office to employer's office
- Principal residence exemption (PRE) multiple sales
Estimator for periods up to December 19, 2020 - very useful tool to calculate
the subsidy, and to forecast future subsidies based on different scenarios.
Shows taxes payable, average and marginal tax rates for all provinces for
employment/other income, capital gains, eligible and non-eligible Canadian
dividends. Compare 6 years of taxes payable by province.
The tables show the combined
federal and provincial/territorial tax rates for capital gains, both types of
Canadian dividends, and other income. Things could change with 2021
budgets. Not confirmed to CRA or to Revenue Quebec.
If you are an employee who always works from home, or are temporarily working
from home, the requirement for this from your employer should be documented now.
If a taxpayer enters long-term care, they may still retain the principal
residence exemption for their home if their child lives in the home, even if the
child pays rent.
An employee who normally works from home might be able to either deduct
travel expenses or receive a tax-free mileage allowance for occasional travel to
their employer's place of business.
This calculator will now print the input and results sheet with no ads or
borders. You should not borrow to invest unless you are an experienced
investor.
Apparently some financial institutions are using LOC or Visa-type loans for
CEBA loans. The forgivable 25% is based on the maximum owing up to Dec 31,
2020.
A new subsidy to provide rent/mortgage support until June 2021, directly to
tenants. Expense subsidy of up to 65% until Dec 19, 2020, plus top-up of 25% for
organizations shut down by COVID.
An expanded CEBA will provide up to $20,000 further interest-free loan, 50%
forgivable if repaid by Dec 31/22. Attestation of COVID-19 impact will be
required. CEBA deadline extended.
The NL budget had no income tax changes. There were increases in
tobacco and vaping product taxes and carbon tax, and a reduction of the
provincial portion of gas tax.
This month's video discusses:
- CEWS audit letter / what to do
- CERB replacements
- Dividends paid when CRA is owed money
- Reasonable meal allowances
- Loan documentation
- T2 Schedule 50 - CRA letter campaign
Employers and employees should be aware of minimum wage rates
and current employment standards. NL's minimum wage will increase on Oct
1st. The highest minimum wage province is AB.
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 can be eliminated by donating certain types of capital property to qualified
donees.
If you were planning to make a donation of cash but could donate property
instead, you can save some tax money. Best to do this by the end of
November for shares, or possibly months earlier for mutual funds.
Capital losses can be transferred to a spouse by utilizing
the superficial loss rules. Your spouse must hold the shares for more than 30 days
after your disposition before selling the shares.
The deadline for new applications under the commercial rent
assistance program is Sep 30, 2020. The deadline to opt-in for the
September extension is Oct 30, 2020.
Some financial institutions now offer a joint account in which the
account holder retains complete control, but which will pass to the named
successor account holder(s) upon death. This eliminates uncertainty in
regard to ownership and probate.
Bill C-2 includes 3 benefits to replace CERB, as well as a provision to
give the Government authority to spend up to $17.1 billion on
specific measures from Oct-Dec 2020.
BC's plan includes grants for small/medium businesses, tax credit for
increased payroll in Q4 2020, 100% PST rebate for machinery/equipment, as
well as measures re child care, skills training etc.
The 2021 base EI rates are unchanged from 2020 due to the pandemic:
1.58% for employees, 2.212% for employers. However, the maximum insurable earnings
(MIE) is increased by 3.9% to $56,300. Quebec's rates are reduced to 1.18%
for employees and 1.652% for employers.
Besides the extension to September, commercial landlords can now make NEW
applications for up to 6 months (Apr to Sep) of rent relief at once. Revised
deadlines
not yet announced.
The rate for transport employees and other individuals to claim meal expenses
using the simplified method has increased to $23 per meal from $17, effective
Jan 1, 2020.
The OSHPTG is a
refundable tax credit for Ontarians. CRA is warning about schemes where
promoters claim they can get a tax refund for taxpayers relating to the OSHPTG.
The deadline for applications for CEBA loans has been extended from August 31
to October 31, and they're working on changes so that those without a business
bank account might be eligible.
