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This month's topics:
Capital gains can increase OAS clawbacks, even if there are capital losses carried forward to completely offset the gains. See our article to find out how to avoid this.
Yes, it's finally over, with CRA allowing almost all of Mr. Golombek's home office expenses, shortly after he filed an appeal to the Tax Court, but Tax Court wasn't needed.
Tips and gratuities may or may not be GST/HST taxable, and they may or may not be subject to deductions by the employer for Canada Pension Plan contributions and Employment Insurance premiums.
The maximum premiums for employees and employers are increasing by 5.2% in 2023 except for Quebec, where employees and employers paying the maximum will pay 7.9% more.
How much can be earned in Canadian dividends (when there is no other income) before regular income taxes are payable, and before alternative minimum tax applies?
All tax comparisons have been revised to reflect the Alberta 2022 indexation.
Should you pay down debt, or contribute to your RRSP? Our calculator may help you, but unless your RRSP returns are going to be consistently higher than the rate on your mortgage or other loan, it is better to pay down your debt.
This calculator may help you decide between contributing to TFSAs or RRSPs. If you're in the lowest tax bracket (federally up to $50,197 in 2022), use TFSAs first!
This calculator shows the big difference in taxes payable on different types of investment income. Even when the age credit and OAS are clawed back, Canadian dividends/capital gains result in the least taxes payable when compared to other types of income such as foreign dividends and interest.
This calculator includes the most common (and some less common) types of income, deductions and tax credits - use for your 2022 tax planning.
Super-simple calculator for 2022 and earlier years: great for estimating taxes on eligible & non-eligible Cdn dividends, capital gains and other income. Shows all provinces, marginal tax rates, compares 2 scenarios to get the tax difference. Very useful for individuals as well as tax professionals and financial planners!
Our table of 2022 non-refundable tax credits has been revised to reflect the Alberta 2022 indexation.
Premier Kenney announced that indexation of the Alberta Personal would begin again, retroactive to January 1, 2022. Our tax rate tables have been revised.
Answer: $1,061,246. Unfortunately, it's not that simple, and depends on your goals. We have some tools that can help you plan ahead for your retirement.
Do you trade goods or services which you would normally sell in the course of your business? Have you started using crypto for transactions, or investing in crypto? There can be sales tax or income tax implications.
RRSP/RRIF proceeds are included in decedent's taxable income, but tax can be deferred by rolling over to spouse beneficiary or certain other beneficiaries.
Topics: GST/HST Input Tax Credit - REOP | Accelerated Investment Incentive Property - Renovations | CCA Retroactive Adjustment |Disability Tax Credit Changes | Draft Legislation Electronic Filing & Payments and Trust Reporting Rules.
It appears that the CRA policy about converting the proceeds of disposition (but not the adjusted cost base) to Cdn$ has changed - the annual average exchange rate in effect at the time of the sale can be used.
Due to a legislative change in 2021, used vehicles purchased after March 1, 2020 are eligible to be included as ZEVs for enhanced CCA rates in the first year.
There are only 2 provinces with a top marginal tax rate less than 50%. The province with the highest rate is NL, lowest is SK. BC has the lowest provincial average rate for $100K of other income.
Taxes paid at varying levels of eligible and non-eligible dividends and interest for all provinces and territories. The lowest-tax provinces for $70K of eligible dividends are AB and BC.
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. BC is the lowest tax province in these analyses.
BC, Ontario, and Alberta are the lowest tax provinces for a single person earning $80,000. See also comparisons for a single income family with 2 children.
Draft legislation includes many changes re the FHSA. Contribution room can be carried forward, undeducted contributions can be deducted in a subsequent year, many other changes.
Many people have both a spousal and a non-spousal RRSP. In many cases it would be more useful, and perhaps save some administration fees, if the two accounts could be combined into one.
A taxpayer can be deemed to have disposed of capital property at fair market value (FMV) in many situations including: In-kind transfers of securities | Gifts of property | Change in use of property | Emigration from Canada | and death of a taxpayer. Capital gains can result.
Registration of estate as employer | Executor responsibilities | Deemed disposal of assets on death | Digital assets owned at death | Information by province | Canada & CRA resources.
Do you want to disinherit dependent children, or reduce estate gifts to children or a spouse? This can be challenged!
This super-simple calculator is great for estimating taxes on eligible & non-eligible Cdn dividends, capital gains and other income. Shows all provinces, marginal tax rates, and compares 2 scenarios to get the tax difference. Very useful for individuals as well as tax professionals and financial planners!
This month's topics:
Federal and provincial income taxes are calculated separately. Both are done on the same tax return, except for Quebec. Using a progressive tax system, tax rates increase as income increases.
The only rate change for 2022 is the top rate for Newfoundland and Labrador, because of their new top rate income tax bracket.
