What's New -> What's New 2016
What's New by Month in 2016
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 will remain at the 2016 rate of 54 cents per km for the first 5,000 km and 48 cents per km for each additional km. For the Territories, the rates are also unchanged, 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 2017 by 1 cent, to 25 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 22 cents per kilometre. The standby charge taxable benefit factors for automobiles remain unchanged.
The 2017 expense limitations for passenger vehicles for interest expense, monthly lease costs, and capital cost allowance (CCA) will remain unchanged from 2016.
BC is introducing a new tax credit for the 2016 tax year, $250 per child for each child who is age 5 to 17 at the end of the taxation year.
Topics this month: Family ski pass may be a taxable benefit; New CRA administrative policy re T5008 duplicate slips; Requirement for a business to file a T4A slip for payments for professional services; Qualified Disability Trusts; Rollover of RPP to RDSP; Claiming eligible dependant tax credit when support is being paid.
Employment income is included on a T4 for the year in which it is received, not earned. If a payment is made in January 2017 for wages earned in December 2016, this amount will be reported on the 2017 T4, not on the 2016 T4 (exception - employee trusts).
If you made RRSP contributions from March 4, 2015 to February 29, 2016, this should have been included on Schedule 7 which was filed with your 2015 tax return. Check our article to find out what to do if the contribution wasn't recorded.
Eligible first time home buyers may qualify for a 25-year loan that is interest-free and payment-free for the first 5 years. Applications to be accepted starting January 16, 2017, for purchases that will close on or after February 15, 2017.
There is no "gift tax" in Canada. Any resident of Canada who receives a gift or inheritance of any amount from almost any source (except from an employer) will not have to include this in their income. However, if capital property is given as a gift, the person who has given the gift will be deemed to have sold the capital property at fair market value, and will have to pay tax on any resulting capital gain.
Ontario's land transfer tax refund for first-time homebuyers will increase from $2,000 to $4,000 for conveyances or dispositions that occur on or after January 1, 2017.
If foreign funds are used to purchase or sell shares, Canada Revenue Agency now indicates that the exchange rate on the settlement date, not the trade date, should be used when converting to Canadian dollars.
When adult size clothing, including team uniforms, is purchased for a child under 15, it is exempt from PST. An exemption certificate must be completed when the clothing is purchased. The same exemption certificate can be used for purchases by an organization, such as a sports team, when exempt merchandise is purchased for multiple children.
This tax credit can be claimed if spouses are living apart, even in another country. It is increased by the family caregiver amount if the spouse has a mental or physical infirmity.
Plan ahead by making a will and ensuring your wishes are known. Make sure that your will complies with current provincial legislation. Learn more about probate fees, joint ownership, and other estate issues.
The TD1 forms for 2017 are 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 deadline for RRSP contributions for the 2016 taxation year is Wednesday, March 1, 2017.
We've update the tables of Quebec personal tax credits and deductions which are adjusted for inflation. The 2017 tax credits are increased by a factor of 0.74%.
Interesting topics - Quebec mandatory tip calculation/reporting, RRSP over-contributions incur high penalties, Small Business Deduction changes, US Voluntary Disclosure program. Paying a salary to a spouse from your business? Make sure you do it properly!
Legislation was passed in 2016 to revise both the eligible and non-eligible dividend tax credit rates for New Brunswick for 2016, 2017 and subsequent years. The NB marginal tax rate tables have been revised to reflect this. NB Finance does not have updated information on their website reflecting this, but we have provided a link to the legislation.
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.
The 2016/2017 Detailed Quebec Income Tax Calculator is now available. All 2017 indexation factors, tax brackets and most tax credit amounts have been confirmed. The 2016/2017 calculator will retain data on your computer for the next time you access it. The French language version has been discontinued because it was rarely accessed.
The 2016/2017 Detailed Canadian Income Tax and RRSP Savings Calculator is now available. All 2017 indexation factors, tax brackets, and most tax credits have been confirmed to Canada Revenue Agency.
Haven't filed your 2006 tax return yet? Taxpayers are running out of time to file requests under the taxpayer relief provisions for the 2006 tax year and any reporting period that ended in the 2006 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 2004 tax year, penalties and interest that have accumulated from 2006 to 2016 could still be reduced as a result of a 2016 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, 2016. 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, 2017.
The last trading date in 2016 for Canadian publicly traded stocks is Friday December 23rd, because the Canadian stock markets are closed on December 27th and 28th. Canadian stocks purchased or sold after Dec 23rd will settle in 2017, so any capital gains or losses on sale will apply to the 2017 tax year. The last trading date in 2016 for US publicly traded stocks is Tuesday December 27th.
