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What's New by Month
The recovery, sickness and caregiver benefits have been extended to Oct 23, 2021, and the CRB number of weeks is increased to 54 weeks.
The wage subsidy has been extended for 4 weeks, at a maximum rate of 20%. The maximum rate for period 20 ending Sep 25th is increased to 40%.
The rent subsidy and lockdown support have been extended for 4 weeks, at a maximum rate of 20%, with the lockdown support continuing at 25%. The maximum rate for period 20 ending Sep 25th is increased to 40%.
Bill C-208 is now law, and allows intergenerational transfers of certain corporations to utilize the Lifetime Capital Gains Exemption. Changes are expected later this year.
If you transfer shares or other investments on which you have a loss to a registered account, the loss will not be deductible.
If you transfer shares or other investments on which you have a gain to a registered account (or to someone else's account), you will have a taxable capital gain.
Add'l OAS pmt; CRA collections/business; tax-driven bankruptcies; Family members informal agreements; Travel allowances; Bulk taxpayer relief; TFSA excess contributions. Lots of great content as usual!
Low-income seniors collecting Old Age Security (OAS) can receive GIS. We've added examples of GIS clawback calculations using the increased exemption amounts.
Taxes paid at varying levels of eligible and non-eligible dividends and interest for all provinces and territories. The lowest-tax provinces for $100K of eligible dividends are BC and NB.
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 this analysis.
BC, Ontario, and Alberta are again the lowest tax provinces for a single person earning $50,000 or $100,000. See also comparisons for a single income family with 2 children.
Do you use Facebook, PayPay, Amazon Kindle, Apple iTunes, cryptocurrency wallets, OneDrive, licensed accounts or other digital assets? It's important to document passwords/private keys and other information for your executor.
Our CWB 2021 tables are now available, showing the enhanced amounts for most provinces and territories. However, since the amounts for AB, NU and QC depend on provincial reconfiguration agreements which have not yet been finalized, we have used the 2020 amounts increased for inflation for their amounts.
BC's Budget 2022 consultations are now open, until Sep 30, 2021. To make a presentation to the Select Standing Committee, indicate your interest in this by Friday, Jul 16, 2021.
A business may not have to be completely locked down from conducting business in order to qualify for the Canada Emergency Rent Subsidy 25% lockdown support top-up.
Our Small Business Income Tax page has lots of helpful articles on the following topics:
CEWS Audits; CERS lockdown support - restricted activities; Insurable employment; Impending US tax changes; US MLPs withholding taxes; Shareholder advances/poor records.
If you retired recently, you may not be getting the CPP benefit related to your contributions re enhanced CPP.
You may be able to save tax by sharing your CPP retirement pension with a lower-income spouse, but clawbacks of OAS, spousal amount and age amount must also be considered.
Good record-keeping needed; Spousal attribution re joint lines of credit; Disappearing source rules; Interest paid to non-resident; Interest exceeding investment income; Income or capital - lots to learn!
Find out how to change your return through your CRA My Account, through your tax software, or by mail to CRA.
Use our calculator to see how long it will take to double your investment or your savings based on your rate of return.
Make sure you keep the receipts for summer activities for your children that could qualify as child care expenses. See our article for allowable expenses and limits on the deduction from income.
An employee or self-employed person can elect to stop paying CPP contributions once they turn 65. Employees file form CPT30 with their employer. Self-employed make the election on their tax return for that year.
Personal tax increases for 2022 for taxable income over $135,973, with 3 additional tax brackets, highest rate increased from 17.3% to 21.8%; Physical activity tax credit will refund up to $2,000 per family; Sweetened beverage tax; Tobacco tax increase.
Successor holder vs Beneficiary - big differences! Secondary beneficiaries; Named beneficiaries and probate; No successor holder or beneficiary.
There are different categories of tax professionals in Canada. Sometimes taxpayers may need help determining which tax professional to consult with.
- Estate Planning - Millennials
CRA has issued a warning about this type of scheme, and Jamie Golombek has an interesting article about it.
A CRA technical interpretation states that wages paid to a shareholder loan account, or wages paid and then returned to the corporation with a credit to a s/h loan account are not eligible remuneration for CEWS.
A CRA technical interpretation concludes that wages paid to an employee retroactively in respect of a week in prior qualifying periods can be considered eligible remuneration for CEWS.
