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The value of the RRSP or RRIF is included in the income of the deceased. When there are named beneficiaries, no tax is withheld when the account is paid to the beneficiary, so the estate plan should ensure that funds are available to pay any tax liability. Named beneficiaries can be held liable for taxes unpaid by the estate.
Canada Revenue Agency unveiled its new CEWS 2.0 wage subsidy calculators on Aug 11th - online calculator for small number of employees, or downloadable spreadsheet for large number of employees.
Payments will be issued beginning this fall. If you are eligible for the disability tax credit but have not applied, or your certificate expired in 2019, you must apply by Sep 25th. Payments will be issued automatically for eligible individuals.
There are calculators available to assist businesses with the very complicated revised wage subsidy.
In a surprising 2020 Ontario Superior Court Case, it was decided that a RIF with a designated beneficiary would instead go to the estate.
The rate for calculating taxable benefits from low-interest and interest-free loans to employees and shareholders, and for loans to spouses or children, will remain at 1% for Q4 2020 beginning Oct 1st.
Everyone in business or with a rental property is faced at some point with the decision as to whether an expense should be capitalized or expensed. There are general guidelines, but in some cases the decision is left to the courts.
The NL government released its update on July 24, 2020. They plan to table a 2020-21 budget prior to the end of summer.
This month's video discusses:
Bill C-20, which has legislation related to the one-time tax-free disability payment, received Royal Assent July 27, 2020. Those who have not yet applied for the disability tax credit but are eligible have until September 25, 2020 to apply.
There are several tax-free employee benefits, and there are some that are surprisingly taxable!
Payment due dates for individual, corporate and trust returns are extended to Sep 30, 2020 from Sep 1, 2020. No penalties or interest will be charged, including the late-filing penalty, as long as the return is filed by Sep 30th - but October estimated benefits/credits may be affected! Interest on existing tax debt is waived for certain periods.
Although the OAS recovery tax notices sent out in July 2020 appear to have the correct tax amount, the rest of the information has not been updated with 2020 threshold/dates.
Results will now print without ads, headers, etc. Forecast your increases in and withdrawals from your RRSP or RRIF, see how long your investments will last.
Eligibility for this tax-free payment will be expanded to CPP disability benefit recipients, Veterans receiving disability supports, and those who qualify for the disability tax credit but have not yet applied, if they apply soon.
The CEWS has just become a lot more complicated, and is now available to a lot more businesses. For periods starting July 5, 2020 and later, the % subsidy is dependent on the % revenue reduction, and ANY revenue reduction is eligible.
The tuition/education/textbook amounts carried forward are always reduced by the maximum amount that can be claimed in the year, even if the maximum amount is not claimed. This sometimes means that credits such as the dividend tax credit cannot be used.
The Economic and Fiscal Snapshot summarized all COVID-19 financial relief. The deficit is projected to be $343.2 billion for the 2020-21 fiscal year. This would increase the interest-bearing debt to over $1.4 trillion. No tax changes were announced.
The Home Buyer's Plan (HBP) allows you to borrow up to $35,000 from your RRSP to buy or build a qualifying home.
This very simple tax-planning calculator which shows taxes payable and marginal tax rates for all provinces and territories will now print results on 1 page with no ads/headers etc. This calculator can help you estimate how much you'll owe next April on those CERB payments!
In some provinces, including BC, having multiple wills can reduce probate fees. One will can be prepared for the assets requiring probate, and a separate will can be prepared for the assets not requiring probate, such as shares of a private corporation (in BC).
Funding received from government sources can be excluded from the determination of "qualifying revenue" for calculation of the 30% revenue decline for the wage subsidy.
Shares can be transferred from a non-registered account to a registered account such as an RRSP. However, if you transfer shares on which there is a loss, the loss will not be deductible. If you transfer shares on which there is a gain, you will have a taxable capital gain.
Updated FAQ: Which expenses are/are not eligible for the non-deferrable expenses stream business loan of up to $40,000 (25% forgivable), and what documentation is required.
Only the tenants approved for the April to June Commercial Rental Assistance are eligible for the July support, and they are automatically eligible, but the landlord must apply, and not all tenants need to be included. Clawback provisions are being removed retroactively.