Attendant care costs
can be claimed for persons who are eligible for the disability amount, and in some situations for persons who do
not qualify for the disability amount. The limit on Federal and Ontario attendant care
expenses
only applies if the taxpayer claimed the disability amount.
Don't use paper forms when you can NetFile for free -
some software packages are free for everyone. Volunteer Tax Clinics
are also still available, many until September 30th.
This month's video discusses:
- CPP - When to apply
- Gross negligence penalties - denied business expenses/unreported income
- Canada Emergency Wage Subsidy (CEWS) - estimator/resources
- Real estate commissions court case
To help CRA validate payments under CEWS, CERB and CESB, there will be
4 new employment income codes. These codes correspond to the periods for which CERB payments are
being made.
A CEBA application hotline is now available so that you can follow up with questions on the status of your application. If your question is regarding eligibility criteria or non-deferrable expense criteria, they will just tell you that what is on the CEBA website applies.
If you've made RRSP contributions not done through your employer, you can
request a reduction to the tax withheld from your employment income. If
self-employed, you may be able to reduce instalments.
If line 23600 of your tax return would be negative if not for the rule
that it is zero if negative, you may have a non-capital loss that can be
carried back 3 years or forward up to 20 years.
The value of the RRSP or RRIF is included in the income of the
deceased. When there are named beneficiaries, no tax is withheld
when the account is paid to the beneficiary, so the estate plan should
ensure that funds are
available to pay any tax liability. Named beneficiaries can be held liable for taxes unpaid by the estate.
Canada Revenue Agency unveiled its new CEWS 2.0 wage subsidy calculators on Aug 11th -
online calculator for small number of employees, or downloadable spreadsheet for
large number of employees.
Payments will be issued beginning this fall. If you are eligible
for the disability tax credit but have not applied, or your certificate
expired in 2019, you must apply by Sep 25th. Payments will be issued
automatically for eligible
individuals.
The rate for calculating
taxable benefits from low-interest and interest-free loans to employees and shareholders,
and for loans to spouses or children, will remain at 1% for Q4 2020 beginning
Oct 1st.
Everyone in business or with a rental property is faced at some point with the decision as to whether
an expense
should be capitalized or expensed. There are general guidelines, but in some cases the decision is left to
the courts.
This month's video discusses:
- COVID-19 - CEWS Major Changes
- COVID-19 - Disability Support
- Trading in Securities
- Loans for Value - Income Splitting Tool
- CRA Project on U.S. Real Estate Coming?
- Voluntary Departure
Bill C-20, which has legislation related to the one-time tax-free disability
payment, received Royal Assent July 27, 2020. Those who have not yet
applied for the disability tax credit but are eligible have until September 25,
2020 to apply.
Payment due dates for individual, corporate and trust returns are extended to
Sep 30, 2020 from Sep 1, 2020. No penalties or interest will be charged,
including the late-filing penalty, as long as the return is filed by Sep 30th -
but October estimated benefits/credits may be affected! Interest on existing tax debt is waived for certain periods.
Although the OAS recovery tax notices sent out in July 2020 appear to have
the correct tax amount, the rest of the information has not been updated with
2020 threshold/dates.
Results will now print without ads, headers, etc.
Forecast your increases in and withdrawals from your RRSP or RRIF, see how
long your investments will last.
Eligibility for this tax-free payment will be expanded to CPP disability
benefit recipients, Veterans receiving disability supports, and those who
qualify for the disability tax credit but have not yet applied, if they apply
soon.
The CEWS has just become a lot more complicated, and is now available to a
lot more businesses. For periods starting July 5, 2020 and later, the %
subsidy is dependent on the % revenue reduction, and ANY revenue reduction is
eligible.
The tuition/education/textbook amounts carried forward are always reduced by
the maximum amount that can be claimed in the year, even if the maximum
amount is not claimed. This sometimes means that credits such as the
dividend tax credit cannot be used.
The Economic and Fiscal Snapshot summarized all COVID-19 financial relief.
The deficit is projected to be $343.2 billion for the 2020-21 fiscal year. This would increase the interest-bearing debt
to over $1.4 trillion. No tax changes were announced.
