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What's New by Month
January 2020
Federal 2020 Pre-Budget Consultations
Surveys are available to be completed on the Your Budget website, and you can share your ideas via email.
Ontario Estate Administration Tax Eliminated for Estates up to $50,000
As per the Ontario 2019 budget, estate administration fees are now zero for estates of $50,000 or less.
Hoping To Be a Business Owner?
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.
Transfer Shares to a Registered Account, But Not at a Loss!
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.
Provincial 2020 Budget Consultations
Give your ideas! Ontario budget consultations end February 11, 2020. Manitoba will end January 31, so give your input now.
RRSP/RRIF Withdrawal Calculator
Use our calculator to calculate your 2019 minimum annual withdrawal, and to estimate your earnings and withdrawals for the next 40 years. Works for non-registered also!
Historical Returns on Investments - Stocks, Bonds, T-Bills
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!
Reporting Foreign Income and Expenses on the Tax Return
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.
December 2019
Reinvested Distributions From Canadian Exchange Traded Funds (ETFs)
The 2019 reinvested distribution amounts for iShares are now available on the BlackRock website. These distributions are not actually paid to you but are reinvested, requiring an increase to your adjusted cost base (ACB) . This will reduce your capital gain when you eventually dispose of the investment.
RRSP Contribution Not Recorded on Previous Year Tax Return
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.
This month's video discusses:
- Climate Action Incentive (CAI);
- Enhanced basic personal amount;
- Contribution to employee's crowdfunding campaign - employment benefit?;
- Gross negligence penalties - magnitude of unreported income;
- New process for authorizing representatives CRA access;
- TOSI: Excluded business - holidays, vacation and sick days.
Manitoba will eliminate probate fees effective July 1, 2020, and will eliminate provincial sales tax on will preparation effective January 1, 2020.
T4 Slips - Requirements and Timing
Employment income is included on a T4 for the year in which it is received, not earned. If a payment is made in January 2020 for wages earned in December 2019, this amount will be reported on the 2020 T4, not on the 2019 T4 (see exception re employee trusts).
2020 Maximum Withdrawals Federally-Regulated LIFs and LRIFs
The rates for 2020 maximum withdrawals from federally-regulated LIFs and LRIFs are now available on the website of the Office of the Superintendent of Financial Institutions.
Federal Home Accessibility Tax Court Case
Patrie v. The Queen was heard in November 2019 and was a win for the taxpayer, even though unsafe stairs were replaced with safe stairs PLUS a deck, increasing the cost significantly. The judge made it very clear that CRA can only use the applicable provisions of the Income Tax Act to determine eligibility for the tax credit.
This very simple tax-planning calculator which shows taxes payable and marginal tax rates for all provinces and territories now includes the additional federal personal tax credit for 2020.
Amateur Athletic Trusts Extension
Legislation has been proposed that would extend the maturation period of amateur athletic trusts by one year. These trusts maturing in 2019 would now mature in 2020.
2020 Climate Action Incentive (CAI) Amounts for 2019 Tax Return
2020 CAI amounts will be claimed as a refundable tax credit on the 2019 tax return by residents of Alberta, Saskatchewan, Manitoba and Ontario.
Tax-Free Motor Vehicle Allowances 2020
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 increase by 1 cent, to 59 cents per km for the first 5,000 km and 53 cents per km for each additional km. For the Territories, the rates are also increased by 1 cent, to 63 cents per km for the first 5,000 km and 57 cents per km for each additional km.
Automobile Operating Cost Benefit 2020
The prescribed rate used to determine the operating cost taxable benefit to an employee for an employer-owned vehicle remains the same, at 28 cents per kilometre. The standby charge taxable benefit factors for automobiles also remain unchanged.
Automobile Sales People Operating Cost Benefit 2020
The prescribed rate used to determine the operating cost taxable benefit to an automobile sales person for an employer-owned vehicle remains the same, at 25 cents per kilometre. The standby charge taxable benefit factors for automobiles also remain unchanged.
Passenger Vehicle Expense Limitations 2020
The 2020 expense limitations for passenger vehicles for interest expense, monthly lease costs, and capital cost allowance (CCA) for zero-emission and non-zero-emission vehicles will remain unchanged from 2019.
Legislation to Increase Federal Personal Tax Credits
On Dec 9th, the federal government presented legislative proposals that would increase the basic personal amount (BPA) for 2020 and later years, increasing to $15,000 by 2023. The spousal and eligible dependant amounts will also be increased.
Canada Pension Plan (CPP) Disability Benefit
Do you have a severe and prolonged physical or mental disability which makes you unable to work at any job on a regular basis? If you are under 65 and have contributed enough to the CPP you may be eligible for a disability benefit.
Cancellation of Canada Pension Plan Retirement Benefits
CPP benefits can be cancelled for up to 6 months after starting the pension, but all the benefits received must be repaid. CPP and OAS benefits must be cancelled after the death of a CPP or OAS recipient.
RRSP Deadline Monday, March 2, 2020
March 2, 2020 is the deadline for making your RRSP contributions for the 2019 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.
November 2019
This month's video discusses:
- Investment management fees re TFSA paid via non-registered account -
advantage tax;
- Rental property losses/source of income?;
- Penalty re repeated failure to report income;
- Agency relationship re GST/HST;
- Represent a Client updates re deceased taxpayers;
- Corporate ownership reporting changes.