The accounting treatment for CECRA and the 25% forgivable portion of the CEBA loan is similar to the tax treatment - included in income or deducted from expenses when received, unless it relates to expenses in future periods.
If your income for 2020 has been reduced due to COVID-19, you can apply for an income review in order to reduce your PharmaCare deductible and family maximum.
This month's video discusses:
The CECRA and the forgivable portion of CEBA are taxable when received in 2020, but if repaid may be deducted when repaid.
The federal government will provide an economic update on Wednesday, July 8th.
Alberta is reducing the corporate income tax rate to 8% effective July 1, 2020 (Job Creation Tax Cut), and introducing an Innovation Employment Grant.
The BC Home Owner Grant reduces the property taxes payable on your principal residence. Once a grant has been claimed for a tax year, another grant cannot be claimed by you or your spouse.
Businesses with 2019 payroll less than $20,000 and eligible non-deferrable expenses between $40,000 and $1.5 million are now able to apply online for CEBA through their financial institution.
This will provide up to $5,000 to support student's post-secondary education costs in the fall, for students who take part in national service activities. Paid work placements are also available.
Your OAS is taxable, and if your net income before adjustments (which also means before deducting loss carry-forwards) exceeds $79,054 in 2020 you will have to repay 15% of your income over that amount, to a maximum of the total OAS you received.
Tax planning should be top of mind long before next April, and for business owners and high-wealth individuals it should always be on your mind. If your tax situation is complicated, find a tax specialist now, not next tax season!
See the big difference in taxes payable on different types of investment income. We've added "net income after tax" to the calculator. You can now print a 1 page summary of results with no ads (in colour if your settings are correct).
The links to these resources have been moved to the top of the page for easier access. They include draft legislation, bills, Hansard (frustrating to read), GC Infobase (LOTS of data), and PBO independent financial analysis.
We've added a new print function to print a 2 page summary of results with no ads, headers or footers. It will print in colour with Chrome, Firefox or Vivaldi if your settings are correct.
The economic update details the reduction of $8.8 billion to Quebec's revenue due to the economic contraction, and provides information on fiscal measures taken re COVID-19.
PEI is raising the basic personal amount, lowering the small business tax rate, increasing the threshold for the low-income tax reduction, and creating a $500 non-refundable Children's Wellness tax credit. All measures effective for 2021.
Estimated COVID-19 related spending has increased to $169 billion for the 2020-21 fiscal year which started Apr 1/20. This increases the interest-bearing debt for a family of 4 to about $157,656.
Applications under the CEBA "Non-Deferrable Expenses Stream" were to be accepted commencing Friday June 19th, but the website indicates there will be a "slight" delay in commencement. This is for businesses with annual payroll under $20,000 and eligible non-deferrable expenses between $40,000 and $1.5 million.
CERB has been extended by 8 weeks, making it available to eligible workers for up to a total of 24 weeks. Don't forget it's taxable, but no tax is being deducted!
We've added a new feature to this calculator, which allows you to print without ads, borders, etc. But to print in colour, you'll have to use Chrome or Vivaldi. We'll be adding this feature to other calculators over time.
This depends on your financial situation. Low income? Probably TFSA. See our analysis, and check out the TFSA vs RRSP Calculator.
Bill C-17 outlines fines and penalties for fraudulent CERB claims, and may make workers ineligible for CERB if they decline to return to work.
Those with a disability tax credit certificate will receive a one-time tax-free payment of up to $600, reduced by the one-time tax-free OAS and GIS payments.
The previously announced one-time tax-free OAS/GIS payment will be received in the week of July 6th.
This month's video discusses:
The consultation, which closes June 5, 2020, seeks input re potential changes to the CEWS program. You can participate by completing a short survey, or provide more detailed feedback by email.
On May 25th the government announced the launch of a toll-free hotline, with 125 CPAs available to provide customized financial guidance to the smallest business owners to help them through this crisis.
The CECRA portal opened this morning for registrations - the day you register depends on province/number of tenants. We've made a couple of cautionary notes. Patience will be required if you try to call them.
Do you still own capital property for which you elected to claim a capital gain and an exemption in 1994? Hopefully you still have all the forms you filed for the election.