An official donation receipt for income tax purposes is required in order to for a donor to claim a charitable tax credit (personal) or deduction (corporate). Charities are NOT REQUIRED to issue these, so make sure they will before you donate. Know what's included in an official receipt.
An incorporated contractor who is considered an "incorporated employee" is a PSB, and is subject to higher corporate income tax rates and limited expense deductions.
If $100 + $14 HST is paid for meals expense there is an input tax credit of $7. The 50% allowable expense is only $50, not $53.50.
Achieving financial independence is definitely more difficult now than in 1968 when we bought our first home, but the steps to achieve it haven't really changed.
See our Business Information page with links to information on corporate and self-employed income tax, business expenses, employees and payroll, payroll taxes, and more.
Topics in this 10-minute video include:
This bill includes the increase in the Home Accessibility Tax Credit, luxury tax on cars, boats and aircraft, immediate expensing of capital assets, making assignment sales of residential housing GST/HST taxable, and many other measures.
There have been no changes to sales tax rates so far for 2022, but NL and SK have made some changes to what is taxable or exempt.
This bill includes the 1% Underused Housing Tax, enhanced School Supply tax credit, extended Northern Residents Deduction and other measures.
This could result in deemed proceeds of FMV to the seller while the recipient must use actual transaction amount as their cost, resulting in double taxation of the difference between FMV and transaction amount.
You have until Friday June 24, 2022 at 3 pm Pacific time to share your views on the 2023 Budget.
Canada Revenue Agency issued GST/HST Notice 323 re GST/HST Treatment of Assignment Sales, proposed by the 2022 Budget.
The only change for 2022 is the Ontario refundable political contribution tax credit, as it is the only province that increases its tax credit for inflation.
Topics in this 10-minute video include:
Do you know your rights and responsibilities as an employee or employer? Learn about labour laws, including minimum wages rates, vacation and statutory holiday entitlement.
How to file a late tax return, learn what your exposure is to interest and penalties.
Maximum MSRPs have increased for the Federal and Quebec rebate programs. Rebates are also available for BC, NB, NL, NS, PEI, QC and YT. ON has no rebates, but has other benefits for "green" vehicles.
The Nunavut Budget did not have any new tax measures.
For a limited time, rebates for EV charging stations will be increased from 50% to 75% of eligible purchase and installation costs.
Discovered a missed tax slip? Missed expenses? It's not difficult to change your tax return, and can be done with the tax software you used to NetFile your return.
Plan ahead so that you are prepared to file your 2022 tax return next year without too much difficulty. Most important to do during the year: store all tax-related documents in one place. If your tax situation is getting more complicated, find a tax professional now, not next tax season!
Our article includes links to provincial and federal pension regulators. Contact your pension plan regulator to determine the options for your locked-in account - don't rely solely on your financial institution.
The only changes for 2022 are the small business (CCPC) rates for PEI, reduced to 1% on Jan 1/22, and SK, reduced to 1% on July 1/22.
The NS Premier announced on May 5th that this tax would be removed but the non-resident deed transfer tax would proceed as planned.
Bill C-19 tabled April 28, 2022 includes this provision, so claims can be included when you file T2 returns. Returns already filed must wait for Royal Assent before requesting adjustments.
Deficits in the billions for at least another few years; LIFT Credit enhancement; New Seniors Care at Home Refundable Tax Credit; Cultural Media Tax Credits modernized.
Topics in this 10-minute video include:
Unfortunately, joint ownership can cause major problems if intentions are not properly documented, leaving questions as to beneficial vs legal ownership. The latest court case involves a BC $3 million lottery winner.
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.
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.
There is no tax withheld from the minimum withdrawal amount. Tax is withheld from the amount withdrawn in excess of the minimum amount.
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. The prescribed rate is currently 1% but will go up to 2% starting July 1, 2022.
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.
If you've rented out your principal residence, or moved into your former rental property, this change in use causes a deemed disposition, which may result in a capital gain.
New Renters Tax Credit; Increased Education Property Tax Rebate; Exemption and threshold increased for Health and Post-Secondary Education Tax Levy; Community Enterprise Development and Small Business Venture Capital tax credits made permanent.
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. A limit on attendant care expenses applies if the taxpayer claims the disability amount.
Joint investment income; tax credits and deductions; how to report your marital status and when to update CRA on a change in your marital status.
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.
Canadian residents may split certain pension income with their resident spouse or common-law partner, if certain conditions are met. This may allow the spouse to claim the pension income tax credit.
Tuition is claimed for the year in which the courses are taken. Some provinces no longer provide this credit. Other credits can be "lost" due to the order in which tax credits must be taken.