2020/2019 Canadian Tax & RRSP Savings Calculator
This very detailed calculator is great for tax planning! For all provinces and territories except Quebec.
2020/2019 Quebec Tax & RRSP Savings Calculator
The detailed Quebec calculator is a great tax planning tool - let it help you determine how much to put into RRSPs.
Would you like to retire at 50? Or just be financially independent by then? See our article for help in achieving this goal.
Manitoba 2020 Budget Consultations
Manitoba has started their 2020 budget consultations, which will continue until some time in February. There are a few ways to provide your input.
Converting RRSPs to RRIFs at Age 71
If you turned 71 this year, your RRSP must be converted to a RRIF, or used to purchase an annuity, by December 31st, but if you haven't done this already your financial institution will probably be automatically converting it soon. 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.
Last Trading Date for 2019 Gains and Losses to be Recorded in 2019
The last trading date in 2019 for Canadian and US publicly traded stocks is Friday, December 27th. Stocks purchased or sold after this date will settle in 2020, so any capital gains or losses on sale will apply to the 2020 tax year.
Taxpayer Relief Deadline December 31, 2019
Haven't filed your 2009 tax return yet? Taxpayers are running out of time to file requests under the taxpayer relief provisions for the 2009 tax year and any reporting period that ended in the 2009 calendar year. If a tax debt arose from a tax year prior to 2009, penalties and interest that have accumulated from 2009 to 2019 could still be reduced as a result of a 2019 request for leniency.
This very simple tax calculator had a major glitch which has been corrected. See taxes for all provinces for 2020 and earlier, and marginal tax rates for dividends, capital gains and other income.
Lifetime Capital Gains Exemption
The capital gains exemption increases to $883,384 in 2020, for eligible small business corporation shares. The exemption is still $1 million for qualified farming or fishing property.
Employee Tools Deduction - Electricians, Cooks, Hairdressers, Plumbers, etc.
Employed tradespeople can claim a maximum $500 deduction for tools purchased in the year. Apprentice mechanics can get a much larger deduction. Both can be calculated using our Employee Tools Deduction Calculator.
Quebec Fall Economic Update November 7, 2019
Family allowance amounts are enhanced for 2020, and prescription premium exemptions are adjusted for 2019.
Quebec Tax Credits and Deductions Subject to Indexation
Quebec's tax credits and deductions are increased for inflation by 1.72% for 2020.
2020 Quebec Pension Plan (QPP) Maximum Pensionable Earnings
The maximum pensionable earnings for 2020 will be $58,700, and the rate is increased to 5.7%, including the 0.30% additional contribution. The additional contribution is deductible from income.
Ontario Fall Economic Update November 6, 2019
Legislation was tabled to reduce the small business corporate income tax rate to 3.2% and the non-eligible dividend tax credit rate to 2.9863% effective January 1, 2020.
2020 Canada Workers Benefit (CWB) - All Prov/Terr except Quebec
The CWB is a refundable tax credit of up to $1,381 per person or $2,379 per couple ($1,481 and $2,216 in Alberta) for those with working income.
2020 Canada Workers Benefit (CWB) - Quebec
The Quebec CWB is a refundable tax credit of up to $2,318 per person or $3,618 per couple for those with working income.
2020 Canada Pension Plan (CPP) Maximum Pensionable Earnings
The maximum pensionable earnings for 2020 will be $58,700, and the rate will be increased to 5.25%, including the 0.30% additional contribution for enhanced CPP. The additional contributions are deductible from income.
October 2019
The 2020 Contribution Limit will be the lesser of 18% of earned income less any applicable pension adjustments, or $27,230.
Old Age Security (OAS) Clawback
If you have capital losses carried forward and unrealized capital gains, and are not going to be collecting your OAS pension for a year or so yet, you may be able to do something now to avoid or reduce an OAS clawback in the future. Are you a high income earning earner about to apply next year for your OAS, with a reduced income? Plan ahead!
Life in the Tax Lane November 2019
This month: Mobile Home/RV Park/Campground - not always Specified Investment Business; Shareholder-employees - employment expenses; Payroll audits; Online only charity registration; TOSI & meaning of excluded business re large dividends; IRS new relief procedures for Expats.
This simple calculator compares taxes on both types of Canadian dividends, capital gains, and other income, for every province and territory for 2015 to 2020. Also shows marginal tax rates for different types of income for the year selected, for every province and territory.
Alberta 2020 Personal Tax Rates
The table of personal tax rates for Alberta has been revised to reflect the pausing of the indexation of the personal tax system effective for the 2020 tax year.
Alberta 2019 Budget - October 24, 2019
Tax measures include: Pause indexation of personal income tax system; Eliminate education and tuition tax credits; Increase tobacco tax; New Child and Family Benefit.
2020 Dividend Tax Credit Rates for Non-Eligible Dividends
We've updated the table of non-eligible dividend tax credit rates to include 2020. The only change thus far for 2020 is Quebec. Rates could still change when 2020 budgets are tabled.
2020 Dividend Tax Credit Rates for Eligible Dividends
We've updated the table of eligible dividend tax credit rates to include 2020. The only change thus far for 2020 is Quebec. This could change when 2020 budgets are tabled.