On May 25, 2020, Canada Revenue Agency confirmed that as long as the tax return is filed by the payment due date of September 1, there will be no late filing penalty. This applies to returns due June 1 or June 15, and to other information returns, elections, etc, such as the T1135.
If you have employment or self-employment income exceeding $3,645 in 2019, have claimed medical expenses or a disability supports deduction and have family net income less than $52,599, you may be able to claim a refundable amount of up to $1,248.
The application portal for CECRA will open on May 25th. Landlords must apply for all 3 months at once. 70% revenue decline from 2019, or from Jan/Feb 2020, is based on average of April, May, and a forecast of June 2020 revenues.
CEBA (interest-free loans) is being expanded to be available to sole proprietors, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than payroll.
The amount of METC is dependent on the taxpayer's net income for tax purposes. If net income is too high, there will be no tax credit. We've added a few examples of the calculation at different income levels.
For each employee, employers will be able to choose between 2 periods for baseline remuneration: wages paid Jan 1 to Mar 15/20, or Mar 1 to May 31/19. This change retroactive, so will apply to the first claim period starting Mar 15/20.
The CEWS program is being extended by 12 weeks to August 29, 2020. Eligibility is being expanded, and the 30% revenue decline test and other provisions may be adjusted, with the intention to spur jobs and growth.
When a business is being closed down, there are many tax and regulatory issues that need to be addressed.
Announced May 13th, about $1 billion to help "regional economies and small and medium businesses" that may require additional help to recover from the COVID-19 pandemic, but have been unable to access existing support measures.
Applications for the CESB open Friday, May 15th. We've added links to information on CESB, student loans and grants, and international students.
Community organizations are hosting free virtual tax clinics. Volunteers may be able to complete and file your taxes for free, by videoconference or by phone.
On May 12, the Prime Minister announced a one-time tax-free payment of $300 for seniors eligible for OAS (regardless of income level), with an additional $200 for seniors eligible for the GIS.
In effect, yes, this is now being done, because the Bank of Canada has implemented a policy called Quantitative Easing (QE), and through this is buying government of Canada debt.
How to determine if your rental income is business income or property income, differences in tax treatment.
CRA has started making calls to follow up on subsidy claims. Received a call? Make sure it's not a scam! How to document your calls to or from CRA. How to submit service complaints as well as kudos for good service.
Funding/requirement changes for Canada Summer Jobs 2020.
Employees should pay the premiums on their disability insurance to ensure the income will be tax-free. If self-employed, it's extremely important to buy disability insurance to protect against extended loss of income.
Deductions, refundable and non-refundable tax credits, attendant care expenses. Some tax credits can be transferred between spouses. Registered Disability Savings Plans (RDSPs), government benefits, and unlocking locked-in pension plans.
Tax issues for students and/or parents: eligibility for tuition, education and student loan interest tax credits, private school tuition fees, deducting moving expenses, child care expenses. Added: COVID-19 benefits for students.
See how much the $145.6 billion direct COVID-19 costs (federal only, doesn't include provincial) will increase the interest-bearing debt of Canada for every adult and child. Could this have been avoided?
Although CERB payments are taxable, no tax is being withheld from the payments. The tax will have to be paid when the income is reported on 2020 tax returns. Use our calculator to estimate what you'll owe.
Student financial assistance increases for fall 2020, emergency student benefit for those ineligible for CERB or EI, student service grants, removal of restrictions of hours worked for international students.
This month's video discusses:
Funds loaned to a lower-income spouse or a child can be used to purchase investments, and tax on the investment income will be paid by the lower-income spouse or child at a lower marginal rate.
Applications for CEWS opens today, April 27th. The 3rd version of CRA's CEWS calculator doesn't seem to follow the legislation. The Tax Templates Inc calculator follows the legislation.
The CECRA will lower rent by 75% for small businesses affected by COVID-19, by providing forgivable loans to qualifying commercial property owners to cover 50% of 3 monthly rent payments, for April, May and June. Details not yet available for how this will be handled for landlords with no mortgage.
There are 8 provinces with top marginal tax rates exceeding 50% in 2020. Of course, the average tax rates are much lower.
