How to reduce your tax refund (November 2011)

At first glance, the idea of working to reduce your tax refund would strike most taxpayers as, at the very least, exceedingly poor tax planning advice. Most Canadian taxpayers view receiving a refund after filing their annual tax returns as getting “free” money from the federal government. In fact, except in very narrow circumstances, the reality is the opposite—it’s the taxpayer who has provided the federal government with the interest-free use of the taxpayer’s money. Read More »

Flying south for the winter (November 2011)

Every year, thousands of Canadians escape our winter by traveling south, usually to the U.S., for a few weeks or months, or even the whole winter. While recent fluctuations in the value of the Canadian dollar relative to the U.S. greenback might mean that a stay in the U.S. will be more expensive this year, the lure of warm temperatures and no snow will still win out for many. Read More »

Federal government launches review of registered disability savings plans (November 2011)

Since 2008, the federal government has permitted families which have children with severe disabilities to save for the future support of those children on a tax-assisted basis. The vehicle through which families can do so has been the registered disability savings plan (RDSP). Read More »

Elections 2011—round two (October 2011)

The year 2011 may be notable in Canadian history as the year of elections. In addition to the general federal election which was held in May 2011, no fewer than 6 of Canada’s 10 provinces—Newfoundland and Labrador, Prince Edward Island, Ontario, Manitoba, Saskatchewan and British Columbia, and all of its three territories (the Northwest Territories, Nunavut, and the Yukon Territory) —will be holding provincial/territorial or municipal elections during the last quarter of 2011. As well, the party which currently forms the federal Official Opposition is holding a leadership contest, as are at least two other parties at the provincial level. Read More »

Legal fees—what’s deductible and when? (September 2011)

Very few Canadians escape paying personal legal fees at one time or another and, depending on the situation, those fees can add up quickly. Unfortunately, while legal fees incurred in some circumstances may be deducted from income on the annual tax return, there sometimes doesn’t seem to be any rhyme or reason to what’s deductible and what’s not. Read More »

Responding to a CRA information request (September 2011)

Earlier this year, Canadians filed about 27 million tax returns in about a three month period between March and June, and the Canada Revenue Agency (CRA) was required to process and issue a Notice of Assessment for every one of those returns. About two-thirds of those returns were e-filed—filed by electronic means like NETFILE, EFILE OR TELEFILE—meaning that the CRA did not receive any receipts or other documentation to support claims for deductions or credits made on the taxpayer’s return. Read More »

Calculating your TFSA contribution room for 2011 (September 2011)

Since they became available on January 1, 2009, Tax-free Savings Accounts (TFSAs) have proven to be extremely popular with Canadians. TFSAs offer Canadians aged 18 and older an opportunity to save and invest on a tax-free basis, without any restrictions on when amounts saved can be withdrawn or the uses to which accumulated funds can be put. Read More »

Post-secondary students and income tax (August 2011)

As summer reaches its midpoint, students who are about to start their post-secondary education as well as those returning for a second, third, or fourth year of university or college will be gearing up over the next few weeks for the upcoming year. And while students are likely to be preoccupied with choosing courses, majors, or residences, or finding a place to live off-campus, their parents are more likely to be focused on tuition bills, residence costs, and the price of textbooks—and how to pay for it all. Read More »

Home EcoENERGY Retrofit program renewed (August 2011)

In 2007, the federal government introduced the EcoENERGY Retrofit program, which provided homeowners who made changes to their homes to make them more energy-efficient with grants of up to $5,000 per property to help offset the cost of those changes. Read More »

Federal and provincial tax changes effective July 1 (July 2011)

Each year, at the beginning of July, a number of tax changes, at both the federal and provincial levels, are implemented. In some cases, the changes are those announced in the current year federal or provincial budget to take effect as of July 1. In other cases, those budgets included changes to individual tax rates or credits which were retroactive to the beginning of the year, and adjustments are made to employee source deductions beginning in July to take account of those changes. Finally, in some cases, the “benefit year” for a federal or provincial program begins on July 1, and benefit amounts are changed as of that date. What follows is a listing of changes at the federal and provincial levels which will either take effect on July 1 or be reflected on employee paycheques for the first time as of that date. Read More »

Scammers Masquerade as CRA

Tax professionals are often asked to confirm a client’s suspicion that a communication purportedly sent by the CRA is bogus. The fake requests are almost always sent by e-mail and ask the recipient to transmit personal information, including banking information, either by e-mail or by visiting a specific Internet address. Read More »

Getting a tax assist for summer child care costs (June 2011)

As June arrives and the end of the school year is in sight, families that do not have a stay-at-home parent have to make plans for keeping the kids busy and supervised over their summer vacation. Read More »

Moving expenses—what’s deductible and when? (June 2011)