2020 Non-Refundable Personal Tax Credits
We've published the tables of non-refundable tax credits for 2020 for Canada and all provinces and territories except Quebec, including Alberta 2019 budget changes. The indexation factors and tax credit amounts have not yet been confirmed to Canada Revenue Agency amounts.
The TFSA contribution limit for 2020 will be $6,000, unchanged from 2019. At the current inflation rate, the limit will increase to $6,500 in 2023.
Tax-Free Savings Account (TFSA) Withdrawals
When a withdrawal is made from a TFSA, the withdrawal amount is added back to your contribution room in the following year. If you're considering a withdrawal in the next few months, do it before Dec 31st so it increases your contribution room in January 2020.
2020 Personal Tax Rate Tables Published
The tables show the combined federal and provincial/territorial tax rates for capital gains, both types of Canadian dividends, and other income. Things could change with the Oct 24 Alberta Budget, or when 2020 budgets are tabled, and federal is probably guaranteed to change after the election. Nothing has been confirmed to CRA or to Revenue Quebec.
Attribution Rules re Gifts, Transfers or Loans to a Spouse or Related Minor Child
If income-producing property, or money to purchase income-producing property, is transferred or loaned to a spouse or related minor child, attribution rules will apply to tax the income in the hands of the transferor. This will not apply to loans which are considered "genuine" loans.
Rebates for Fuel-Efficient Vehicles and Charging Stations
There is no time limit specified for the federal rebates for fuel-efficient vehicles and charging stations, but the BC and Quebec rebates have end dates specified. The rebates could end earlier than the specified dates if available funds are exhausted.
September 2019
Canada Child Benefit / Child Disability Benefit / Shared-Custody Parent
Proposed legislation will retroactively change the definition of a shared-custody parent, to a parent who resides with the qualified dependant at least 40% of the time. See 2019 CCB and CDB payment and threshold amounts.
Alberta's new government will table their first budget on October 24, 2019, 3 days after the federal election.
Government of Canada Debt in Selected Years, 1967 to 2019
When the debt of all levels of government is included, every man, woman and child in Canada owes $52,859. We need to pressure all levels of government to reduce our debt!
Life in the Tax Lane October 2019
This month's topics include: EI benefits denied to employee fired due to misconduct; Property flipping - income or capital; Deduction denied for employee travel/vehicle expenses; Shared-custody parents and CCB.
Cannabis as an Eligible Medical Expense
The provisions for the inclusion of cannabis as an eligible medical expense changed when cannabis was legalized effective October 17, 2018. If you want to claim it as a medical expense, make sure you have your medical document, and buy from a holder of a licence for sale of cannabis products!
Free in 30! / Financial Freedom
This is a plan to help you go from having nothing to being financially independent in 30 years or less.
2019 Donation Tax Credit Rates
We're a little slow with this table, but donation tax credit rates have not changed from 2018 to 2019.
2020 Employment Insurance (EI) Rates
The 2020 employee EI rate is reduced to 1.58% from the 2018 rate of 1.62%. The employer rate is 2.212%, down from 2.268%. The maximum insurable earnings (MIE) is increased to $54,200 from the 2019 rate of $53,100. The resulting maximum annual contribution per employee for 2020 is decreased to $856.36 from the 2019 maximum of $860.22, a decrease of 0.2%.
Donating Shares or Other Capital Property Can Eliminate Capital Gains
Capital gains can be eliminated by donating certain types of capital property 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.
Transferring Capital Losses to a Spouse
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.
Campgrounds and the Small Business Deduction
In most cases, a campground owned by a corporation would be considered to be earning property income, and would not be eligible for the small business deduction unless it employed more than 5 full-time employees.
Canada Workers Benefit 2019 Except Quebec
The Canada Workers Benefit amounts for 2019 are now available including Alberta and Nunavut, which are different from the other provinces/territories. Quebec is also different, but is in a separate table.
Canada Workers Benefit 2019 Quebec
The Canada Workers Benefit amounts for 2019 for Quebec are now available.
Money-Saving and Wealth Building Tips
We have a wealth of information that may help you cut costs, save money, and build your wealth! For instance, how much would you have to deposit today to have $1 million in the future? Info on unclaimed bank balances, calculating your loan interest rate, and much more.
We've expanded our article "Can the Government of Canada Print Money and Spend it?" to include information on how the Bank of Canada works, and the Canadian Money Supply.
Reinvested Distributions on the T3
It's been reported to us that Qtrade is showing reinvested capital gains distributions on the T3 not only in box 21, but also as a negative amount in box 42. This is technically correct, but might be confusing, as you won't be able to enter the negative amount into tax software.
August 2019
How Much Money Do You Need To Retire?
You should be thinking about this now, even if you are just starting out in your career. This will be different for everyone, but we provide some guidance to help you figure things out. We advise you to plan to live off your dividends once you retire, instead of drawing down your investments, if at all possible.
Government Benefits, Programs and Services
Links to information on benefits and services provided by the federal and provincial/territorial governments, for seniors, persons with disabilities, low-income, children, families, students and others.
Life in the Tax Lane September 2019
This month's topics include: Director's personal liability in a Workers' Compensation case; TFSA overcontributions; Overdrawn shareholder loan to a non-arm's length person; Transfer of life insurance from a corporation; Represent a Client changes; and IRS compliance campaign re former participants in Offshore Voluntary Disclosure Program.