Tax-Free First Home Savings Account; Increased Home Buyers' and Home Accessibility Credits; New home reno credit; Property flipping rule; Business tax incentives; Flow-through share changes; Bill C-208 fix; CCPC changes, and much more.
No personal tax or fee increases; elimination of 15% tax on home insurance for 1 year; 3 new business tax credits.
Video Tax News provides information on a recent Federal Court case which addressed a taxpayer's request to access her ex-spouse's income tax information.
The RRSP contribution limit for 2022 is $29,210 and for 2023 will be $30,780.
The DTS provides free technical help from experienced CRA officers for small and medium income tax service providers.
Retirement benefits can start as early as age 60, with reduced benefits, or as late as 70, with increased benefits. Those receiving the pension before age 70 and still working will continue to pay into CPP, and will receive post-retirement benefits starting the following year.
Recovery of CERB overpayments; COVID-19 protocol costs; Canada Digital Adoption Program; Money received from offshore accounts; Underused Housing Tax (can affect Canadians); Accessing former spouse's tax information.
The federal budget will be tabled on April 7, at approximately 4 pm EDT.
New refundable tax credits for children's sports and arts, and for fertility and surrogacy costs; tax exemption for employment income earned by eligible skilled trades; new deed transfer tax and property tax for non-residents.
The Auto-fill feature allows tax return software to automatically fill in the tax slips in the income tax return. There are reports of some 2021 tax slips missing, so make sure you check this.
Eligible spin-offs of foreign corporations can be done on a tax-free basis by filing an election with your tax return. CRA provides a list of spin-offs that have been approved for tax deferral.
The 2022 CAI amounts, which will be paid in quarterly instalments, were announced on March 23, 2022 by the Department of Finance.
Eligibility; When can it not be claimed; Only 1 credit per household; Child not resident in Canada; Shared custody; Spouse deceased during year; Additional caregiver amount for infirm dependant.
Small business corporate tax rate returns to 1% Jul 1/22 and to 2% Jul 1/23; tobacco tax increases; PST will be on additional items but removed from audiobooks; changes to education property tax, VLT commissions; proposal to take over the carbon tax charges.
No personal or corporate income tax changes; $500 one-time cost of living support payment to adults earning up to $100,000; $3 billion deficit for fiscal 2022-23 followed by surpluses in subsequent years.
Increases for basic personal amount and low-income tax reduction threshold; 3-year phased-in provincial property tax rate reductions; 1-year cap on allowable rent increase.
Both can affect business deductions, employee taxable benefits, employment expenses, and GST/HST ITCs. It's important to have business/personal cell phone usage documented to have it accepted by CRA.
Need to do a quick estimate of taxes payable, and compare 2 different cases? Compare 2 provinces same year, 1 province different income for the same year, or 1 province same income for 2 different years.
These are reinvested, not paid to you, requiring an increase to your ACB, reducing future capital gains. 2021 final amounts for iShares are now available.
Bookmark this page of links to resources on CRA; Service Canada; Courts and court decisions; Legislation; Foreign exchange, interest rates and CPI; Statistics Canada; Investment resources and more!
Besides interest expense, some other expenses can be deducted. Tax return preparation can be deducted in certain circumstances.
There are separate tax credits for federal and provincial or territorial political contributions. Small political contributions are encouraged by the high tax credit rate on the first part of the contribution. Only the Ontario credit is refundable.
Did you receive a letter from CRA suggesting that you review the exemption you claimed, and adjust if necessary?
Medical expenses can be claimed by either spouse, or can be shared; How to determine the 12-month period for expenses; Medical expenses of a deceased person; Have both a spouse and a common-law partner?; Expenses for other eligible dependants.
No changes to personal or corporate income taxes were announced.
No changes to personal or corporate income tax rates; Property mill rates and some fees increase by inflation.
If shares are withdrawn from your RRIF their ACB will be the market value in C$ at the time of withdrawal. This is averaged with existing shares of the same stock in your non-registered accounts. The average ACB is the cost used for an in kind deposit to your TFSA.
The extended repayment date will apply to "eligible CEBA loan holders in good standing", and if you qualify, your financial institution will contact you to provide details. If they don't contact you within a reasonable time, you should contact them.
CRA processing issues - tax credits; Principal residence exemption letters from CRA; Working from home extended relief; Proposed changes CRA admin processes and reporting requirements trusts; Immediate expensing capital assets.
Basic personal amount increase for 2023, new tax on vaping products, increased tobacco taxes, carbon tax increase as per plan.
The only confirmed future budget dates we have are Saskatchewan March 16th and New Brunswick March 22nd. We have probable timing for other provinces, but not even an estimate for the territories.
March 1, 2022 is the deadline for making your RRSP contributions for the 2021 taxation year. RRSPs are one of the best tax-saving tools available to Canadians, but if you're currently low income, TFSAs would likely be better for you.
