– The tax treatment of charitable donations made in relation to a death will be more flexible for deaths occurring after 2015.
– VRSPs came into effect on July 1, 2014 and subject Quebec employers will gradually be required to offer such a plan or other wage-deduction based savings plan to their employees; they will have at least until December 31, 2016 to comply.
– The tax rate applicable to ordinary (non-eligible) dividends increased in 2014 due to adjustments to gross-up and credit rates applicable to these dividends.
– Quebec refundable tax credits intended for businesses have been reduced by 20% since June 5, 2014.
– A new search and rescue volunteer tax credit was instituted in 2014.
– Since 2014, certain expenses incurred to develop an individualized treatment plan and the expenses related to a trained service animal serving to help an individual manage severe diabetes are eligible to the tax credit for medical expenses.
– The deferral period for donations of ecologically sensitive property is extended from five to ten years for gifts made after February 10, 2014.
– Since 2014, it is no longer necessary to apply for the GST/HST tax credit by checking the related box in a tax return. The CRA will automatically send a notice of determination to qualifying individuals.
– The assistance provided to individuals living in a northern village through the solidarity tax credit is increased since 2014.
– The political contributions tax credit is increased in 2014.
– Since January 1, 2014, the taxable income threshold in Ontario to which the 13.16% tax rate applies decreased to $220,000 and a new tax rate of 12.16% applies to taxable income between $150,000 and $220,000. These new income thresholds will not be subject to annual indexation.
Did you know?You may be eligible for new or improved tax relief measures and online services when filing your 2014 income tax and benefit return.
The new Mobile Office is all done and already hitting the roads in York Region! :)
What are your thoughts?
The guys at Signarama Newmarket are working hard getting the final phase of the project done. The Graphics :)
Below you see today that there fixing some dents and applying the first layer.
It's coming along. Just installed the power supplies today. It should be out on the road by Wednesday and ready to go. Fingers crossed.
Enjoy a sneak peak!
Wow. We are almost completed the conversion on the bus. Carpets were done last week. Today we leveled and secured the desk. Just need to get some chairs and AV/DC power going.
Also, we need to get the outside vehicle graphics done.
Did you know?Are you 60 to 70 years of age and did you return to work in 2013 after being away from the workforce? You may not know about changes to Canada Pension Plan (CPP) contributions that came into effect in January 2012. The changes affect employees and self-employed workers aged 60 to 70 (but not those working in Quebec).
Overview of the changes
Did you know?
The new first-time donor’s super credit gives you an extra 25% non-refundable federal tax credit when you claim your charitable donation tax credit. This means that you can get a 40% credit for up to $200 in cash donations and a 54% credit for the part of the cash donations that is over $200 but not more than $1,000. This is in addition to the provincial credit.
Did you know?
You may be eligible for new or improved tax relief measures and services when filing your 2013 income tax and benefit return.
We have finally got the carpet installed on the Mobile Office bus conversation completed. Its been so cold out that we had to wait for warmer weather. Next step is to attached the desk to the floor and some electrical work for power. Almost there :)
Shortly after you file your 2013 return, you should receive a Notice of Assessment from the CRA. When you receive it, compare it to the taxes payable as reported on your return. If there’s any discrepancy, try to determine the reason.
If you don’t understand why the amounts are different or you disagree with the assessment, consult your tax adviser or ask the CRA to provide further details. Do not automatically assume you made the error. The assessment may be based on a misunderstanding of the facts, or it may be due to a processing error.
The CRA will generally reassess returns if the adjustment relates to a calculation error or a misunderstanding of the facts. If your dispute is based on a different interpretation of the law, you may have to file a Notice of Objection.
Individual taxpayers can initiate the appeal process by outlining the objection on Form T400A or by setting out the facts and reasons for their objection in a letter to the chief of appeals at their local district taxation office.
Generally, a Notice of Objection must be filed within 90 days of the mailing date of the Notice of Assessment. However, individuals and testamentary trusts have until one year from either the filing due date of the return or 90 days after the day of mailing the Notice of Assessment, whichever is later. Consult your tax adviser if you believe a reassessment or an objection is warranted.
If you’re a member of an RPP or DPSP, your RRSP contribution limit will be reduced by an amount called the pension adjustment (PA). This adjustment represents the present value of the pension benefits you earned for the previous year in your RPP or DPSP. PA reporting is required as part of the T4 reporting process in February of each year.
There is another adjustment if your pension benefits are enhanced for post-1989 service. This particular adjustment—the past service pension adjustment (PSPA)—reduces your RRSP contribution limit for any given year.
One other adjustment—the pension adjustment reversal (PAR)—can increase your contribution room. You may receive a PAR if you leave your pension plan before retirement. This adjustment is intended to increase your RRSP contribution room where the PAs previously reported on your behalf exceed your termination benefit under the pension plan.
Example: Suppose you were laid off by your employer in 2013 and, based on your earned income for 2012, your 2013 RRSP contribution room was $14,500. If your former employer reports a PAR of $5,000 with respect to your participation in its pension plan, your revised 2013 RRSP deduction room will be increased to $19,500.
Based on the above, your maximum deduction for any one year will be calculated as follows: RRSP contribution room carried forward, plus 18% of your prior year’s earned income (to a stated maximum), plus any pension adjustment reversal (PAR), less your PA for the prior year, less any PSPA for the current year.