Reduce Income Tax Deductions Now for Current RRSP Contributions
If you have made your 2019 RRSP contributions already, you can complete a CRA form to get permission for your employer to deduct less income tax from you. If you are self-employed, you may be able to reduce your instalments.
What Tax is Deducted from RRSP or RRIF Withdrawals?
The withholding tax rate depends on the amount withdrawn as well as other factors. You may have to pay more tax or get a refund depending on your total taxable income when your tax return is filed. When multiple lump-sum withdrawals are made, the withholding tax rate may be based on the total of those withdrawals in the year.
School's Starting Soon - Students and Income Tax
There are many tax issues for students and/or their parents, such as eligibility for tuition, education and student loan interest tax credits (some of which have been eliminated), private school tuition fees, deducting moving expenses, and child care expenses.
See how much can be earned in Canadian dividends without attracting income tax, when the dividends are the only income earned. Alternative minimum tax (AMT) kicks in when eligible dividends exceed $52,070. Over $100,000 in eligible dividends can be earned in several provinces before attracting regular provincial income tax, but of course federal income tax and federal/provincial AMT will be payable.
Life in the Tax Lane August 2019
This month's topics include: Parking taxable benefit: Employee stock option tax changes; Condo sale - income or capital?; First-Time Home Buyer Incentive; and T1135 taxpayer relief.
First-Time Home Buyer Incentive (FTHBI)
Under this Incentive, Canada Mortgage and Housing Corporation ( CMHC) will fund up to 10% of a first-time home buyer's purchase via a shared-equity mortgage (SEM). The Incentive amount is up to $40,000 (10%) for a new home or $20,000 (5%) for an existing home.
Capital cost allowance (CCA) is the depreciation that is allowed to be expensed for tax purposes for fixed assets, except land. Get information on rates, half-year rule, short fiscal year and tax incentives for clean energy equipment.
July 2019
RRSP vs Mortgage Calculator
The RRSP vs Mortgage (or other loans) calculator, which has been updated for 2019 tax changes, helps you to decide whether to increase your monthly loan payment or contribute the extra monthly amount to an RRSP. When in doubt, pay down your debt!
Guaranteed Income Supplement (GIS)
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. If you and your spouse are separated for reasons beyond your control, payments may be adjusted.
2018 and 2019 Tax Comparisons Dividends vs Interest
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 in 2019 are Alberta and BC.
2018 and 2019 Seniors Tax Comparisons Dividends vs Interest
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.
Alberta Dividend Tax Credit for Non-Eligible Dividends
Alberta passed legislation in June that changed the dividend tax credit rate for non-eligible dividends to 2.18% for 2019 and subsequent years.
Alberta Corporate Income Tax Rate
Alberta passed legislation in June to reduce the general corporate income tax rate to 11% effective July 1, 2019, with subsequent reductions each January 1st until the rate is 8% for 2022.
Temporary or Part-Time Job - Perhaps No Tax Deductions
If you are working part time or in a temporary job and know that your total income will be less than your total personal tax credits on the TD1 form, check the box on page 2 of the form and your employer will not deduct income tax. Under 18 - no CPP deductions. Almost always - EI deductions.
Employee Stock Option Taxation - Proposed Changes
On June 17, the government released proposed legislation to limit the tax benefits of employee stock options. Interested parties are invited to submit comments by September 16, 2019.
Enhanced Canada Pension Plan Contributions and the Tax Return
We've been contacted several times by people who either aren't aware of the enhanced CPP, or who aren't familiar with how the contributions are being treated on the tax return, and think that our Detailed Canadian Income Tax Calculator is incorrect. Although for 2019 the total CPP rate is 5.1%, only 4.95% is used for the non-refundable tax credit. The remaining 0.15% is allowed as a deduction from income.
June 2019
Nunavut's Bill 26, passed in May 2019, increases the basic personal and spousal amounts and cost of living tax credits for 2019, and reduces the small business corporate income tax rate effective July 1, 2019.
Life in the Tax Lane July 2019
Topics this month: Taxability of virtual currency; Fee restrictions disability tax credit; Interest deductibility; Construction industry info request by CRA re contractor purchases; New housing rebate/primary residence; CRA service standards.
Prince Edward Island 2019 Budget - June 25, 2019
Tax changes effective Jan 1, 2020: the basic personal amount will increase to $10,000 with proportionate increases in the spousal/equivalent-to-spouse amounts; the threshold for the low-income tax reduction will increase; the small business corporate tax rate will be reduced to 3.0%.
BC MSP Premium Assistance Pensioners / Veterans
Many elderly pensioners/veterans do not realize that full MSP premiums are being deducted from their monthly cheques. If you know of someone that may be in this position, alert them to the fact that a refund is available if they are low income.
BC MSP Premiums Spouse in Care
When a spouse is in a hospital, nursing home or long term care, and fees are being paid for this care, their income is not included in the income calculation for premium assistance. However, this income exclusion does not apply in a couple of situations.
Provincial Political Contribution Tax Credits
Our information has been updated to reflect the 2019 amounts for provincial political contribution tax credits.
You can eliminate some major decisions by setting long term goals regarding your financial future. It's not as difficult as it sounds, because you don't have to plan your whole financial life at once. At the start, you have to set out your major goals. The fewer the decisions you have to make, the happier you will be.
RRSP Overcontributions Can Be Costly
Each individual taxpayer is responsible - not their accountant or financial planner - to ensure that they don't overcontribute. There is a 1% per month tax on excess contributions. A recent court case upheld tax, penalties and interest on overcontributions.