This very simple tax-planning calculator which shows
taxes payable and marginal tax rates for all provinces and territories
will now print results on 1 page with no ads/headers etc. This
calculator can help you estimate how much you'll owe next April on those CERB
payments!
In some provinces, including BC, having multiple wills can reduce probate fees. One will can be prepared for the assets
requiring probate, and a separate will can be prepared for the assets not
requiring probate, such as shares of a private corporation (in BC).
Funding received from government sources can be
excluded from the determination of "qualifying revenue" for
calculation of the 30% revenue decline for the wage subsidy.
Shares can be transferred from a non-registered account
to a registered account such as an RRSP. However, if you transfer
shares on which there is a loss, the loss will not be deductible. If
you transfer shares on which there is a gain, you will have a taxable
capital gain.
Updated FAQ: Which expenses are/are not eligible for the non-deferrable expenses stream business loan of up to $40,000 (25% forgivable), and what documentation is required.
Only the tenants approved for the April to June Commercial Rent
Assistance are eligible
for the July support, and they are automatically eligible, but the landlord must
apply, and not all tenants need to be included. Clawback provisions are being removed retroactively.
The accounting treatment for CECRA and the 25% forgivable portion of the CEBA
loan is similar to the tax treatment - included in income or deducted from
expenses when received, unless it relates to expenses in future periods.
If your income for 2020 has been reduced due to COVID-19, you can apply
for an income review in order to reduce your PharmaCare deductible and
family maximum.
This month's video discusses:
- National Leads Tip Program
- Fake Kids Enforcement Notification
- CERB, CEWS, and CESB Enforcement
- Managing Your Business During COVID-19
- Buyers and Sellers of PPE
- POST Promise
- CEWS Program Extension
- CEWS Adjustment Requests
- CERB $1,000 Threshold Update
- Bill C-17 (CERB, CEWS, Disability Payment)
-
CECRA Extended
-
CEBA Expanded Eligibility
The BC Home Owner Grant reduces the property taxes payable on
your principal residence. Once a grant has been claimed for a tax year, another
grant cannot be claimed by you or your spouse.
Businesses with 2019 payroll less than $20,000 and eligible
non-deferrable expenses between $40,000 and $1.5 million are now able to apply
online for CEBA through their financial institution.
This will provide up to $5,000 to
support student's post-secondary education costs in the fall, for students who
take part in national service activities. Paid work placements are also
available.
Your OAS is taxable, and if your net income before
adjustments (which also means before deducting loss carry-forwards) exceeds
$79,054 in 2020 you will have to repay 15% of your income over that amount, to a
maximum of the total OAS you received.
Tax planning should be top of mind long before next April,
and for business owners and high-wealth individuals it should always be on
your mind. If your tax situation is complicated, find a tax specialist now, not next tax season!
See the big
difference in taxes payable on different types of investment income.
We've added "net income after tax" to the calculator.
You can now print a 1 page summary of results with no ads (in
colour if your settings are correct).
The links to these resources have been moved to the top of the page for
easier access. They include draft legislation, bills, Hansard (frustrating to
read), GC Infobase (LOTS of data), and PBO independent financial analysis.
We've added a new print function to print a 2
page summary of results with no ads, headers or footers. It will print in
colour with Chrome, Firefox or Vivaldi if your settings are correct.
The economic update details the reduction of $8.8 billion to Quebec's
revenue due to the economic contraction, and provides information on
fiscal measures taken re COVID-19.
PEI is raising the basic personal amount, lowering the small business
tax rate, increasing the threshold for the low-income tax reduction, and
creating a $500 non-refundable Children's Wellness tax credit. All
measures effective for 2021.
Estimated COVID-19 related spending has increased to $169 billion for
the 2020-21 fiscal year which started Apr 1/20. This increases the
interest-bearing debt for a family of 4 to about $157,656.
Applications under the CEBA "Non-Deferrable Expenses Stream"
were to be accepted commencing Friday June 19th, but the website indicates
there will be a "slight" delay in commencement. This is for businesses
with annual payroll under $20,000 and eligible non-deferrable expenses between $40,000 and $1.5
million.