If your spouse has low income, you may be able to claim a spousal amount tax credit, even if the spouse is a non-resident. If you separated or divorced during the year, this credit may still be available.
Tax is withheld from RRIF withdrawals in excess of the minimum amount. For 2020, tax will only be withheld for withdrawals in excess of the original unreduced minimum amount.
BC, Ontario, and Alberta are the lowest tax provinces for a single person earning $50,000. See also comparisons for a single income family with 2 kids. Taxes include CPP/EI, ON Health Premium, and QC prescription drug premiums.
See the taxes paid at varying levels of eligible and non-eligible dividends and interest for all provinces and territories. The lowest-tax provinces for higher levels of eligible dividends are Alberta and BC.
We compare taxes paid in each province/territory by a senior with eligible dividends vs other income (foreign dividends, interest, etc.) - see how the taxes (including OAS clawback) are significantly lower with eligible dividends.
My son, Alex Pope, is that expert, and is looking for opportunities with a small to medium-sized firm. He's located in Maple Ridge, BC, but is well-equipped to work remotely. Please share this to give him more exposure - searching for job opportunities is hampered a little by a pandemic!
The CAI is now included in the Detailed Canadian Tax and RRSP Savings Calculator. The amount must be entered by the user, and is not checked. The calculator includes a link to the CAI article where amounts are available.
Sometimes when we've modified a calculator that you've used recently, it will appear "messed up". This is because it retains data. You'll have to clear your browser cache to fix this.
A loan by a corporation to a shareholder may result in a deemed taxable benefit. Care must be taken in the timing of salary or dividend payments to clear shareholder loans. The prescribed interest rate for s/h loans for Q2 2020 is unchanged.
Moodys hosted a Facebook Live video re the CEWS, answering many questions from viewers. It's still unclear how some parts of the CEWS will be administered, especially for shareholder-employees.
When an individual gives funds for their spouse to contribute to a TFSA, once the funds are withdrawn from the TFSA, income and capital gains from those funds will be taxed in the hands of the individual, not the spouse. This is not the case for spousal contributions to an RRSP.
The calculator has been modified to include the 25% reduction in the RRIF minimum withdrawal for 2020. If you haven't converted your RRSP to a RRIF yet, you can still use this calculator to project your earnings and withdrawals for the next 40 years.
There is no withdrawal necessary in the year a RRIF is set up, but there are minimum amounts that must be withdrawn annually starting in the year after setup.
Bill C-14 for the 75% Canada Employment Wage Subsidy was tabled today in the House of Commons.
Eligible child care expenses can include day-care centres and nursery schools, individual child care services, day camps and day sports schools, private school costs (the portion of tuition costs relating to child care services), boarding schools, and overnight sports schools and camps.
This non-refundable tax credit is clawed back when the income threshold of $37,790 (2019 federal) is exceeded. Capital gains can cause a clawback even when offset completely with capital losses carried forward.
Eligibility for this non-refundable tax credit includes persons with a severe and prolonged mental or physical impairment which significantly restricts the ability to perform more than one basic activity of daily living. Form T2201 must be completed by a medical practitioner to claim this credit.
This is a comprehensive summary of financial relief announced thus far for individuals, businesses, non-profits and others. It includes links to many resources.
Includes links to Excel workbooks provided by Canada Revenue Agency and by Tax Templates Inc. to help calculate the subsidy.
Most pension plans allow the "unlocking" of all or a portion of a LIRA, LIF or LRIF under certain circumstances.
Eligibility for this payment will be determined from 2019 tax returns, no need to apply. Income thresholds increased, so more individuals may be eligible for the one-time payment.
Business will be able to apply for the 10% Canada Emergency Wage Subsidy via an online portal which will hopefully be available soon. The subsidy will be available to businesses which have had a 30% drop in revenue compared to Mar, Apr and May of last year. See the article for more details.
If you made RRSP contributions from March 1, 2018 to March 1, 2019, this should have been included on Schedule 7 which was filed with your 2018 tax return. Check our article to find out what to do if the contribution wasn't recorded, and which line number to use when adjusting your tax return with CRA.