What Tax is Deducted from RRSP or RRIF Withdrawals?
The rate of tax varies depending on the amount of the withdrawal. The tax must be deducted from the payment coming out of the registered account - it cannot be paid from a non-registered account after the withdrawal.
Investment Income Tax Calculators
These calculators for all provinces show 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.
Disability Tax Credit (DTC) Promoters Restrictions Act Regulations
Proposed regulations were published in the Canada Gazette on June 1st, setting a maximum fee of $100 for submitting a DTC application. Interested parties may make representations concerning the proposed Regulations within 30 days after the publication in the Gazette.
Annual Retirement Income Calculator
How much will you be able to withdraw from your investments each year until they are reduced to zero? Enter your investment balance and varying rates of return.
May 2019
Life in the Tax Lane June 2019
Topics in the June video: Zero-emission vehicles; CRA cautions re Health Spending Accounts; Employee clothing taxable benefit; and Donation of credit card loyalty rebates.
Federal Draft Legislation re Health and Welfare Trusts
On May 27, 2019, Draft Legislation Supporting Conversion of Health and Welfare Trusts into Employee Life and Health Trusts was released. Comments may be provided until July 31, 2019.
If you have been investing for many years, are an experienced investor, and have considered borrowing to invest, try our calculator and make sure you read our article on borrowing to invest. This is not recommended for novice investors!
The new PEI government will likely table their 2019 budget in late June. The Alberta new government plans to table their 2019 budget in the fall.
Quebec Tax Credit for Career Extension for Age 60+ - Formerly Experienced Worker Tax Credit
This tax credit is renamed, expanded, and enhanced for 2019. The amount of the credit depends upon the maximum eligible amount of work income. This is the amount by which the eligible work income of the individual exceeds the base amount of $5,000.
Late Filing Penalties and Interest
How to file a late tax return, learn what your exposure is to interest and penalties.
2019 Tax Comparisons Employment Income All Provinces and Territories
BC, Ontario, and Alberta are again the lowest tax provinces for a single person earning $50,000. See also comparisons for a single income family with 2 kids aged between 6 and 17. Taxes include CPP contributions and EI premiums, ON Health Premium, and QC prescription drug premiums.
2018 Tax Comparisons Employment Income All Provinces and Territories
BC, Ontario, and Alberta were again the lowest tax provinces for a single person earning $50,000. See also comparisons for a single income family with 2 kids aged between 6 and 17. Taxes include CPP contributions and EI premiums, BC MSP premiums, ON Health Premium, and QC prescription drug premiums.
Should You Try to Minimize Probate Fees?
Probate fees can be reduced when assets are held in joint ownership, but there can be some drawbacks to this. Be careful to document the intent of the joint ownership. Know the difference between beneficial and legal ownership.
Private Health Services Plans (PHSPs) and Health Spending Accounts (HSAs)
A business may deduct PHSP or HSA payments made on behalf of employees and their dependants. These payments are not taxable to the employees, and there are no CPP or EI premiums charged on these payments.
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.
Tax Planning for 2019 - Start Early!
You should plan ahead so that you are prepared to file your 2019 tax return next year without too much difficulty. One of the most important things to do during the year is to 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!
Retention of Books and Records
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.
Ontario Refundable Childcare Access and Relief From Expenses (CARE) Tax Credit
The CARE credit will provide families with a refund of up to 75% of their eligible child care expenses, starting with the 2019 taxation year. The credit will be claimed on the tax return.
How to Get Your Money out of RRSPs Tax Free (Sort of)
Unfortunately, there is no way you can avoid tax when withdrawing money from RRSPs or RRIFs. But, with some tax planning, you can reduce the taxes payable by borrowing to invest in Canadian stocks in a non-registered account while you're withdrawing funds from your registered account. We do not recommend this strategy unless you are an experienced investor!
In April 2019 the BC Provincial Sales Tax Act definition of small seller was modified to include a provision that the seller must not knowingly have sold goods at a sale other than retail in the previous 12 months.
April 2019
Doing anything with Bitcoin? You may be targeted by CRA. Find out if your online information was compromised; Taxpayer relief - financial hardship; Reassessments for statute-barred periods.
Tax Relief for Canadians Affected by Flooding, Other Circumstances
Unable to file tax returns or pay taxes due on time? Tax relief can be requested for inability to pay, financial hardship, or other circumstances.
Fuel-Efficient Vehicle Rebates and Incentives
The federal 2019 budget announced that incentives of up to $5,000 will be available for zero-emission vehicles, in a program that will take effect May 1, 2019. BC and Quebec have their own incentive programs for fuel-efficient vehicles.
Discovered a missed tax slip? Missed expenses? It's not difficult to change your tax return, and can be done with the tax software you used to NetFile your return.
Are Your Gains and Losses Capital or Income?
For most taxpayers, the gain or loss on the sale of securities will be considered capital gains or losses. For some taxpayers, such as day traders, the gains and losses will be considered income gains or losses (100% taxable). However, an election can be made so that the gains or losses on all Canadian securities are considered capital gains and losses.
Health Spending Accounts (HSA) and Private Health Services Plans (PHSP)
HSAs and PHSPs are a way of providing tax-free medical benefits to employees. CRA indicates that some businesses have improperly claimed these deductions. The rules for sole proprietors and sole shareholders are more restrictive - make sure you know the rules.