Those who received CERB based on gross self-employment income of $5,000 or more and have repaid benefits can apply for a refund.
Under some circumstances, all or a portion of locked-in retirement accounts can be unlocked.
A taxpayer can combine their spousal and non-spousal accounts, but after the combination the account is a spousal RRSP. Attribution rules will apply to withdrawals made by the taxpayer for recent contributions made by the spouse.
We apologize for the feed problems lately. Feedburner will be discontinuing email subscriptions in July, so we've been trying to find a replacement for this, and subsequently making changes to the feed, which has obviously caused problems. We've gone back to the old feed format now, which still seems to be a problem. Hopefully you'll be patient while we work out the bugs. We won't be replacing the email version of the feed which sends updates more often than monthly. If you're using the email version, please see other options above.
Make sure you're aware of how long you must retain source documents (receipts, invoices, tax slips, investment trade confirmations, etc) and other records for your personal tax return and for your business.
There are no changes to sales tax rates so far in 2021.
On May 11, 2021, New Brunswick tabled Bill 48 to reduce their lowest personal tax rate to 9.40%, and increase the Low Income Tax Reduction threshold.
Newfoundland and Labrador's 2021 budget will be delivered on Monday, May 31, 2021.
Do you know your rights and responsibilities as an employee or employer? Learn about minimum wages rates, vacation and statutory holiday entitlement. New information on COVID-19 changes for many provinces.
Updated for 2021 budget changes including enhanced Canada Workers Benefit, ready for your 2021 tax planning.
Plan ahead so that you are prepared to file your 2021 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!
Bill C-30 includes Disability Supports Deduction adjustments for 2020 and 2021 for individuals who have received COVID-19 benefits.
Bill C-30 includes provisions to allow employees to use their 2019 automobile usage in order to access the reduced standby charge in 2020 or 2021.
Bill C-30 includes provisions to allow employees to use their 2019 automobile usage in order to access the reduced operating cost benefit in 2020 or 2021.
This Bill includes provisions proposed in Budget 2021 as well as proposals made earlier regarding COVID-19.
These can result in taxable income and sales taxes payable. CRA investigations; taxpayer responsibilities.
The 2021 Federal Budget proposed to allow the purchase by CCPCs of certain capital assets to be immediately expensed, if available for use by Dec 31, 2023.
- Federal Budget 2021
If you repaid 2020 COVID benefits in 2021, this can be deducted on your 2020 tax return, as proposed in the Federal 2021 Budget.
We've added information re: claiming medical expenses for a former spouse; defining the 12-month time period; and what if there is a spouse and a common-law partner?
It is possible to amend a CEWS or CERS claim after the deadline, in certain circumstances, but this must be done within 30 days after the later of April 21, 2021 and the applicable filing deadline.
PST exemption electric bicycles;
No projected end to deficits;
The loss on the sale of shares can be disallowed if shares were purchased in the period 30 days prior to or 30 days after the date of sale. See CRA's superficial loss calculation for when fewer items are bought than were sold during the period.
Although Quebec has extended the due date for tax returns, federal tax returns still have a due date of April 30th.
There are tax consequences if a principal residence or cottage is rented out, or if a rental property becomes a principal residence or personal-use property.
We've determined a work-around for this calculator's problem of not allowing input of the monthly CPP/QPP income in some circumstances.
Generally, the tax credit for the first $200 of donations is at the lowest tax rate, and the remainder at the highest tax rate, but there are some exceptions to this. Donations to a U.S. charity might also be eligible for the tax credit.
Capital gains on the sale of Qualified Small Business Corporation (QBC) shares or Qualified Farming or Fishing Property can be reduced or eliminated by the up to $1 million exemption.
Many investments are "qualified" investments for registered plans, but some are non-qualified, or even prohibited. The plan holder/beneficiary could be penalized for holding these investments.
This rebate is available for certain asset purchases made by a corporation from Sep 17, 2020 to Sep 30, 2021.
No personal or corporate income tax rate changes; New Teaching Expense Tax credit and Education Property Tax Rebate; RST changes; Business - health/education tax levy changes; Revisions to Interactive Digital Media Tax Credit and Small Business Venture Capital Tax Credit.
Active Families Benefit restarted; Home Renovation Tax Credit; Small Business corporate tax rate to be increased 2022 and 2023; Non-eligible dividend tax credit reduced for 2021; Road use fee electric vehicles; changes to sales tax and education property tax.