CERB has been extended by 8 weeks, making it available to eligible
workers for up to a total of 24 weeks. Don't forget it's taxable, but
no tax is being deducted!
We've added a new feature to this calculator, which allows you to print
without ads, borders, etc. But to print in colour, you'll have to use
Chrome or Vivaldi. We'll be adding this feature to other calculators
over time.
Those with a disability tax credit certificate will receive a one-time
tax-free payment of up to $600, reduced by the one-time tax-free OAS and
GIS payments.
This month's video discusses:
- Charitable Status - Is Atheism a Religion?
- Telecommuting Allowances and Reimbursements
- 10% Temporary Wage Election
- Supplementary Unemployment Benefit Plans
- Director Liability - Challenging the Corporate Assessment
The consultation, which closes June 5, 2020, seeks input re
potential changes to the CEWS program. You can participate by completing a short survey, or provide more
detailed feedback by email.
On May 25th the government announced the launch of a
toll-free hotline, with 125 CPAs available to provide customized financial
guidance to the smallest business owners to help them through this crisis.
The CECRA portal opened this morning for registrations - the
day you register depends on province/number of tenants. We've made a
couple of cautionary notes. Patience will be required if you try to call them.
Do you still own capital property for which you elected to
claim a capital gain and an exemption in 1994? Hopefully you still have
all the forms you filed for the election.
On May 25, 2020, Canada Revenue Agency confirmed that as long
as the tax return is filed by the payment due date of September 1, there will be
no late filing penalty. This applies to returns due June 1 or June 15, and
to other information returns, elections, etc, such as the T1135.
If you have employment or self-employment income exceeding
$3,645 in 2019, have claimed medical expenses or a disability supports deduction
and have family net income less than $52,599, you may be able to claim a
refundable amount of up to $1,248.
The application portal for CECRA will open on May 25th. Landlords must
apply for all 3 months at once. 70% revenue decline from 2019, or from
Jan/Feb 2020, is based on average of April, May, and a forecast of June 2020
revenues.
CEBA (interest-free loans) is being expanded to be available to sole
proprietors, businesses that rely on contractors, and family-owned corporations
that pay employees through dividends rather than payroll.
The amount of METC is dependent on the taxpayer's net income for tax
purposes. If net income is too high, there will be no tax
credit. We've added a few examples of the calculation at different
income levels.
For each employee, employers will be able to choose between 2 periods for
baseline remuneration: wages paid Jan 1 to Mar 15/20, or Mar 1 to May 31/19.
This change retroactive, so will apply to the first claim period
starting Mar 15/20.
The CEWS program is being extended by 12 weeks to August 29,
2020. Eligibility is being expanded, and the 30% revenue decline
test and other provisions may be adjusted, with the intention to spur jobs
and growth.
Announced May 13th, about $1 billion to help "regional economies and
small and medium businesses" that may require additional help to recover
from the COVID-19 pandemic, but have been unable to access existing support
measures.
Community organizations are hosting free virtual tax clinics. Volunteers may be able to complete and file your taxes for free, by videoconference or by phone.
On May 12, the Prime Minister announced a one-time tax-free payment of
$300 for seniors eligible for OAS (regardless of income level), with an
additional $200 for seniors eligible for the GIS.
In effect, yes, this is now being done, because the Bank
of Canada has implemented a policy called Quantitative Easing (QE), and
through this is buying government of Canada debt.
CRA has started making calls to follow up on subsidy
claims. Received a call? Make sure it's not a scam! How to
document your calls to or from CRA. How to submit service complaints
as well as kudos for good service.
Employees should pay the
premiums on their disability insurance to ensure the income will be
tax-free. If self-employed, it's extremely important to buy
disability insurance to protect against extended loss of income.
Deductions, refundable and non-refundable tax
credits, attendant care expenses. Some
tax credits can be transferred between spouses. Registered Disability Savings Plans
(RDSPs), government benefits, and
unlocking locked-in pension plans.