The TFSA contribution limit for 2017 will again be $5,500. At the current rate of inflation, it will increase to $6,000 in 2019.
The RRSP dollar limit for 2017 is $26,010, and for 2018 is $26,230. The Money Purchase (MP) dollar limit for 2017 is $26,230.
Fees paid to financial institutions/brokerages regarding withdrawals from RRSPs and RRIFs are not tax deductible.
The working income tax benefit (WITB) is a federal refundable tax credit for low-income individuals or families with working income over $3,000 (base amount for most provinces and territories). The tables for 2016 have been confirmed to CRA amounts. The tables for 2017 are our calculations based on the 2017 indexation factors, and will be confirmed when WITB amounts are available from CRA in November 2017.
Bill C-29 included changes to the small business deduction which are more complicated and affect more businesses than anyone anticipated. The Video Tax News team has prepared a video to help explain how the changes may affect you.
A separate log should be kept for each vehicle which is driven for both business and personal use. For the self-employed, only the business portion of vehicle expenses can be deducted from income, and GST/HST input tax credits are only allowed related to the business use of a vehicle.
The 2017 tables of non-refundable tax credits for all provinces (except Quebec) and territories are now available. 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 2017 TD1 forms.
The maximum pensionable earnings for 2017 will increase to $55,300 from $54,900. The maximum employee/employee contribution increases to $2,564.10 from $2,544.30. The self-employed maximum is $5,128.20, up from $5,088.60.
The maximum pensionable earnings for QPP for 2017 is $55,300. The rate increases from 5.325% to 5.40%, 10.80% for self-employed. This results in maximum QPP contributions of $2,797.20 for employees/employers, or $5,594.40 for self-employed.
Bill C-29 provides amendments to the Income Tax Act and related legislation regarding the Canada Child Benefit, eligible capital property rules, sales of linked notes, certain GST/HST measures, and other items.
Compare taxes and marginal tax rates for both types of Canadian dividends, capital gains, and other income, for all provinces and territories, for 2012 to 2017.
The tables of 2017 personal tax rates are now available. The indexation factors used to calculate the tax bracket and basic personal amount increases are our calculations, and will be confirmed to Canada Revenue Agency (CRA) when these are available.
If you have losses carried forward to offset your current year capital gains, the capital gains can still increase your OAS clawback, as well as the age amount clawback, because the carried-forward losses are deducted after the calculation of net income before adjustments, which is used for the OAS clawback calculation.
The Minister of Finance will deliver the Fall Economic Statement on November 1, 2016. The Statement will be available at approximately 3:20 pm EDT.
Effective for 2016 and later years, the sale of your principal residence must be reported on your personal income tax return, even if 100% of the gain is sheltered by the principal residence exemption. The penalties for not doing so can be very high!
This month's video talks about the changes to the principal residence exemption, how Uber drivers must collect QST (and GST or HST), tax changes re inter-corporate dividends, federal pre-budget consultations, and what information you should record if you are subject to a Canada Revenue Agency audit.
The October 2016 Economic Update announced that the Health Contribution would be eliminated ahead of schedule, effective January 1, 2017.
The gain on the sale of real estate is a capital gain unless the property has been purchased with the intent of reselling at a profit, or developed and sold as a business endeavour. If it is considered a business transaction, the entire profit or loss on the sale is taxable or deductible. If the transaction is a capital gain, and the property is the taxpayer's principal residence, the principal residence exemption may eliminate all or part of the capital gain.
When there is a change in use of real estate, either from income-producing to personal-use (e.g., principal residence or cottage/second home), or from personal-use to income-producing, there is a deemed disposition of the property, which will have to be reported on the owner's tax return, for deemed dispositions in 2016 or later taxation years.
Effective for the 2016 taxation year, the disposition of a principal residence must be reported even if the gain is fully exempt. Effective for dispositions after October 3, 2016, the "one-plus rule" is eliminated if the taxpayer was a non-resident in the year in which the property was acquired. There are also some changes in the PRE regarding trusts.
This month's video talks about the new Form T183, which must be signed before a tax preparer can electronically file your tax return. The form now includes a section where you can provide your banking information so the tax preparer can create a pre-authorized debit to CRA on your behalf - this sounds like a very bad idea! The video also covers shared custody/Canada Child Benefit, the new Eligible Educator School Supply Refundable Tax Credit, CRA's improved service initiative, and employment benefits/reimbursement of moving expenses, and provides a link to a Nanny Payroll Calculator.
All Canadians are invited to submit their ideas online and via Twitter, using the hashtag #Budget2017.
Gladstone's Class of 1967 is planning a 50 year reunion to be held in June 2017. Many of the classmates have not yet been located. If you're one of them, or if you know someone who is, check out the reunion website. If you're a graduate of another school, check out the classcreator.com website to see if your graduating class is listed.