While interest rates remain low, an increase in those rates and, therefore, in the cost of carrying a mortgage is clearly on the horizon. In addition, changes made by the federal government to mortgage lending rules for Canada Mortgage and Housing Corporation (CMHC) insured mortgages which took effect earlier this year had the effect of making it more difficult for first-time buyers, especially, to get into the real estate market. One of those changes reduced the maximum allowable amortization period for mortgages from 35 years to 30 years, meaning an increase in the required monthly payment, even if interest rates are unchanged. That change, combined with the anticipated increase in mortgage interest rates, made for a busy late winter and early spring real estate season, as first time home buyers took advantage of the opportunity to get into the market in advance of the changes. Even without these changes, spring and summer are, in any year, typically the busiest season for real estate sales and, consequently, the time when most moves take place. For any number of reasons, therefore, a lot of people will be moving this summer. Read More »

What happens after you file that tax return (May 2011)

By now, most Canadian taxpayers (with the exception of the self-employed and their spouses, who have until June 15) will have filed their 2010 income tax returns. Once the Canada Revenue Agency (CRA) has processed those millions of returns, over the next few weeks and months taxpayers across Canada will begin to receive Notices of Assessment for 2010. In most cases, the Notice of Assessment issued will simply confirm the information which the taxpayer provided on the return, perhaps with some minor arithmetical corrections. However, not infrequently, the Notice of Assessment will indicate that the CRA has disallowed or changed the amount of certain deductions or credits, or has included in income amounts not declared by the taxpayer on his or her return. When that happens, it’s time for the taxpayer to decide whether to dispute the CRA’s assessment of their tax situation. Read More »

The high cost of driving—is there tax relief available? (May 2011)

As gas prices across Canada look to set new records, the cost of getting to work (or getting just about anywhere) is likely a topic of conversation in nearly every home and workplace in Canada. Consumers are looking for just about any way to reduce their cost of getting around. Read More »

Filing on time – and the costs of being late (April 2011)

It may seem like an obvious mistake to avoid, but every year some taxpayers pay unnecessary (and non-deductible) penalties and interest for no reason other than that they simply didn’t get their returns in on time. For the record, a 2010 personal tax return is late-filed if it isn’t sent to the Canada Revenue Agency (CRA) on or before May 2, 2011 or, if you or your spouse are self-employed, on or before June 15. In all cases, tax amounts owing due must be paid on or before May 2, 2011. Read More »

Pension income splitting (April 2011)

Unlike contributing to an RRSP or a tax-free savings account (TFSA), the idea of splitting pension income as a tax-planning strategy doesn’t get a lot of attention in the media. That’s unfortunate for a couple of reasons. Read More »

Last minute tax-filing strategies (April 2011)

By the time most Canadians sit down to gather together information slips and receipts to prepare their 2010 tax return, any opportunities to minimize tax payable for the year are, for the most part, gone. Most tax-planning or tax-saving strategies, in order to be effective for 2010, would have to have been put in place by the end of that calendar year. The major exception to that rule is, of course, registered retirement savings plan (RRSP) contributions, but even those had to have been made by March 1, 2011 in order to be claimed on the 2010 return. Read More »

Getting your return in – when and how? (March 2011)

If the constant flow of television commercials reminding taxpayers of the upcoming RRSP contribution deadline wasn’t enough, the arrival of the 2010 tax return form and the issuance of tax information slips must leave taxpayers in no doubt that it’s that time of year again. By the end of February or early March, taxpayers will usually have received all of the information needed to prepare their 2010 income tax returns. Read More »

Federal individual tax rates and brackets for 2011 (January 2011)

The indexing factor for federal tax credits and brackets for 2011 is 1.4%. Consequently, the following federal tax rates and brackets will be in effect for individuals for the 2011 tax year:

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Tax changes and deadlines for the 2011 tax year (January 2011)

A number of tax changes will take effect on January 1, 2011, most of them affecting individual taxpayers. The more significant changes are listed below.

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A year-end tax “to do” list (December 2010)

For most Canadians, December means holiday celebrations and school vacations. In the tax world, however, December 31 marks the deadline by which most tax planning and saving strategies must be put in place in order to have an impact on one’s tax liability for the 2010 tax year. What follows is a list of tax “to do’s” that must be accomplished by the end of the calendar year—and a few more that can wait until sometime in the first quarter of 2011. Read More »

E-commerce and the Taxman (November 2010)

The exponential growth of the Internet over the past fifteen years has been accompanied by a similar explosion in internet-based purchases and sales of goods and services, commonly referred to under the all-inclusive rubric of “e-commerce”. Read More »

CRA issues updated guide to tax-free savings accounts

The Canada Revenue Agency (CRA) has updated its guide RC4466, outlining the rules applicable to tax-free savings accounts. The updated guide, which is available only in electronic format, can be found on the CRA Web site at:

http://www.cra-arc.gc.ca/E/pub/tg/rc4466/rc4466-10e.pdf.

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Federal government launches consultation process on retirement income system

The federal Minister of Finance has announced that the federal government will be undertaking a comprehensive review of Canada’s government-supported retirement income system (Canada Pension Plan, Old Age Security, Guaranteed Income Supplement, registered pension plans, registered retirement savings plans, and registered retirement income funds). The review will include a number of “town hall” meetings and “roundtable discussions” across Canada, as well as an open consultation process. Submissions made as part of that consultation process can be sent by e-mail or by regular mail to the Department of Finance by April 30, 2010.

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