If your business is incorporated, you must file a separate corporate income tax return. If not, the business income is included on specific forms in your personal income tax return. A professional accountant can help to ensure that you claim all allowable expenses.
If you have a business or a rental property, you have to decide whether an expense is capital or current in nature - in other words, whether it should be capitalized or expensed, or if it is personal use. General guidelines can help.
The T3 you receive for your income from an ETF may have an amount in box 21 for capital gains. It is possible that all or part of this amount was not actually paid to you, but was reinvested. This increases your adjusted cost base (ACB) for the amount of reinvested distributions, which reduces your capital gain when you eventually sell the investment.
When you receive dividends from Canadian public corporations, 138% of the dividend is included in taxable income. Due to the dividend tax credit, the tax on the dividends is much less than it would be on employment income, interest, or foreign dividends.
Personal income tax system to be indexed rate starting in 2021; new incentive to encourage investment in the chemical fertilizer sector; extend manufacturing and processing exporter tax incentive for 3 years; and more.
Residential non-owner-occupied property tax rate reduction, student loan rate reduced, new carbon pricing plan, no personal or corporate income tax changes.
Federal government support for small and medium businesses:
The Bank of Canada further reduced the target for the overnight rate, to 0.25%.
GAINS payments doubled, student loan payments deferred, new 10% refundable investment tax credit for businesses, business tax deferrals, and more.
This month's video discusses:
Checking the status of a refund, uncashed refund cheques - now shown in My Account, interest on refunds, mandatory direct deposit.
Some non-taxable income is not reported on tax returns. Some must be reported and later deducted, affecting some tax credits, clawbacks, and income-tested benefits.
All provinces and territories have created special web pages to provide information on COVID-19, how to prevent it, and what financial and other supports are being provided.
Which expenses are deductible and which are not? When does interest become non-deductible (disappearing source rules)? Where are these expenses claimed on the tax return?
See a detailed summary of the key points, for employees, employers, small business, parents, students, and those with RRIFs.
More details are now available about the 10% wage subsidy for employers, and how it can be claimed.
Do you have a worthless investment? Can't sell it because it was delisted? There may be a way to claim the capital loss.
If you rent out one or more rooms in your home, or if you own a rental property, there are many expenses that can be deducted in calculating your net rental income.
This free tax service is available for those with modest incomes - $35,000 for an individual, $45,000 for a couple (add $2,500 for each dependant), as long as the tax situation is relatively simple.
We've assembled a page of resources including links to government and financial institution information, as well as Video Tax News information re COVID-19 measures. Information on student loans, income support for workers, and business supports.
Retail Sales Tax rate reduced to 6% July 1, 2020, other RST rate reductions; Green Levy effective July 1, 2020, to replace federal carbon tax; probate fees eliminated July 1, 2020.
The 2019 tax deadline is extended to June 1, and tax balances and instalments may be deferred till after Aug 31 without interest or penalties. Support has been announced for small businesses, employees, self-employed, etc.
The refundable tax credit for caregivers will be enhanced and made more accessible. There are many measures concerning businesses, but no change in personal or corporate income tax rates or dividend tax credit rates.
If a property such as a principal residence has changed in use from personal use to income-producing (or vice-versa), there is a deemed disposition. Fair market value must be determined, and special rules apply for the depreciable portion of the property.
In kind (securities) transfers are not on your T5008 and Trading Summary; Reporting foreign transactions and holdings; Trade date vs settlement date and much more!
The Yukon small business corporate income tax rate will be reduced to zero effective Jan 1, 2021. Yukon's basic personal amount tax credit will mirror the changes to the federal basic personal amount.
If a deceased Canadian resident who is not an American citizen owned U.S.-situated assets exceeding $60,000 US in fair market value at the time of death, a US federal estate tax return must be filed. Read the article, and try out our calculator.
Our US Estate Tax Calculator has been updated to include the 2020 tax year.
There were no new tax changes announced. Corporate general income tax rate reductions were previously announced. The target is to have a small budgetary surplus by the 2022-23 fiscal year.
This month's video discusses:
There were no tax changes announced.
No personal tax changes were announced. Corporate tax rates to be reduced: general to 14%, small business to 2.5%. Vaping products to be taxed, tobacco taxes increase. Digital media and digital animation tax credits will be extended.