Capital gains can be eliminated by donating certain types of capital property (qualified investments, prescribed debt obligations, or ecologically sensitive land) 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.
If you're having problems printing the results from one of our calculators on the width of one page, please read this information.
It is often difficult to determine if a cost should be capitalized or expensed, but there are some guidelines which can help.
This tax credit can be claimed for a senior parent or grandparent who lives with you, even if they are not your dependant. However, it cannot be claimed in full if the line 305 eligible dependant tax credit can be claimed.
A single parent can claim this tax credit for one of their children, but if 2 single parents share a home only one of them can claim this amount. If they can't agree on who should claim it, neither of them can claim it. This credit can be claimed for other dependants besides a child.
Don't be in a panic to switch classes of mutual funds by October 1, because the legislative changes now don't take effect until January 1, 2017.
A great variety of investments can be held in registered accounts. Canada Revenue Agency (CRA) recently issued a new Income Tax Folio on this topic.
To get premium assistance, you must APPLY FOR IT! In 2017, a senior couple earning $51,000 or less before adjustments will qualify for premium assistance.
On September 15 the BC Government announced that it would cancel the planned 4% MSP premium increase, and further reduce the rates for those eligible for premium assistance. A couple will now pay only 10.3% more than 2016, instead of the planned 14.7% increase. Note that to get premium assistance, which is available for much higher incomes in 2017, one must apply for it.
The 2017 EI rate will be reduced from 1.88% to 1.63%, and the maximum insurable earnings (MIE) will increase to $51,300 from $50,800. The result is a reduction in the maximum premium to be paid by employees, to $836.19 from $955.04.
Make sure you know which employment is insurable, because there is no point in paying premiums if you won't be able to collect employment insurance.
Employers who provide their employees with a short term disability plan may be able to reduce the EI premiums they pay.
There are many different online and non-online options available for making payments to CRA. Canada Post and CUPW have now reached an agreement so there will be no postal disruption. However, it is certainly easy to pay these amounts electronically.
A taxpayer can claim the transit pass tax credit on behalf of a spouse or common-law partner, or the taxpayer's children under age 19. Make sure you keep appropriate receipts.
Withholding taxes will be deducted from US and other foreign dividends earned in a TFSA. These are not recoverable.
Haven't started a TFSA yet? How much can be contributed? See our table showing annual limits and cumulative total.
This month's video talks about joint ownership - legal vs beneficial, change in legal title of property, keeping of books and records, including change from CRA regarding church envelopes, changes coming regarding switching of mutual funds, new BC property transfer tax for foreign buyers of real estate in Vancouver, CRA crack down on real estate tax cheats in Vancouver, and documentation required to support your claim for foreign tax credits.
For a Canadian controlled private corporation (CCPC) selling assets which include eligible capital property (ECP) such as trademarks or goodwill, the tax cost may be much higher in 2017 than under the current tax rules for ECP. This is not so for the sale of shares, but many purchasers prefer to buy assets rather than shares. If you're considering a sale, make sure you get professional tax advice.
We have revised the marginal tax rates for SK non-eligible dividends. The rates are 0.04% lower than previously shown. This is a result of the rate in Bill 22, which received Royal Assent on June 30, being slightly different from the rate indicated in the 2016 Budget.
We have revised the marginal tax rates for NS non-eligible dividends - the rates are 0.19% to 0.2% higher than previously shown.
Canada Revenue Agency (CRA) Scams to Watch Out For - article on LinkedIn
We personally have had a couple of threatening calls from people saying they were CRA agents. If someone calls you saying they are from CRA, get their name and agent #, and call CRA through one of their listed phone numbers to check on this information. NEVER give out your personal information.
The amount you receive from the Old Age Security pension depends on how long you, a Canadian citizen or legal resident, have lived in Canada after age 18. The OAS may also be available to Canadians living outside of Canada.
These are articles which relate to students regarding income, deductions, tax credits and savings plans.
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.
On July 27, 2016, draft legislative proposals and explanatory notes were released relating to mutual fund switching, eligible capital property, the small business deduction, the business limit and taxable capital limit, life insurance policies, and other items. Interested parties are invited to submit comments by September 27, 2016. The changes re mutual fund switching will be effective January 1, 2017 instead of the originally planned October 1, 2016.
This month's video talks about travel allowances and when they are or are not considered reasonable, deductibility of expenses re a theoretical business venture which may really be a hobby, claiming input tax credits in the start-up phase of a business, shareholder benefits from the use of corporately owned assets, and how CRA can retroactively register a business for GST/HST and require payment of amounts that should have been collected.