There are a few different 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.
Are you a single parent? Or, are you supporting a parent or other dependent relative? The equivalent to spouse tax credit may be available.
The one-time $500 payment made to OAS recipients aged 75+ is taxable, reported on line 13000 other income. The T4A for this may not be available online yet.
There are several ways to file your tax return, including NetFILE and EFILE, File My Return (by telephone), or printing and mailing your return.
The due date for 2021 tax returns & payments is May 2, 2022. Self-employed have until June 15th to file, but payment is due May 2nd.
Community organizations will complete and file your taxes for free if you have a simple tax situation and modest income. Another free option is to use the File My Return service by telephone.
No changes to personal/corporate income tax rates; Some education property tax rates increase; Lower tobacco tax rate for smokeless products; Online marketplaces to collect Tourism Levy.
No changes to personal/corporate income tax rates. New "clean buildings" and "clean technology" tax credits; PST exemptions for used ZEVs and heat pumps; PST on private vehicle sales based on greater of reported purchase price and average wholesale value.
Most incorporated businesses can apply for a rebate of PST paid on capital assets purchased between Sep 17, 2020 and Mar 31, 2022. The deadline for applications is Sep 30, 2022.
Tax expert Jamie Golombek had his 2020 claim for home office expenses for working from home during the pandemic rejected. Learn the steps he's taken to fight the reassessment.
Know how to complete the TD1 when you have multiple jobs or low income, or other situations where you might pay too much or too little tax.
Draft legislation includes many Budget 2021 proposals. The deadline for submissions for most items is March 7, 2022.
Draft legislation released for consultation provides for expanded eligibility, to individuals and partnerships as well as CCPCs. Submissions will be accepted on this measure until March 7, 2022.
Your 2021 CPP OAS and EI tax slips will be available in your My Service Canada Account on February 1st.
For 2021, as it was for 2020, "earned income" includes COVID-19 relief payments for which you receive a T4A or T4E, as well as EI benefits and QPIP benefits.
Both CRA and Revenue Quebec have calculators to help you determine the best method to use for claiming home office expenses.
These services will be available starting Monday Feb 21, 2022 for filing 2018 to 2021 tax returns. If doing your own taxes, we recommend using tax software to NetFILE the return.
Case for deferring CPP benefits | COVID treatment employment benefits and WFH expenses | Worker's Comp. re accident at home | Income-splitting loans | CRA focus areas | Expanded trust reporting rules.
There are federal and provincial/territorial age amount tax credits for those aged 65+, which are reduced when income exceeds a certain threshold.
Filing a tax return allows you to receive refundable tax credits, GST/HST credit, and to establish eligibility for government benefits. The sale of a principal residence must be reported on a tax return.
Make sure you take advantage of available deductions and tax credits! See our info on this as well as reporting investment and other income, tax return due dates, filing with a spouse, dealing with CRA and more.
Use our calculator to determine your 2022 minimum annual withdrawal, and to estimate your earnings and withdrawals for the next 40 years. Works for non-registered also!
If your status as a "developing farm" has been revoked, it's important to know that there is no deadline for achieving gross annual value requirements for a developing farm, despite the "projected" date for doing this. Jan 31st is the deadline to appeal your assessment.
The deadline for submissions for Ontario's 2022 Budget consultations is February 11, 2022. Manitoba's consultations deadline is January 31, 2022.
The repayment deadline is now Dec 31, 2023, for all eligible borrowers in good standing.
Your OAS is taxable, and if your net income before adjustments (which also means before deducting loss carry-forwards) exceeded $79,845 in 2021 you will have to repay 15% of your income over that amount, to a maximum of the total OAS you received.
Web Forms are now available for employers to file up to 100 T4 slips. Wages paid in Jan 2022 re Dec 2021 do NOT go on the 2021 T4 slip.
The 2022 threshold for the BC home owner grant is $1,975,000. Grant amounts have not changed. If there are multiple residences on 1 property, the assessed value may be able to be "partitioned" if it exceeds the threshold.
If you haven't been keeping a trip log for the business use of your vehicle, best to start now. This is important for business owners as well as employees driving a company vehicle.
You can make your RRSP contribution with an in kind transfer of shares. 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.
2021 was an amazing year for stocks. See returns for up to 72 years, and growth of $1,000 invested. Over the past 20 years one would lose money after inflation by investing in Cdn 3-month T-bills or Cdn government 1-3 year bonds.
Use our calculator to determine your returns for 2021 or any time period for a particular investment or investment account, or your entire portfolio.
All income and expenses must be reported on your tax return in Canadian dollars. The average US exchange rate for 2021 is 1.2535, which can be used for dividends, but not for purchases and sales.
See also Prior Years:
Revised: September 29, 2022
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