Foreign US$ - Cdn$ Average Annual Exchange Rate History
We've created a table with the average annual exchange rates for converting US$ to Canadian$, going back to 1997.
Charitable Donations Carried Forward
A charitable donation that was initially reported on one spouse or common-law partner's return can be transferred to the other spouse or common-law partner in a subsequent year.
Eligible Medical Expenses - Travel Medical Insurance and More
Don't miss out claiming medical expenses. Private travel medical insurance may qualify if nothing but eligible medical expenses are covered by the plan. Home renovations may qualify if they enable a disabled person to be more mobile within the dwelling.
Overpayments of CPP Contributions or EI Premiums
The method of recovery depends on whether the overpayment relates to the current year, or a prior year.
Newfoundland and Labrador 2019 Budget - April 16, 2019
There is very little in the way of tax changes in the NL 2019 budget.
The Community Volunteer Income Tax Program will prepare tax returns at no charge for modest income individuals with simple tax returns. Modest income for 2018 tax returns is about $35,000 for an individual, $45,000 for a couple, plus $2,500 for each additional dependant.
Ontario 2019 Budget - April 11, 2019
There aren't many tax measures in the 2019 budget, but a significant one is a new Childcare Access and Relief from Expenses (CARE) refundable tax credit for 2019. Estate Administration Tax will be eliminated effective Jan 1, 2020 for estates of $50,000 or less, lowered for those over $50,000.
Bill C-97 Budget Implementation Act 2019 No. 1 (BIA 1)
The federal government tabled Bill C-97 on April 8th to implement a number of measures proposed in Budget 2019.
Attendant care costs can be claimed for persons who are eligible for the disability amount, and in some situations for persons who do not qualify for the disability amount. The limit on Federal and Ontario attendant care expenses only applies if the taxpayer claimed the disability amount.
Recording Foreign Transactions
If you have purchased an investment in a non-registered account, it is your responsibility to keep records which will allow you to calculate the adjusted cost base (ACB) of that investment, in Canadian dollars, even for investments held in US$. Your brokerage statements will not provide the Cdn$ ACB for investments held in US$.
Refundable Medical Expense Supplement
If you have employment or self-employment income exceeding $3,566 in 2018, have claimed a disability supports deduction or medical expenses and have family net income less than $51,484, you may be able to claim a refundable amount of up to $1,222.
Filing With a Spouse / Marital Status
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.
Directory of Accounting Organizations
Our directory of accounting, bookkeeping and financial planning firms now includes links to the directories of Chartered Professional Accountants (CPAs) members/firms by province.
Tax Treatment of Income From Investments in Call and Put Options
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.
What If I Can't Afford to Pay the Tax I Owe?
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.
March 2019
Life in the Tax Lane April 2019
Topics in this month's 10-minute video: "Nominal" consideration on gift of capital property could cause tax problems; current expense vs capital expenditure; Federal 2019 Budget - zero-emission vehicles, housing measures, shared equity mortgages, Canada training credit.
Nunavut 2019 Budget - February 20, 2019
There were no tax changes announced in the Nunavut budget.
Nova Scotia 2019 Budget - March 26, 2019
There were no new tax measures other than a new Venture Capital Personal and Corporate Tax Credit, and phasing out of the Equity Tax Credit.
Property Rental Deductible Expenses
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. Claiming capital cost allowance (CCA) on the home may result in the loss of the principal residence exemption when you eventually sell your home.
Do you have a worthless investment? Can't sell it because it has been delisted? There may be a way to claim the capital loss.
The age amount tax credit is a non-refundable credit, and is reduced when income exceeds a certain threshold, both federally and provincially. Capital gains can cause income to exceed the threshold, and offsetting capital losses carried forward won't help with this.
Tax Treatment of Income From Investments in Exchange-Traded Funds (ETFs)
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, thus reducing your capital gain when the ETF is sold.
Learn about scholarships, who can still claim tuition and education tax credits, student loan interest, how eligible Canadian dividends may affect student tax credits.
Quebec 2019 Budget - March 21, 2019
The experienced worker tax credit is enhanced and renamed the Tax Credit for Career Extension; New refundable tax credit for SMBs to encourage them to hire or retain workers age 60+; Changes re refundable tax credit for reporting of tips; Digital accommodation platform operators must register for and collect the tax on lodging.
Saskatchewan 2019 Budget - March 20, 2019
The only tax change in the SK budget was the introduction of new tax credits for volunteer firefighters and emergency medical first responders.
Federal 2019 Budget - March 19, 2019
The budget includes: an increase to the RRSP Home Buyers' Plan withdrawal limit; new personal tax credit for certain digital subscriptions; changes re RDSP termination requirements; new Canada Training Credit for work earnings for those age 25 to 64; 100% CCA for certain zero-emission vehicles; and other measures.
New Brunswick 2019 Budget - March 19, 2019
No tax increases in the NB budget. The current rules for the NB Small Business Corporate Income Tax Rate will be maintained rather than implementing the federal passive income tax measure.
For Which Province Do I File a Tax Return?
Under normal conditions, a person files a tax return for the province in which they are residing on December 31 of the taxation year. A person will be determined to be resident in the province in which they have the most significant residential ties, which may not be the province in which they are employed.
