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What's New by Month
April 2019
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: April 22, 2019