Tax issues for students and/or parents: eligibility for tuition, education and student loan
interest tax credits, private school tuition fees, deducting moving
expenses, child care expenses. Added: COVID-19 benefits for
students.
See how much the $145.6 billion direct COVID-19 costs (federal only, doesn't
include provincial) will increase the interest-bearing debt of Canada for every
adult and child. Could this have been avoided?
Although CERB payments are taxable, no tax is being withheld from the
payments. The tax will have to be paid when the income is reported on 2020
tax returns. Use our calculator to estimate what you'll owe.
Student financial assistance increases for fall 2020, emergency student
benefit for those ineligible for CERB or EI, student service grants, removal of
restrictions of hours worked for international students.
This month's video discusses:
- COVID-19 Updates
- Working From Home - Home Office Costs
- Directory Liability re GST/HST
- EI Voluntary Departure
- Backdating of Documents
- Childcare Costs Denied
Funds loaned to a lower-income spouse or a child can be used to purchase investments,
and tax on
the investment income will be paid by the lower-income
spouse or child at a lower marginal rate.
Applications for CEWS opens today, April 27th. The 3rd version of CRA's CEWS calculator doesn't seem to follow the legislation.
The Tax Templates Inc calculator follows the legislation.
The CECRA will lower rent by 75% for small businesses affected by COVID-19,
by providing forgivable loans to qualifying commercial property owners to cover
50% of 3 monthly rent payments, for April, May and June. Details not yet
available for how this will be handled for landlords with no mortgage.
If your spouse has low income, you may be able to claim a spousal amount tax
credit, even if the spouse is a non-resident. If you separated or divorced during the year, this credit may
still be available.
Tax is withheld from RRIF withdrawals in excess of the minimum amount.
For 2020, tax will only be withheld for withdrawals in excess of the original
unreduced minimum amount.
BC, Ontario, and Alberta are the lowest tax provinces for a single person earning $50,000.
See also comparisons for a single income family with 2 kids. Taxes include
CPP/EI, ON Health Premium, and QC 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 Alberta and BC.
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 CAI is now included in the Detailed Canadian Tax and RRSP Savings
Calculator. The amount must be entered by the user, and is not checked. The
calculator includes a link to the CAI article where amounts are available.
Sometimes when we've modified a calculator that you've used recently, it will
appear "messed up". This is because it retains data. You'll have to
clear your browser cache to fix this.
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. The prescribed interest rate for s/h loans for
Q2 2020 is unchanged.
Moodys hosted a Facebook Live video re the CEWS, answering many questions
from viewers. It's still unclear how some parts of the CEWS will be
administered, especially for shareholder-employees.
When an individual gives funds for their spouse to contribute to a TFSA, once
the funds are withdrawn from the TFSA, income and capital gains from those funds
will be taxed in the hands of the individual, not the spouse. This is not
the case for spousal contributions to an RRSP.
The calculator has been modified to include the 25% reduction in the RRIF
minimum withdrawal for 2020. If you haven't converted your RRSP to a RRIF yet, you can still use this
calculator to project your earnings and
withdrawals for the next 40 years.
There is no withdrawal necessary in the year a RRIF is set up, but there are minimum amounts that must be withdrawn
annually starting in the year after setup.
Eligible child care expenses can include day-care centres and nursery schools, individual child
care services, day camps and day sports schools, private school costs (the
portion of tuition costs relating to child care services), boarding schools, and
overnight sports schools and camps.
This non-refundable tax credit is clawed back when the income threshold of
$37,790 (2019 federal) is exceeded. Capital gains can cause a clawback even when
offset completely with capital losses carried forward.
Eligibility for this non-refundable tax credit includes persons with a severe and prolonged mental or
physical impairment which significantly restricts
the ability to perform more than one basic
activity of daily living. Form T2201 must be completed by a medical
practitioner to claim this credit.
This is a comprehensive summary of financial relief
announced thus far for individuals, businesses, non-profits and others. It
includes links to many resources.
Eligibility for this payment will be determined from 2019 tax returns, no
need to apply. Income thresholds increased, so more individuals may be eligible
for the one-time payment.