Eligible Dividends and the Enhanced Dividend Tax Credit
When individuals receive dividends from Canadian public corporations, 138% of the dividend is included in taxable income. The additional 38% is called the "gross-up". However, after applying the enhanced dividend tax credit, the tax on these dividends is much less than it would be on employment income, interest, or foreign dividends.
2019 Sales Tax Rates - GST/HST, PST, RST, QST
Our table of sales tax rates has 2 changes so far for 2019: Manitoba's retail sales tax rate will go down to 7% on July 1st, and in BC, electricity will be fully exempt from PST on April 1st. Residential electricity has always been exempt, so this only affects businesses.
Tax Treatment of Different Types of Investments
If you sold or had a deemed disposal of an investment in 2018, it is your responsibility to ensure that it is properly reported on your 2018 income tax return, even if you use a professional tax preparer. It's quite possible that not all dispositions will be on the T5008 provided by your brokerage - they still must be reported.
Old Age Security Clawback and Your Tax Return
If your 2018 OAS was reduced by a "recovery tax", this tax is treated like an income tax instalment. On your 2018 tax return, your clawback will be recalculated based on 2018 income. Any taxes owing, including the clawback, will be reduced by the recovery tax paid during 2018.
Eligible Retiring Allowance Received First 60 days of 2019
If you received an eligible retiring allowance that was directly transferred to an RRSP in Jan 1 to Mar 1 2019 it must be recorded on the 2018 Schedule 7. However, since the T4 will be for 2019, not 2018, the reporting is different from the usual, and must be done properly in order to avoid future problems.
Manitoba 2019 Budget - March 7, 2019
Manitoba is reducing the retail sales tax from 8% to 7% effective July 1, 2019. There were no personal or corporate income tax rate changes, but several business tax credits were extended.
Yukon 2019 Budget - March 7, 2019
There were no personal or business tax changes in the Yukon budget.
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 many provincial exceptions to this. If you're carrying forward donations this is fairly easily done using tax software, but using printed forms you'll have to track things from year to year yourself.
Understanding TaxTips.ca Tables of Marginal Tax Rates
Our tax tables do not include low income tax reductions, health or other premiums, or the NL deficit reduction levy which can add 10% to the marginal tax rate at various levels of taxable income.
You can use our Tax Calculator to determine your actual marginal tax rate - see the note at the bottom of the calculator.Medical Expense Tax Credit - Spouses
A couple will usually get a higher medical expense tax credit if all expenses are combined on the tax return of one spouse - usually the lowest income spouse.
Reporting the Sale of Your Principle Residence on Your Tax Return Using Tax Software
On Schedule 3 Line 179, you must indicate if you lived in your home for all the time that you owned it. If yes, no need to enter proceeds or ACB on Schedule 3.
Ready to Invest? Recommended Stocks
If you're a novice investor, or just don't have the time or inclination to pick stocks, see our recommended stocks.
February 2019
Life in the Tax Lane March 2019
This month's 10-minute video covers the Climate Action Incentive Payment re carbon tax; Allowances vs expense reimbursements for employees; Reassessment re estate valuation 5 years after filing; OAS deferral - time limit; Tax service providers dedicated CRA telephone service; and GST/HST New Housing Rebates.
Capital losses can normally only be used to reduce or eliminate capital gains. However, they can be carried back to any of the 3 preceding taxation years, or carried forward indefinitely.
GST/HST Credit - File a Tax Return
Every person age 18 or older should file a tax return to establish their eligibility for the GST/HST credit, which is a non-taxable quarterly payment. A single person with net income of up to $44,000 is eligible for the credit. Thresholds and credit amounts increase as numbers of dependants increase.
Why You Should File a Tax Return
There may be circumstances which 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.
RRSP Deadline Friday March 1, 2019
RRSPs can be a great tax-saving vehicle, because the contributions are deducted from income. Although TFSA contributions are not tax-deductible, they can sometimes be better for you to use than RRSPs, such as when you are in the lowest tax bracket.
Detailed Canadian Income Tax and RRSP Savings Calculator
This calculator includes most tax credits and deductions, includes taxpayer and spouse, can help you determine the best RRSP contribution or pension splitting amount, and tells you if all your donations are not all being utilized. It can't file your tax return but can certainly help in tax planning.
The 2019 Federal Budget will be tabled on Tuesday, March 19, 2019.
BC 2019 Budget - February 19, 2019
There were no personal or corporate income tax rate changes in the budget. Student loan interest is eliminated. The BC Early Childhood Tax Benefit will be replaced by a more generous BC Child Opportunity Benefit on October 1, 2020. The Climate Action Tax Credit will be increased each July 1st until 2021. Several other tax credits are enhanced or extended.
New Brunswick 2019 Pre-Budget Consultations
New Brunswick's pre-budget consultations are open until February 28th. Manitoba and Newfoundland also still have pre-budget consultations open, but with no indication of when they close.
RRSP Contributions Not Reported on Previous Year Tax Return
Contributions made Jan-Mar 2019 must be reported on your 2018 tax return, even if they are not being deducted for the 2018 tax year. If you made contributions in Jan-Mar 2018 and didn't report them in your 2017 return, read this article.
RRSP Home Buyer's Plan (HBP) and Lifelong Learning Plan (LLP)
You can borrow from your RRSP to buy or build a home, or to finance full-time training or education. Make sure you complete Schedule 7 if you have made repayments to the HBP or LLP, otherwise you lose RRSP deduction room.