The cost of a capital asset is generally not deductible as an expense. However, you can depreciate certain business assets for tax purposes. The tax term for such depreciation is “capital cost allowance” (CCA).
Depreciable assets are grouped into classes according to their type and use. There are more than 50 different classes, each with its own rate of depreciation.
The government also adjusts CCA rates to provide economic incentives or to better reflect the useful life of the property. The following are some of the more significant examples:
Most classes of assets are depreciated on a declining-balance basis. Some of the more common CCA classes and their applicable CCA rates are noted in the tables at the back of this book.
The amount of depreciation you can claim for a year is determined by multiplying the remaining balance in the asset class by the specified percentage rate for that specific class (generally pro-rated for short taxation years). The remaining balance, referred to as the undepreciated capital cost (UCC), is calculated on a continuous basis.
Each year (subject to the available-for-use rules—see below), you add the cost of assets acquired in the year to the previous year’s closing balance. If you have disposed of an asset, you subtract the proceeds up to the original cost of the asset.
The amount of CCA determined by this method represents the maximum amount that can be claimed. You do not have to claim the maximum amount. For example, if your business is in a loss position, you may decide not to claim depreciation for that particular year.
Represent A Client allows individuals and businesses to establish a link between their My Account or My Business Account and an employee of the business or a third party, thereby authorizing the representative to access the account. Both My Account and My Business Account are based on the concept of “See It Online” or “Do It Online,” which also underpins the access levels that can be granted to representatives.
One of the main purposes of these programs is to give individuals access to tax-related information and amounts maintained by the CRA. Examples of information would include carryover balances for losses, RRSP contribution room, notices of assessments from prior years, instalment balances and account balances, entitlements to credits, and so forth. Where access is provided under the “See It Online” concept, the representative is only able to view the account information and cannot initiate any changes to the information or submit new information.
A number of actions can be initiated through My Account or My Business Account. Examples include the electronic filing of information returns, changing banking information, initiating a formal objection to an assessment, providing materials requested by the auditor and so on. An authorized representative must be granted a certain level of access in order to “do it online.”
As a result, you can authorize representatives for Level 1 access (“See It Online”) or Level 2 access (“Do It Online”).
Additional details regarding My Account, My Business Account and Represent A Client can be found on the CRA’s website.
Your maximum annual RRSP contribution is based on your earned income in the previous year. Earned income includes salaries, employee profit sharing income, business income, disability pensions (issued under the Canada and Quebec pension plans), taxable alimony or maintenance, and rental income. Your earned income is reduced by business losses, rental losses, union dues, employment expenses, and deductible alimony or maintenance paid. Retiring allowances, investment income, capital gains, pension income and business income earned as a limited partner are not classified as earned income.
If you are not a member of a registered pension plan (RPP) or a deferred profit sharing plan (DPSP), you’ll be able to contribute 18% of your 2012 earned income to an RRSP in 2013 to a maximum of $23,820. That contribution must be made within 60 days of the end of the calendar year which is February 28, 2014 for the 2013 taxation year. If you were not able to make the maximum contribution to your plan in any of the years from 1991 to 2012, you can also make up the difference in 2013. Your 2013 earned income will determine your 2014 contribution limit.
Tax tip: Making the maximum RRSP contribution in 2013 will require earned income of at least $132,333 for 2012. Check the Notice of Assessment that the CRA sent to you after the assessment of your 2012 return. It will tell you how much you can contribute and should take into account any under contributions since 1991. It will also tell you if you have made any contributions that you have not yet deducted for income tax purposes.
If you have a self-directed RRSP, you can transfer other investments you own into your self-directed RRSP as part of your deductible contribution. Should their fair market value at the time of the transfer exceed your cost, the difference must be reported as a capital gain. However, if the cost exceeds their fair market value, you are not able to claim the capital loss. Therefore, it is not the best idea to sell or transfer losing investments to your RRSP.
It’s also possible to hold the mortgage on your home in your RRSP—it takes a bit of effort to set up and there are costs involved, but this arrangement can offer some advantages.
In certain situations, your RRSP can invest in shares of a Canadian private company if it carries on its business primarily in Canada. However, there are rules that will assess penalties where your RRSP holds a non-qualified or prohibited investment. One example of a prohibited investment is a share in a company in which you (and related parties) have an interest of 10% or more. The rules are extremely complicated, and you should consult with a knowledgeable tax adviser before using your RRSP to invest in private company shares.
When considering long-term investments, such as five- year guaranteed investment certificates (GICs), within your RRSP, keep in mind that you may have a problem if you need to withdraw the funds before the investment matures.
Employment Insurance (EI) premiums can constitute a considerable expense. There are various exemptions from having to remit EI premiums. For example, if you own more than 40% of the voting shares of a corporation, your employment is not subject to EI premiums. There’s another exemption for employees who deal at “non-arm’s-length” with their employer. The problem with this rule is that there’s another rule stating that two related persons are deemed to deal with each other at “arm’s- length” if the circumstances of the employment are substantially similar to what they would be if an unrelated person were to perform the same job.
Tax tip: Consult your professional adviser to determine if there’s any way you can structure the employment of your spouse or common-law partner or other family members to justify EI-exempt status. Your business and family members could also be eligible for a refund.