Dividends received by a corporation are taxed differently from those received by individuals in Canada. There is no grossup or dividend tax credit. Part IV tax of 38 1/3% may be payable on dividends received from Canadian corporations, but in this case a dividend refund may be received when dividends are paid out to shareholders.
Unless a person has been trained in preparing corporate tax returns and is up to date on current tax laws, the return should be prepared, or at least reviewed, by a professional accountant. This article provides information on corporate tax returns, and links to Canada Revenue Agency information on filing deadlines, payment due dates, instalments, and more.
If a Canadian resident individual, corporation or trust holds foreign investment property with a cost exceeding $100,000 Canadian at any time in the year, form T1135, foreign asset verification statement, must be filed at the same time as the tax return. Make sure you keep good records in order to determine if you need to file this form, as the penalties can be onerous.
GIS is available to low-income Old Age Security (OAS) recipients. It is usually based on the prior year income, but if an OAS pensioner has a reduction in income, Service Canada may base GIS on estimated current year earnings.
When an individual earns income from the rental of real property, it may be considered business income instead of property income. These 2 types of income are treated differently for tax purposes. This affects CPP premiums, among other things.
On July 22, 2016, the Department of Finance released draft legislative and regulatory proposals re GST/HST, which includes revising rules re pension plans, drop shipments, and RESPs, and also includes housekeeping amendments.
Whether you're an employee or employer, it's very useful to know the employment standards, or at least to know where to find them if you have a question. We've added links to some tools that help with calculations of various employment entitlements.
The Children's Fitness Tax Credit is available for registration and membership costs for prescribed programs of physical activity for children who are, at the beginning of the taxation year, under 16, or under 18 for a child with a disability. The credit was reduced for 2016 and is eliminated thereafter. Some provinces also have a similar tax credit.
Many programs, including those providing enrichment or tutoring in academic subjects, are eligible for the Children's Arts Tax Credit, so make sure you save the receipts from all your children's activities that may qualify. The credit was reduced for 2016 and is eliminated thereafter. Some provinces also provide this tax credit.
Manitoba's 2016 Budget bill includes a revision to the calculation of the non-eligible dividend tax credit, for 2017 and later years.
Both New Brunswick and Newfoundland and Labrador increased their HST rates to 15% on July 1, 2016.
If you want to make an in-kind contribution of shares to your RRSP, TFSA or another registered account, make sure they are not shares on which you have a loss, because the loss will not be deductible. Also be careful if you are going to sell them and then repurchase them in your registered account - read our article!
Next year, effective March 1, 2017, the Bank of Canada will change the way it publishes foreign exchange rates. It will no longer publish a noon and closing rate, but instead will publish an average rate for the day, at 4:30 pm ET. Currently it publishes historical tables based on the noon rate, and an average annual rate for the taxation year based on the noon rate.
This month's topics include upcoming changes to the CRA website, in-trust accounts for children, the small business deduction as it relates to campgrounds, CRA information requirements, and how CRA can recover CCTB and GST/HST overpayments years after the overpayments, even if you told them you were no longer eligible!
On June 20, 2016, it was announced that an agreement in principal had been reached to strengthen the CPP. Changes would begin in 2019 and be gradually phased in. The CPP annual retirement pension would increase from 1/4 to 1/3 of pensionable earnings.
There are both refundable and non-refundable tax credits available, both federal and provincial (BC, NB, ON), for seniors and persons with disabilities. After 2016, the Ontario tax credit will no longer be available.
You are better to pay off your mortgage first if your mortgage interest rate is equal to or higher than the rate of return on your RRSP.
Are you trying to decide whether to increase your monthly mortgage payment, or contribute the extra monthly amount to an RRSP? Let our RRSP vs mortgage calculator help you make the decision. Tax rates in the calculator include 2016 budget changes.
If you're in the lowest tax bracket, TFSA may be best, and you can transfer to an RRSP when your income increases, to get a better deduction. The RRSP and TFSA have almost equivalent results when the marginal rate for RRSP contributions is the same as for RRSP withdrawals. If you've used up all RRSP contribution room, then it's time to use up all your TFSA room! See when TFSA may be best.
This calculator, updated with 2016 budget changes, can help you decide which type of account is better for you. This will depend on your current age, annual income now and after retirement, province of residence, as well as other factors.
Borrowing to invest (in a non-registered account) can be a good strategy, but should not be done by novice investors. When you borrow to invest, you are converting regular income, which is fully taxed, into Canadian dividends and capital gains, which are taxed at lower rates and/or allow you to defer tax. However, if borrowing to invest would keep you awake at night, it is probably not for you!