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.
This Act will come into force on November 15, 2021. Revised regulations coming soon, may still cap fees at $100 for DTC requests.
Tax returns must still be filed by April 30th, but some (NOT ALL) taxpayers who received COVID relief benefits will not be required to pay interest on outstanding tax debt for the 2020 tax year until April 30, 2022.
The deadline for applications for a $60,000 CEBA loan or the $20,000 expansion is now June 30, 2021. Apply online with your financial institution.
- CERS/CEWS update
Accommodations and parking are sometimes included as eligible medical expenses, as is cannabis. Check the list of eligible expenses.
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.
Should a cost be capitalized or expensed? There are general guidelines that can be followed to determine the answer. This article also deals with expense and capital items that are used both for business and personal use.
Withdrawals from your RRSP from Jan 1 to Dec 31, 2020 for the HBP or LLP will be on a 2020 T4RSP, and must be reported on Schedule 7 of your 2020 tax return, even though they don't affect your income.
If you made repayments to your RRSP for the HBP or LLP from Mar 3/20 to Mar 1/21, make sure you report them properly on your 2020 tax return in order to not lose RRSP contribution/deduction room.
Do you have a worthless investment? Can't sell shares because they've been delisted? There may be a way to claim the capital loss.
Canadian vs foreign investments; What the Income Tax Act says about the exchange rate; Trade date vs settlement date; Superficial losses; Transfer capital losses to a spouse.
A deduction may be available for tools purchased in order to earn employment income as a tradesperson (e.g. hairdresser, cook, plumber, electrician, mechanic, apprentice tradesperson, etc.). Let our calculator help with the calculation.
Tax credit for seniors' home support services enhanced; Small business tax rate reduced; non-eligible dividend tax credit rate reduced; many other measures.
No tax measures were announced other than the 10-year extension of the Equity Tax Credit for investments in Community Economic Development Investment Funds (CEDIFs).
20% increase to 2021 CARE credit; Refundable jobs training tax credit 2021 only; Employee Health Tax (EHT) exemption increase made permanent, threshold amount for instalments doubled; and more.
Let our article and our calculator help you with this decision. However, if you have never invested, don't start by borrowing for your RRSP!
The 2021 Budget will be tabled on Monday, April 19, 2021.
This calculator may help you decide between contributing to TFSAs or RRSPs. If you're in the lowest tax bracket (federally up to $49,020 in 2021), use TFSAs first!
If you have purchased an investment in a non-registered account, it is your responsibility to keep records which will allow you to calculate the adjusted cost base (ACB) of that investment, in Canadian dollars, even for investments held in US$. Your brokerage statements will not provide the Cdn$ ACB for investments held in US$.
If you have employment or self-employment income exceeding $3,714 in 2020, have claimed a disability supports deduction or medical expenses and have family net income less than $53,604, you may be able to claim a refundable amount of up to $1,272.
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.
No personal or corporate tax changes were announced. Carbon tax increases to $40 per tonne from $30 effective April 1, 2021.
Each taxpayer is responsible for overcontributions to their RRSP - not their accountant or financial planner. Your notice of assessment will show your contribution limit. If this is negative, you likely have an excess contribution which will result in a costly tax.
Tax measures effective Jan 1, 2022: Personal exemption increases to $11,250; Low-income tax reduction threshold increases to $20,000; Small business tax rate reduced to 1%.
If you feel there is an error on your T4A for CERB or other COVID benefits you should contact CRA as soon as possible. Make sure you file your return on time!
Expenses of a 40km+ move to attend post-secondary school may be deducted against taxable scholarship or award income or from employment income earned while at school. The move home might be deductible from employment income earned there, if conditions are met.
There were no new tax measures announced in the Yukon 2021 budget.
The subsidy will continue with the current structure, with maximum 75% subsidy for active employees. Subsidy structure for furloughed employees will also continue unchanged.
The subsidy will continue with the current structure, with maximum 90% subsidy for businesses locked down due to COVID, and maximum 65% for other businesses.
- COVID-19 Benefit Recipients - Interest Relief
There were no personal or corporate tax changes in the Alberta budget. COVID-19 recovery spending continues; tourism levy abatement continues, property tax reductions oil/gas properties.
