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What's New by Month
May 2020
Consultation on the Canada Emergency Wage Subsidy (CEWS)
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.
Business Resilience Service Hotline
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.
Canada Emergency Commercial Rental Assistance (CECRA) Portal Open
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.
Refundable Medical Expense Supplement
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.
Canada Emergency Commercial Rental Assistance (CECRA) Update
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.
Canada Emergency Business Account (CEBA) Expansion
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.
Medical Expense Tax Credit (METC)
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.
Canada Emergency Wage Subsidy Baseline Remuneration
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.
Canada Emergency Wage Subsidy (CEWS) Extended
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.
Regional Relief and Recovery Fund (RRRF)
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.
Canada Emergency Student Benefit (CESB)
Applications for the CESB open Friday, May 15th. We've added links to information on CESB, student loans and grants, and international students.
Free Tax Preparation - Community Volunteer Income Tax Program
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.
Can the Federal Government Print Money and Spend it?
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.
Real Estate Rentals - Business Income vs Property Income
How to determine if your rental income is business income or property income, differences in tax treatment.
Phone Calls To and From Canada Revenue Agency (CRA)
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.
April 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.
Resources for Persons With Disabilities
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?
Canada Emergency Response Benefit (CERB) Taxable
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:
- COVID-19 Updates
- Working From Home - Home Office Costs
- Directory Liability re GST/HST
- EI Voluntary Departure
- Backdating of Documents
- Childcare Costs Denied
Lending to a Spouse or Child for Investments
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.
Canada 75% Emergency Wage Subsidy (CEWS)
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.
Canada Emergency Commercial Rental Assistance (CECRA)
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.
Top Marginal Tax Rates in Canada
There are 8 provinces with top marginal tax rates exceeding 50% in 2020. Of course, the average tax rates are much lower.
Spouse or Common-Law Partner Tax Credit
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.
RRIF Minimum Withdrawal Withholding Tax
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.
2020 Tax Comparisons Employment Income
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.
2020 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 are Alberta and BC.
2020 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.
Need An Expert in SQL Server, .NET and Access?
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!
Climate Action Incentive (CAI) / Tax Calculator
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.
Calculators Looking Messed Up?
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 Tax April 13 Video and Blog re 75% Canada Emergency Wage Subsidy (CEWS)
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.
Gift to Spouse for TFSA Contribution - Attribution Rules
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.
RRSP/RRIF Withdrawal Calculator
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.
Registered Retirement Income Fund (RRIF) Minimum Withdrawals
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.
COVID-19 Financial Relief for Canadians - April 11, 2020
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.
COVID-19 Financial Relief for Canadians
This is a comprehensive summary of financial relief announced thus far for individuals, businesses, non-profits and others. It includes links to many resources.
Canada Emergency Wage Subsidy (CEWS) for Employers
Includes links to Excel workbooks provided by Canada Revenue Agency and by Tax Templates Inc. to help calculate the subsidy.
Unlocking Your Locked-In Pension Funds
Most pension plans allow the "unlocking" of all or a portion of a LIRA, LIF or LRIF under certain circumstances.
BC One-Time July 2020 Enhanced Climate Action Tax Credit
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.
COVID-19 Canada Emergency Wage Subsidy for Employers
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.
March 2020
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, and which line number to use when adjusting your tax return with CRA.
Do I Have to File Both Personal and Business Tax Returns?
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.
Reinvested Distributions From Canadian Exchange Traded Funds (ETFs)
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.
Eligible Dividends and the Dividend Tax Credit
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.
Saskatchewan 2020 Budget - March 18, 2020
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.
New Brunswick 2020 Budget - March 10, 2020
Residential non-owner-occupied property tax rate reduction, student loan rate reduced, new carbon pricing plan, no personal or corporate income tax changes.
COVID-19 Business Financial Support
Federal government support for small and medium businesses:
- government-backed interest-free bank loans, partially forgivable,
- 10% temporary wage subsidy and 75% wage subsidy.
- GST/HST remittances can be deferred until June.
The Bank of Canada further reduced the target for the overnight rate, to 0.25%.
Ontario COVID-19 Action Plan March 25, 2020
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:
- COVID-19 - lots of resources
- Employment Insurance - need to file for EI on time
- Directory Liability re Payroll Withholdings
- Tips - Gross Negligence Penalties
- Is it a Business? Start-ups and Wind-ups
- CRA My Account - Uncashed Cheques
Tax Refund - How Long Will it Take?
Checking the status of a refund, uncashed refund cheques - now shown in My Account, interest on refunds, mandatory direct deposit.
What Kinds of Income are Not Taxable?
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.
COVID-19 Provincial / Territorial Support and Information
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.
Deductible and Non-Deductible Investment Expenses
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?
Key Points in Canada's COVID-19 Economic Response Plan
See a detailed summary of the key points, for employees, employers, small business, parents, students, and those with RRIFs.
Temporary Wage Subsidy For Employers re COVID-19
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.
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.
Free Tax Preparation Service - Community Volunteer Income Tax Program
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.
Manitoba 2020 Budget - March 19, 2020
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.
Tax Return Deadline Extended re COVID-19
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.
Quebec 2020 Budget - March 10, 2020
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.
Change in Use of Property - Deemed Disposition
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.
Tax Issues re Investing, and Tax Treatment of Different Types of Investments
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!
Yukon 2020 Budget - March 5, 2020
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.
US Federal Estate Tax May be Payable by Canadians
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.
US Federal Estate Tax Calculator for Canadians
Our US Estate Tax Calculator has been updated to include the 2020 tax year.
February 2020
Alberta 2020 Budget - February 27, 2020
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:
- T1 Season - What's New
- U.S. - New Disclosure Requirements for Crypto Activities
- Vehicle Logs/Apps
- Tenant Relocation Assistance - Taxable?
- Starting a Business While Collecting EI
- In-Kind Contributions to an NPO
Nunavut 2020 Budget - February 26, 2020
There were no tax changes announced.
Nova Scotia 2020 Budget - February 25, 2020
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.
Northwest Territories 2020 Budget - February 25, 2020
No new taxes were announced.
What Happens to Debts of a Deceased Person?
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.
Eligible Dependent / Equivalent to Spouse Tax Credit
Are you a single parent? Or, are you supporting a parent or other dependent relative? The equivalent to spouse tax credit may be available.
BC 2020 Marginal Income Tax Rates
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.
BC 2020 Budget February 18, 2020
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.
Students - Tax Information, Savings Plans, Financial Help
Learn about tax deductions and credits, private school costs, RESPs, student grants and loans, and help with tax preparation.
Are Your Tax Credits Changing for 2020?
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.
RRSP Deadline Monday March 2nd
The deadline for 2019 contributions to an RRSP is Monday, March 2nd - don't wait till the last minute!
Have you Sold Your Principal Residence?
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.
2020 Sales Tax Rates - GST/HST, PST, RST, QST
There are no sales tax rate changes thus far for 2020.
2020 Corporate Income Tax Rates
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.
Enhanced Canada Pension Plan (CPP)
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.
Unclaimed Money - Is Some of it Yours?
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.
January 2020
Automobiles, Passenger Vehicles and Motor Vehicles - Tax Issues
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.
Why You Should File a Tax Return
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.
Filing Your Tax 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!
This month's video discusses:
- Joint Tenancy - Cautions
- Executor Personal Liability
- Condo Pre-Sale - GST/HST Issues
- Home Accessibility Tax Credit
- Tax Promoter Schemes
- Negligence - Erroneous Donation Claims
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 2020 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.
See also Prior Years:
Revised: May 31, 2020