The Borrow to Invest Calculator, which has been updated with all 2016 budget changes, helps you to see the advantages of borrowing to invest in stocks and exchange traded funds (ETFs). You can input different interest rates, rates of return and other data to compare scenarios. You will be provided with details of net after tax income for two different cases - borrowing to invest, or doing nothing. The calculator works for all provinces and territories, including Quebec. Make sure you read the related Borrowing to Invest article before using this strategy!
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. Alternative minimum tax kicks in when eligible dividends exceed $51,475. Over $100,000 in eligible dividends can be earned in Alberta and BC before attracting regular provincial income tax, but of course federal income tax and provincial alternative minimum tax will be payable.
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 again 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. 6 months of income from UCCB is included in the analysis. 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 still AB and SK. AB is still 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.
There were very few tax changes in this budget. The Active Families Benefit refundable tax credit is being eliminated effective for the 2016 taxation year. The legislation for the non-eligible dividend tax credit will be revised so that the 2016 dividend tax credit will be 3.4% of the taxable dividend, as in previous years.
The Manitoba budget announced that the personal income tax brackets and basic personal tax credit would be indexed for inflation starting in 2017. The Seniors School Tax Rebate will be income-tested, and will now be administered through the income tax return, so the 2016 credit will be claimed on the 2016 income tax return filed in 2017.
This month's topics include German social security pensions, employment expenses, the principal residence election as it relates to multigenerational homes and rentals to children, use in court of your accountant's discussions with CRA, partnerships and the Notice of Determination, and U.S. Limited Liability Partnerships.
Don't agree with your income tax assessment? How to file a notice of objection.
How to file a late tax return, what is your exposure to interest and penalties?
Our article on unlocking pension accounts includes links to pension regulators, both provincial and federal. Contact the regulator of your pension plan to determine what you can do with your locked-in account - don't rely solely on information from your financial institution.
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.
2016 brings a few changes regarding donation tax credits. The federal tax credit rate is now 33%, to the extent that income is taxed at 33%. Newfoundland and Labrador's donation tax credit rates increased along with the increases in personal income tax rates. The limitation on donations of 75% of income is eliminated for the Quebec donation tax credit.
We've done some analysis to try to find the source of Canada's interest-bearing debt by political party. The interest paid on this debt from April 1, 1963 to March 31, 2016 totals $1.267 trillion.
The maximum lifetime capital gains exemption (LCGE) for the sale of qualified small business corporation shares is $824,176 for 2016. For qualified farming or fishing property the maximum is $1 million. Planning ahead is absolutely necessary if you're hoping to claim this exemption in the future!
This calculator works for all provinces and territories, with a separate one for Quebec. The purpose of the calculator is to show 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.
Changes from all 2016 budgets tabled thus far have been included in the calculator, including the higher donations tax credit rate and revisions to NL and NB tax rates, PE personal tax credits and low income tax reduction, BC MSP, BC tax reduction, and NL non-eligible dividend tax credit. The NL deficit reduction levy is also now included in the calculator.
The Quebec 2016 budget changes have now been incorporated into the calculator, including changes to donations, experienced worker tax credit, work premium tax credit, and progressive health contribution. The Federal 2016 budget revisions are also included, with the latest revision being to the donation tax credit calculation.
Enter your income from Canadian eligible and non-eligible dividends, capital gains, and other income, see taxes payable for every province and territory, as well as your marginal tax rate for Canadian eligible and non-eligible dividends, capital gains, and other income. Shows results for 2016 and earlier years for a single person, and includes the basic personal exemption and dividend tax credits. Updated to include changes from all 2016 budgets that have been tabled thus far.
If you have filed your return and then determine that you need to make a change, either because you have received another T-slip, or because you didn't claim an expense and later learned it was deductible, you can request an adjustment to your tax return, either online or by mail.
The Life in the Tax Lane video for May: CRA's report to Parliament, restrictions coming to Small Business Deduction, Panamanian accounts hacked, oocyte preservation (re sperm and embryos) as a medical expense, proposed stock option changes dropped, Alberta vs Newfoundland and Labrador budgets - spend vs tax.
When a business is being closed down, there are many issues that need to be addressed.
Is your business (whether incorporated or self-employed) required to register to collect GST/HST? Make sure you know how to determine this. See how often you will have to report and remit GST/HST. Even some small suppliers are required to register.
There are many benefits provided by the federal, provincial and territorial governments, for seniors, persons with disabilities, low-income, children, families, and students. You may get financial assistance, rebates, refundable tax credits and more. You probably have to file a tax return to be eligible for many of these benefits, even if you have no tax to pay.
Learn how to properly track your adjusted cost base (ACB) and report income depending on the type of investment - shares, bonds, mutual funds, income trusts, ETFs, options and more. Discussion of return of capital, negative ACB and reinvested distributions from ETFs.