Business will be able to apply for the 10% Canada Emergency Temporary Wage Subsidy via an online portal
which will hopefully be available soon. The subsidy will be available to
businesses which have had a 30% drop in revenue compared to Mar, Apr and May of
last year. See the article for more details.
If you made RRSP contributions from March
1, 2018 to March 1, 2019, this should have been included on Schedule 7 which
was filed with your 2018 tax return. Check our article to find out what
to do if the contribution wasn't recorded, and which line number to use when
adjusting your tax return with CRA.
If your business is incorporated, you must file a
separate corporate income tax return. If not, the business income is
included on specific forms in your personal income tax return. A
professional accountant can help to ensure that you claim all allowable
expenses.
If you have a business or a rental property, you have
to decide whether
an expense is capital or current in nature - in other words, whether it should be capitalized or
expensed, or if it is personal use. General guidelines can help.
The T3 you receive for your income from an ETF may have an
amount in box 21 for capital gains. It is possible that all or part of
this amount was not actually paid to you, but was reinvested. This
increases your adjusted cost base (ACB) for the amount of reinvested
distributions, which reduces your capital gain when you eventually sell the investment.
When you receive dividends from Canadian public
corporations, 138% of the dividend is included in taxable income. Due to the dividend tax
credit, the tax on the dividends is much less than it would be on employment
income, interest, or foreign dividends.
Personal income tax system to be indexed rate starting in 2021; new incentive
to encourage investment in the chemical fertilizer sector; extend manufacturing
and processing exporter tax incentive for 3 years; and more.
Residential non-owner-occupied property tax rate reduction, student loan rate
reduced, new carbon pricing plan, no personal or corporate income tax changes.
Federal government support for small and medium businesses:
- government-backed interest-free bank loans, partially forgivable,
- 10% temporary wage subsidy and 75% wage subsidy.
- GST/HST remittances can be deferred until June.
The Bank of Canada further reduced the target for the overnight rate, to
0.25%.
This month's video discusses:
- COVID-19 - lots of resources
- Employment Insurance - need to file for EI on time
- Directory Liability re Payroll Withholdings
- Tips - Gross Negligence Penalties
- Is it a Business? Start-ups and Wind-ups
- CRA My Account - Uncashed Cheques
Some non-taxable income is not reported on tax returns. Some must be reported and later deducted,
affecting some tax credits, clawbacks, and income-tested benefits.
All provinces and territories have created special web
pages to provide information on COVID-19, how to prevent it, and what financial and other
supports are being provided.
Which expenses are deductible and which are not?
When does interest become non-deductible (disappearing source
rules)? Where are these expenses claimed on the tax return?
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.
This free tax service is available for those with
modest incomes - $35,000 for an individual, $45,000 for a couple (add
$2,500 for each dependant), as long as the tax situation
is relatively simple.
We've assembled a page of resources including links to
government and financial institution information, as well as Video Tax News
information re COVID-19 measures. Information on student loans, income support
for workers, and business supports.
Retail Sales Tax rate reduced to 6% July 1, 2020, other RST rate reductions;
Green Levy effective July 1, 2020, to replace federal carbon tax; probate fees
eliminated July 1, 2020.
The 2019 tax deadline is extended to June 1, and tax balances and instalments may be deferred till after Aug 31 without interest or penalties. Support has been announced for small businesses, employees, self-employed, etc.
The refundable tax credit for caregivers will be enhanced and
made more accessible. There are many measures concerning businesses, but
no change in personal or corporate income tax rates or dividend tax credit
rates.
If a property such as a principal residence has changed in
use from personal use to income-producing (or vice-versa), there is a deemed
disposition. Fair market value must be determined, and special rules apply for
the depreciable portion of the property.
In kind (securities) transfers are not on your T5008 and
Trading Summary; Reporting foreign transactions and holdings; Trade date vs
settlement date and much more!
The Yukon small business corporate income tax rate will be
reduced to zero effective Jan 1, 2021. Yukon's basic personal amount tax
credit will mirror the changes to the federal basic personal amount.