Transfer/Carry Forward of Unused Tuition and Education Amounts
The tuition and education tax credits have been eliminated now in NB, ON and SK. However, it is only ON that no longer allows the carry-forward of unused credits from another province when a taxpayer moves to Ontario.
Voluntary Tax Deductions from Old Age Security or Canada Pension Plan Payments
If you previously requested voluntary tax deductions from your OAS or CPP in order to avoid having to make income tax instalments, you can request a change through your My Service Canada Account, or by completing and submitting a form.
Requesting a Change to Your OAS Clawback / Recovery Tax
If your income circumstances have changed such that you think the clawback of your OAS should be reduced or eliminated, you can request a change by completing form T1213OAS and submitting it to Canada Revenue Agency.
What Types of Income are not Taxable?
Some types of income are not taxable, such as inheritances, gifts and most lottery winnings, and some must be included in the tax return even if they are not taxable, such as GIS and workers' compensation benefits. The latter affect income-tested benefits even though they are not included in taxable income.
2019 Non-Eligible (Small Business) Dividend Tax Credit Rates
Due to the 2019 final reduction in the gross-up rate for non-eligible, or "regular" dividends, the dividend tax credit rates for 2019 are automatically revised for most provinces and territories.
2019 Enhanced Dividend Tax Credit Rates
The tables of dividend tax credit rates for eligible dividends includes rates for 2019. The only changes thus far are for BC and Quebec. This could change when 2019 budgets are tabled.
2019 Corporate Income Tax Rates
The Federal small business corporate income tax rate is reduced to 9% effective January 1, 2019. The Quebec and PEI small business rates are also reduced for 2019, and Manitoba's small business limit is increased.
January 2019
RRSP/RRIF Withdrawal Calculator
Use our RRSP/RRIF calculator to calculate your 2019 minimum annual withdrawal, and to estimate your earnings and withdrawals from your RRIF for the next 40 years. If you haven't converted to a RRIF yet, or if you only have non-registered investments, this calculator is still useful for you!
Filing Your Return - Income, Deductions, Tax Credits
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!
Life in the Tax Lane February 2019
This month's video includes: Principal residence exemption - large lots; 2019 tax-free automobile allowances; Incentive payments for travel to pick-up site; Construction industry T5018 form penalties; Canada Child Benefit and shared custody; CPA Canada - Tax system review needed.
So far we know of 2 dates for provincial budgets - BC on February 19th and Manitoba on March 7th. There are also a few pre-budget consultations still underway.
GST/HST Invoicing Requirements
It's amazing how some large companies who are GST/HST registrants do not provide proper invoices. Proper invoicing is required so that the customers of the business can properly claim their input tax credits. GST/HST must be shown separately on an invoice. Federal and provincial HST parts are not shown separately. Provincial retail sales tax (PST, RST, etc) is shown separately from the GST. The seller's business number must be shown if the total sale is $30 or more.
BC Speculation and Vacancy Tax
Make sure you file a declaration if you're in one of the designated areas, otherwise you'll be billed for this tax even if you shouldn't be paying it. If you don't receive a notice but are in a designated area, call the BC government! This tax applies to vacant residential land as well as land with a residence on it. The City of Vancouver Empty Homes Tax is another separate tax.
Besides annual property tax on the assessed value of properties, there is property purchase tax when a property changes hands, as well as a foreign buyers' tax, which is an additional property purchase tax. There is now an additional school tax for high-value residential properties, as part of the annual property tax bill.
Ontario Low-income Individual and Families (LIFT) Credit
The non-refundable LIFT credit will be in effect for 2019 and subsequent years, and will provide a provincial income tax reduction of up to $850 for an individual and $1,700 for a couple. There is no LIFT credit if the individual has no employment (T4) income. This credit is included in the Detailed Canadian Tax Calculator.
Historical Returns on Investments - Stocks, Bonds, T-Bills
This table of returns on investments has been updated with the December 2018 Consumer Price Index (CPI). See returns for 1, 5, 10, 20 and 50 years. Then use our Investment Return Calculator to determine your own returns.
Transfer Shares to a Registered Account, But Not at a Loss!
You can transfer 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.
Writing Off Interest Expense Related to Investments
If you incur interest expense related to investments, make sure you keep a clear record of it. Interest expense is claimed on line 221 of the personal income tax return.
2019 BC Pharmacare Coverage Changes
Changes effective January 1, eliminate family deductibles for family net income of $30,000 or less, reduce deductibles for net income of $41,667 or less, and eliminate or reduce family maximums for net income of $45,000 or less. Note that you MUST REGISTER for Pharmacare benefits.
Reporting Foreign Income and Expenses on the Tax Return
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 2018 is 1.2957.
Historical Returns on Investments - Stocks, Bonds, T-Bills
It was a bad year for the S&P/TSX and for the S&P 500. However, the S&P 500 return in Canadian dollars was better than in US dollars because the Canadian dollar decreased in value against the US dollar. See the historical returns for 1, 5, 10, 20, and 50 years, and how much $1,000 invested at the beginning of the period in various investment types are worth at the end of the period. Over the past 5+ 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 2018 or any time period for a particular investment or investment account, or your entire portfolio.
See also Prior Years:
Revised: January 13, 2020