The family caregiver amount tax credit is available for dependants who are mentally or physically infirm. It is added to the spousal amount, equivalent to spouse/eligible dependant amount or caregiver amount, included in the infirm dependant (18+ years of age) amount, and claimed on line 367 for infirm minor children.
If your income is relatively low ($30,000 for an individual) and your tax return is simple, you may be able to get free help to prepare your tax return.
Always file your tax return on time, even if you can't afford the tax, in order to avoid late filing penalties!! Then talk to Canada Revenue Agency.
Even if you don't have to pay tax, you should file a tax return to establish your TFSA or RRSP contribution room, apply for or renew government benefits, including the GST/HST credit, or receive any refundable tax credits for which you may be eligible.
Effective October 1, 2016, PEI will increase the HST rate to 15%, and will eliminate the real property transfer tax payable by first-time home buyers. Some non-refundable personal tax credit amounts increase for 2016, as does the low-income tax reduction and the refundable sales tax credit.
The above link is to the Nova Scotia budget documents - no tax changes were announced.
Tax increases are happening in many areas - personal income tax, corporate income tax, fuel taxes, retail sales tax on insurance premiums, and a temporary deficit reduction levy (another personal tax), among other measures.
Alberta is introducing a carbon levy effective January 1, 2017, but this will be offset with a rebate paid to low and middle income taxpayers. The small business corporate income tax rate will be reduced from 3% to 2% effective January 1, 2017, with a resulting reduction in the dividend tax credit for non-eligible dividends. Two new tax credits will be introduced for individuals and corporations that invest in Alberta.
For taxpayers who record gains and losses from call and put options as capital gains or losses (this isn't the case for everyone), the timing is a little trickier for options which have been sold, as opposed to options which have been purchased. See our table which explains how to do things.
Living below our means, saving and investing - this is the story of how we achieved financial independence. Hopefully you can do the same.
Make sure you report these repayments on Schedule 7 of your tax return, otherwise you could lose RRSP contribution room.
It's not always easy to know whether earnings are or are not subject to CPP contributions. An employer must deduct contributions from most types of income of their employees, but not usually from self-employed contractors, who would normally pay the employee and employer portions of the CPP contributions when they file their tax return. Sometimes Canada Revenue Agency will decide that a payee is an employee instead of a self-employed contractor, causing problems for the payer. However, their decision is not always upheld by the Tax Court of Canada.
Income from income trusts are usually comprised of a few different types of income for tax purposes. As with mutual funds and exchange-traded funds, there will often be return of capital which will reduce your adjusted cost basis. Sometimes, this can result in a negative adjusted cost basis, which is reported as a capital gain. This article describes how to report this on your tax return.
Deductions are usually better than a tax credit, because they are reducing your income, so your tax is reduced at your marginal tax rate, not the lowest tax rate. Available deductions include child care expenses, interest expense, moving expenses, and other deductions.
2015 is the last year in which the Family Tax Cut will be available. A form of income splitting, it is available to couples with children under 18, to a maximum of $2,000. See 2015 examples of the calculation of the FTC.
A person who is single at any time during the year can claim a tax credit for a dependent child or other dependent relative living with them at that time. If the person was required to make support payments for the dependent child this may affect the eligibility for the tax credit.
Check out our articles on what qualifies as eligible pension income; how pension income can be created; pension splitting, how to determine if the spouse will get a pension tax credit when pension income is split; and how to complete Step 4 of form T1032 Joint Election to Split Pension Income.
We've published the table of 2016 corporate income tax rates, showing the federal changes and any provincial changes that have already been made.
It is usually best for the highest income spouse to claim the tax credit for all donations of both spouses. However, sometimes not all donations are utilized, and can then either be carried forward or split between spouses. Our tax calculators will help with this.
The 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. You have to increase your adjusted cost base (ACB) for the amount of reinvested distributions. This will reduce your capital gain when you eventually dispose of the investment. You may have to do some searching to determine the amount of the ACB increase, although at least a couple of brokerages have done things to make this easier.
Even if you are paying someone to prepare your tax return, you are ultimately responsible to ensure that the correct information is filed, so make sure you provide your preparer with complete, organized information, and that you review your return for accuracy. Choose a reputable accounting firm or tax preparation firm. If your financial planner is doing your tax return for you, ensure they are trained in doing so, and that they are prepared to sign the return as the preparer.
The Life in the Tax Lane video for April has a surprising court case about employee vs contractor (trucker) - payer owns truck, but driver is contractor, as well as information on: RESPs and how taxing they can be; how reliance on an accountant or bookkeeper won't help you avoid penalties; employee travel expenses; and circumstances where employment earnings are not always insurable.