If a deceased
Canadian resident who is not an American citizen owned U.S.-situated assets
exceeding $60,000 US in fair market
value at the time of death, a US federal estate tax return must be filed.
Read the article, and try out our calculator.
There were no new tax changes announced. Corporate general income tax rate reductions were
previously announced. The target is to have a small budgetary surplus by
the 2022-23 fiscal year.
This month's video discusses:
- T1 Season - What's New
- U.S. - New Disclosure Requirements for Crypto Activities
- Vehicle Logs/Apps
- Tenant Relocation Assistance - Taxable?
- Starting a Business While Collecting EI
- In-Kind Contributions to an NPO
No personal tax changes were announced. Corporate tax rates
to be reduced: general to 14%, small business to 2.5%. Vaping products to be
taxed, tobacco taxes increase. Digital media and digital animation tax
credits will be extended.
If that debt is a tax
debt, it can be recovered by CRA from named beneficiaries of registered plans,
or from others to whom the deceased transferred property prior to death.
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.
Our tax rate tables have been revised to include
the new BC top tax rate of 20.5%. This results in a combined federal/BC top
tax rate of 53.5% for taxable income over $220,000.
The budget introduces a new top personal tax rate of 20.5%, as well as
PST on carbonated beverages and streaming services such as Netflix and Amazon
Prime. A new BC Access Grant for students is also introduced. Carbon
tax rate increases for 2020 and 2021 are detailed.
Turning 65 this year? Other tax credits changing? Complete a new TD1
form to give to your employer. Your TD1 form determines your tax
withholdings. Working part time = maybe no tax withholdings.
This
sale MUST be reported on the tax return, even if it is 100%
eligible for the principal residence exemption. When there is more than one
owner, each will report their share of the sale.
The general corporate tax rates have been reduced for 2020 in
Alberta and Quebec, and the small business tax rate has been reduced in Ontario,
Quebec and Prince Edward Island.
Are you confused about the 2019 changes to the CPP? The
contributions are separated into 2 parts for the tax return. The original 4.95%
CPP is used for a tax credit as usual, and the additional contribution for
enhanced CPP is allowed as a deduction from income.
The Bank of Canada holds about $888 million of unclaimed
balances, and the BC Unclaimed Property Society holds over $159 million. There
are separate Alberta and Quebec unclaimed property registries.
Deductible expenses, need for a trip log (CRA has a car
expense project), expense limitations, auto taxable benefits, and GST/HST input
tax credits on vehicle allowances.
There may be circumstances that require you to file a tax
return, including the sale of your principal residence. You should file a tax return even if you have little or no income,
to
receive
refundable tax credits, GST/HST credit, and to establish eligibility for other
government programs and services.
We have many articles on filing your tax return and how this
can be done, as well as articles about different types of taxable income,
deductions and tax credits, and many other topics. Make sure you
take advantage of available tax credits!
Are you an aspiring entrepreneur? Should you
start your own business, or buy the shares or assets of an existing one?
Check out advantages and disadvantages.
You can do an in kind transfer of shares from a non-registered account
to a registered account such as an RRSP. However, if you transfer
shares on which there is a loss, the loss will not be deductible. If
you transfer shares on which there is a gain, you will have a taxable
capital gain.
Use our calculator to calculate your 2020 minimum annual withdrawal, and to estimate your earnings and withdrawals for the next 40 years. Works for non-registered also!
2019 was a great year for stocks! See returns for 1/5/10/20/40/50 & 70 years, and the growth of $1,000 invested.
Over the past
10 years one would be losing money after inflation by investing in
Canadian 3-month T-bills or Canadian government 1-3 year bonds.
Use our investment return calculator to determine your
returns for 2019 or any time period for a particular investment or investment
account, or your entire portfolio.
Assets are sometimes put into joint ownership with right of
survival in order to minimize probate fees. A recent court case highlights
why this is sometimes a very bad idea!
All income and
expenses must be reported on your tax return in Canadian dollars, converted
either at the transaction date exchange rate, or the average exchange rate for
the year. The average US exchange rate for 2019 is 1.3269, which can be
used for dividends, but not for purchases and sales.
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