If you received COVID benefits with little or no tax withheld in 2020, you'll probably have tax owing, which could be reduced by an RRSP contribution.
Nunavut tabled their 2021 Budget, with no tax changes announced.
So far, we only know the dates for upcoming 2021 budgets for 3 provinces: Alberta on Feb 25th, Saskatchewan April 6th and BC April 20th.
The prescribed rate for 2021 Q2 starting April 1st will remain at 1%, for spousal loans as well as for shareholder and employee loans.
All employers are required to provide data for 4 new codes on the 2020 T4, for employment income paid from Mar 15 to Sep 26, 2020. T4 due date this year is Mar 1/21.
Effective April 1, 2021 there are new registration requirements for businesses located outside of BC.
Self-employed individuals who received CERB and would have qualified based on gross income will not be required to repay the benefit if they met all other eligibility requirements.
The small business corporate income tax rate has been reduced for 2021 in Northwest Territories, Prince Edward Island, Quebec, and Yukon.
The NT budget includes a reduction of the small business corporate tax rate to 2% from 4%, increases to carbon tax, property tax rates and some fees, and increased Cost of Living Offset.
CRA has modified Guide T4044 to add that starting in 2020, reasonable monthly home internet access fees can be an eligible work-space-in-home expense for employees.
Calculate your returns for an investment, investment account, or entire portfolio, for any period. New print function added.
A proposed class action lawsuit has been filed in Federal Court against the federal government on behalf of self-employed pensioners, although if it is successful it may affect all self-employed people affected by this issue.
Life in the Tax Lane February has an additional link to information on the new refundable Canada Training Credit, available for 2020 tax returns.
See our checklist of items to have on hand prior to preparing your own tax return or taking information to a professional tax preparer.
This year your CPP OAS and EI tax slips will be available in your My Service Canada Account as early as February 1st.
The only change to donation tax credit rates for 2020 was the higher BC tax rate of 20.5% for donations over $200 to the extent that income is taxed at this rate. 2021 tax credit rates remain unchanged, but budgets could change that.
- Canada Training Credit
Budget 2021 consultations are underway for a few provinces - earliest closing date is next week.
CRA and Tax Templates Inc. calculators are available up to period 13 ending Mar 13/21. Video Tax News/Punchard Systems CEWS Estimator is also available up to period 13 - easy to use, excellent for planning.
Both NETFILE and EFILE will be available starting Monday, February 22, 2021, for filing 2020 and earlier tax returns. Make sure you have all your tax slips before filing!
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.
For 2020 and 2021, "earned income" will include COVID relief payments for which you receive a T4A or T4E, as well as EI benefits and QPIP benefits.
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?
Business loans @ fixed 4% interest rate with flexible terms of up to 10 years with up to a 1 year postponement on repayments at start of loan, guaranteed by Canada.
Due to the COVID-19 pandemic, there will be no revocations of farm status for the 2021 assessment roll. For future reference: There is no deadline for achieving gross annual value requirements for a developing farm, despite the "projected" date for doing this.
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.
See the big difference in taxes payable on different types of investment income. Print a 1 page summary of results with no ads, in colour.
This detailed calculator now includes political contribution tax credits. Check your 2020 tax return, do your 2021 tax planning!
Both CRA and Revenue Quebec have calculators to help you determine the best method to use for claiming home office expenses.
These can result in taxable income, and in sales taxes collectible/payable. Gain on Bitcoin is also taxable.
Both CEWS and the Canada Emergency Rent Subsidy (CERS) are included in taxable income immediately before the end of the qualifying period to which they relate. If not done, tax return amendments will be needed.
These premiums are not deductible by a sole proprietor. They are deductible by an employer as wages expense, but are included as a taxable benefit to the employee.
The deadline for periods 1 to 5 (ending Aug 1/20) wage subsidy applications is Jan 31/21. See our article for when CEWS is included in income.
Web Forms will be available for employers to file up to 100 T4 slips starting Jan 11/21. Don't forget about the extra codes for 2020.
Use our calculator to determine your 2021 minimum annual withdrawal, and to estimate your earnings and withdrawals for the next 40 years. Works for non-registered also!
2020 was a good year for stocks. See returns for 1/5/10/20/41/50 & 71 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 calculator to determine your returns for 2020 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 2020 is 1.3415, which can be used for dividends, but not for purchases and sales.
See also Prior Years:
Revised: July 30, 2021
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