No new taxes were announced.
If that debt is a tax debt, it can be recovered by CRA from named beneficiaries of registered plans, or from others to whom the deceased transferred property prior to death.
There are several ways of splitting income, either with a spouse or child. Some methods of splitting income with a spouse are done only on the tax return, such as pension splitting.
Are you a single parent? Or, are you supporting a parent or other dependent relative? The equivalent to spouse tax credit may be available.
Our tax rate tables have been revised to include the new BC top tax rate of 20.5%. This results in a combined federal/BC top tax rate of 53.5% for taxable income over $220,000.
The budget introduces a new top personal tax rate of 20.5%, as well as PST on carbonated beverages and streaming services such as Netflix and Amazon Prime. A new BC Access Grant for students is also introduced. Carbon tax rate increases for 2020 and 2021 are detailed.
Learn about tax deductions and credits, private school costs, RESPs, student grants and loans, and help with tax preparation.
Turning 65 this year? Other tax credits changing? Complete a new TD1 form to give to your employer. Your TD1 form determines your tax withholdings. Working part time = maybe no tax withholdings.
The deadline for 2019 contributions to an RRSP is Monday, March 2nd - don't wait till the last minute!
This sale MUST be reported on the tax return, even if it is 100% eligible for the principal residence exemption. When there is more than one owner, each will report their share of the sale.
There are no sales tax rate changes thus far for 2020.
The general corporate tax rates have been reduced for 2020 in Alberta and Quebec, and the small business tax rate has been reduced in Ontario, Quebec and Prince Edward Island.
The 2020 tax rate tables have been updated to include the effect of the federal enhanced basic personal amount.
Are you confused about the 2019 changes to the CPP? The contributions are separated into 2 parts for the tax return. The original 4.95% CPP is used for a tax credit as usual, and the additional contribution for enhanced CPP is allowed as a deduction from income.
The Bank of Canada holds about $888 million of unclaimed balances, and the BC Unclaimed Property Society holds over $159 million. There are separate Alberta and Quebec unclaimed property registries.
Deductible expenses, need for a trip log (CRA has a car expense project), expense limitations, auto taxable benefits, and GST/HST input tax credits on vehicle allowances.
There may be circumstances that require you to file a tax return, including the sale of your principal residence. You should file a tax return even if you have little or no income, to receive refundable tax credits, GST/HST credit, and to establish eligibility for other government programs and services.
We have many articles on filing your tax return and how this can be done, as well as articles about different types of taxable income, deductions and tax credits, and many other topics. Make sure you take advantage of available tax credits!
This month's video discusses:
Surveys are available to be completed on the Your Budget website, and you can share your ideas via email.
As per the Ontario 2019 budget, estate administration fees are now zero for estates of $50,000 or less.
Are you an aspiring entrepreneur? Should you start your own business, or buy the shares or assets of an existing one? Check out advantages and disadvantages.
You can do an in kind transfer of shares from a non-registered account to a registered account such as an RRSP. However, if you transfer shares on which there is a loss, the loss will not be deductible. If you transfer shares on which there is a gain, you will have a taxable capital gain.
Give your ideas! Ontario budget consultations end February 11, 2020. Manitoba will end January 31, so give your input now.
Use our calculator to calculate your 2020 minimum annual withdrawal, and to estimate your earnings and withdrawals for the next 40 years. Works for non-registered also!
2019 was a great year for stocks! See returns for 1/5/10/20/40/50 & 70 years, and the growth of $1,000 invested. Over the past 10 years one would be losing money after inflation by investing in Canadian 3-month T-bills or Canadian government 1-3 year bonds.
Use our investment return calculator to determine your returns for 2019 or any time period for a particular investment or investment account, or your entire portfolio.
Assets are sometimes put into joint ownership with right of survival in order to minimize probate fees. A recent court case highlights why this is sometimes a very bad idea!
All income and expenses must be reported on your tax return in Canadian dollars, converted either at the transaction date exchange rate, or the average exchange rate for the year. The average US exchange rate for 2019 is 1.3269, which can be used for dividends, but not for purchases and sales.
See also Prior Years:
Revised: August 12, 2020
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