Unless it is used to generate income, a cottage or second home is normally considered personal-use property. It's important to track the adjusted cost base (ACB) of your principal residence or your cottage, as the principal residence exemption could apply to either one. Even if you don't own a second property, the ACB of your home needs to be tracked, because its status as a principal residence could change in the future.
Expenses that are paid to earn employment income are sometimes deductible, including any GST/HST that was paid on them. This can only be done if your employer requires you to pay the expenses, and either you didn't receive reimbursement for the expenses, or the amount you did receive is included in your income. Employee clothing is not deductible, and if purchased by the employer will be a taxable benefit, except in certain circumstances.
The Budget proposes to eliminate the increased age of eligibility for the Old Age Security (OAS), increase the GIS top-up for single seniors, increase GIS and Allowance benefits for senior couples living apart, continue the consultation regarding enhancing the Canada Pension Plan retirement pension, and look into creating a new Seniors Price Index to use for indexation of the OAS. It also proposes to increase services and financial support for veterans.
The Budget stops the reduction of the small business tax rate after 2016, creates the new Canada Child Benefit, eliminates the education and textbook tax credits, reduces and then eliminates the children's fitness and arts credits, eliminates tax-free switching of mutual fund classes, expands tax support for clean energy, and proposes many other measures.
Manitoba will not table a Budget prior to the April 19, 2016 election, and no legislative proposals have been tabled for the fiscal update. The proposals include a new top tax rate of 20.9%, increases to the Seniors' School Tax Rebate, Family Tax Benefit, and Personal Tax Credit (to be renamed the Affordability Tax Credit). A new donations tax credit rate of 20.9% is proposed, to be applicable to the extent that taxable income is taxed at 20.9%.
Quebec's 2016 budget includes several personal tax measures, including a new temporary RenoVert refundable tax credit for eco-friendly renovations, further reduction and quicker elimination of the health contribution, enhancement of the adapted work premium refundable tax credit, greater access to the tax shield, improved tax treatment of donations, and further lowering the age of eligibility for the experienced worker tax credit. There are many business measures, including reduction of the Health Services Fund contribution rate for small and medium-sized businesses (SMBs), and adjustments to the criterion for the Small Business Deduction (SBD).
Joint ownership of assets with someone other than a spouse can have many potential problems if beneficial ownership is transferred as well as legal ownership. Documentation of intentions is very important to avoid costly court challenges.
The Life in the Tax Lane video for March has a long list of interesting topics, including foreign vacation property as principal residence, future changes in CPP benefits/premiums, EI benefits while working but not being paid, changes to stock options, and Form T1135 and jointly held property. There's also mention of a "Tax Ninja" contest!
There are many topics available here under the headings of reporting your income, deductions from income, non-refundable tax credits and refundable tax credits. Browse the topics to see which deductions and tax credits may be available to you.
The Ontario government is eliminating (for 2017) tax credits for tuition and education, children's activities, and home renovations. They are creating the Ontario Student Grant. The kiddie tax will be at the top tax rate effective January 1, 2016. Tobacco and some alcohol taxes are increasing.
Federal income tax is calculated separately from provincial/territorial income taxes. Both calculations start with the same taxable income, except in Quebec, where the taxable income could differ from the federal taxable income. After tax is calculated based on the taxable income, non-refundable tax credits are deducted.
We've updated our tables which show how much can be earned in 2016 in Canadian eligible or non-eligible dividends without attracting income tax, when the dividends are the only income earned. The amounts for non-eligible dividends may change with upcoming provincial budgets.
If you owned, at any time in 2015, specified foreign property with a total cost of more than $100,000 Canadian, you must complete form T1135. The foreign property could be many things - foreign stocks, real estate, amounts in foreign bank accounts, etc. The fair market value may be under $100,000 - the form still must be filed. If the maximum total cost during 2015 is less than $250,000, a new simplified reporting method can be used.
This calculator is very detailed, includes most common tax credits - use it to determine how much you can save from an RRSP contribution, to check your 2015 tax return, or to start your 2016 tax planning.
MSP changes, property transfer tax exemptions, home renovation tax credit expanded to persons with disabilities, farmers' food donation tax credit, PST exemptions expanded for farmers, etc.
Effective January 1, 2017, children will be exempt from MSP premiums. Rate for single adult increases 4%, rate for couple increases 14.7%. Single parent will pay as a single person instead of as a family. Premium assistance will be expanded from a threshold of adjusted net income of $30,000 to $42,000.
Contribution limits, attribution rules, investments, Home Buyers Plan, RRSP savings calculator, unlocking pensions, RRIF withdrawal calculator, and lots more information on RRSPs, RRIFs and TFSAs.
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.
If you are going to invest in an RESP for your child's future education, make sure you are aware of all the options and provisions first. A few provinces also provide grants towards the RESP.
One need not be completely disabled to claim the disability tax credit. To claim the credit a form must be completed by a physician. In 2016 it is expected that regulations will be completed for the Disability Tax Credit Promoters Restrictions Act, which is not yet in force.
The GST-HST credit is a tax-free payment paid quarterly, to eligible recipients 19 or older, or to younger spouses or parents. Many provinces also provide a credit to be paid in conjunction with the GST-HST credit. A single person with income of $42,000 or less in 2014 would have received a GST-HST credit for July 2015 to June 2016.
Our table of 2016 sales tax rates for PST, GST and HST is now available.
The 2016 NB budget increases corporate tax rates and HST, eliminates the top personal income tax rate and reduces the 21% rate to 20.3%.
The 2016 marginal tax rates have been revised according to the 2016 NB Budget.
If you have a parent or grandparent over the age of 65 living with you, even if they are not your dependant you could be eligible for the caregiver amount of $4,608, if their net income was less than $20,343 in 2015. 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.
T4 slips for 2015 must be distributed to employees on or before February 29, 2016. They can be filed online, no need to wait for a web access code. Wages paid in January 2016 for December 2015 wages will NOT be reported on a 2015 T4.
With Service Canada’s online Tax Information Slips service, you can access your official OAS, CPP or EI tax slips earlier, and file your income tax sooner. Your tax slips for the prior year are available online as early as February 2nd.
Whether you own foreign or Canadian ETFs, you should know the tax consequences of the income from them, and how to calculate your adjusted cost base (ACB). With Canadian ETFs, you need to know about reinvested distributions and how they increase your ACB and thus reduce your capital gain on sale.
Although most stock markets were down in 2015, investments in foreign stocks had a good return when converted to Canadian dollars.
If you want to make an in-kind contribution of shares to your RRSP, TFSA or another registered account, make sure they are not shares on which you have a loss, because the loss will not be deductible. Also be careful if you are going to sell them and then repurchase them in your registered account - read our article!
The Life in the Tax Lane video for February discusses CRA's new "auto-fill" of tax returns as well as their online mail and "My Payment", CPP and EI on tips, taxable benefits, and how the leap year affects tax due dates. Click "like" or "share" on the video to win a t-shirt!
Most 2015 personal income tax returns have a due date of May 2, 2016, because April 30th falls on a Saturday. Self-employed individuals have until June 15th to file their personal tax returns, but any amounts owing must still be paid by May 2nd.
NetFile will be available from Feb 15, 2016 to Jan 20, 2017 for filing 2013 to 2015 personal income tax returns. EFile will be available during the same period, for filing 2012 to 2015 personal income tax returns.
A U.S. federal estate tax return must be filed if a deceased Canadian resident who is not an American citizen owned U.S.-situated assets (including US stocks in a Canadian brokerage) exceeding $60,000 US in fair market value at the time of death. However, if the total worldwide estate of the deceased is less than $5.45 million US, there will probably be no US estate tax.
The US estate tax calculator will now calculate the US federal estate tax for any year from 2011 to 2016.
For the 2015 taxation year, CRA is introducing a new service to be provided through certified tax preparation software. Information from tax slips filed with CRA can be used to automatically fill in parts of a current-year income tax return.
The Department of Finance has released for consultation draft legislative proposals that would modify the income tax treatment of certain trusts and their beneficiaries. Interested parties are invited to provide comments on the draft legislation by February 15, 2016.
What motor vehicle expenses can be deducted from income for self-employed or corporations; Employee-owned vehicles; Taxable benefits; Expense limitations; GST/HST input tax credits.
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 2015 is 1.2787108.
There were some problems with our Detailed Canadian Income Tax and RRSP Savings Calculator and our Investment Income Tax Calculators for those using IE, but those problems have been corrected.
This calculator, which now includes 2016 tax rates and TFSA/RRSP limits, may be able to help you decide which type of account is better for you.
Before borrowing, you should read our article. Novice investors should not borrow to invest. Borrowing to invest can convert regular income into tax-efficient dividend income and capital gains.
The Borrow to Invest Calculator has been updated to use 2016 income tax rates.
Participants can receive funded training for in-demand jobs, or on-the job training through a paid work-experience placement. Benefits could also include child-care costs, transportation costs, and exemptions for bursaries, scholarships and grants.
As of Dec 1, 2015, family, friends, supporters and community groups can give regular gifts of cash to people receiving disability assistance in BC, without affecting their assistance.
BC's health authorities provide a range of services for dying people of all ages, including children, and their families, including provision of drugs and medical equipment.
See also Prior Years:
Revised: June 15, 2021
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