Tax Tips & Business Matters
12/11/2024
Tax Tips and Traps, 2024 - Year-end - Speical Edition
YEAR-END TAX PLANNING
December 31, 2024 is fast approaching… see below for a list of tax planning considerations. Please contact us for further details or to discuss whether these may apply to your tax situation.
1) NEW! As of June 25, 2024, 2/3s of capital gains in excess of $250,000 per year are proposed to be taxable. Capital gains of $250,000 or less will effectively continue to be included at a 50% rate due to a new deduction.
If you anticipate that annual net capital gains will not exceed the $250,000 threshold, the changes will not affect you. However, if you expect annual capital gains to exceed $250,000, you may be impacted by the changes.
If you expect to realize annual capital gains over $250,000 in the near term, consider triggering gains at the end of 2024 to utilize the full $250,000 in capital gains that are protected from the 2/3 inclusion rate. Any unused limit cannot be carried forward; however, a new $250,000 limit will become available next year. Triggering gains can be useful if your portfolio has significant accrued gains that you would like to realize in the near future. Spreading the gains over a few years to maximize access to the effective 50% inclusion rate can reduce the overall tax cost. However, if you don’t foresee exceeding $250,000 in gains in a single year, deferring gains may be better to avoid paying tax earlier than necessary.
That is, determining whether to trigger capital gains should be considered in light of expected future capital gains and the expected time horizon of holding the investment.
10/15/2024
Tax Tips & Traps 148 2024 - 4th Quarter
Tax Tidbits
Some quick points to consider…
- All GST/HST returns (except for those of charities and selected financial institutions) must now be filed electronically using methods such as NETFILE, internet file transfer through a third-party accounting software, CRA’s My Business Account, electronic data interchange (EDI) through a financial institution or TELEFILE through a toll-free phone number. Registrants who paper file improperlywill be charged a penalty.
- Starting in 2024, digital platform operators (such as Airbnb and Etsy) are required to provide information to CRA on the sellers who use their platform, including the seller’s identification and details of their financial transactions.
- Over 2.1 million people have registered for the Canadian Dental Care Plan (CDCP). Almost 12,000 oral health providers have formally registered to provide services to patients under the plan. Providers can now provide services without formally registering, provided they bill Sun Life directly for eligible services.
08/19/2024
Tax Tips and Traps 145 2024 - 3rd Quarter
Tax Tidbits
Some quick points to consider…
- All eligible Canadian resident seniors (over age 65), children under 18 and individuals eligible for the disability tax credit can now apply for the Canadian Dental Care Plan. Other eligible individuals will be invited to participate in 2025. To qualify, the applicant must not have access to dental insurance and the applicant’s family income must be below $90,000.
- In July 2024, CRA began issuing legal warnings and taking legal measures to collect outstanding personal COVID-19 benefit program debts. Individuals who have not responded or cooperated are being contacted if CRA has determined that they have the financial capacity to pay the outstanding amount. CRA encouraged individuals who cannot pay the full amount immediately to contact them and develop a payment arrangement.
- While the increase to the capital gains inclusion rate from 50% to 2/3 for corporations and most trusts and from 50% to 2/3 on the portion of capital gains realized in the year that exceeds $250,000 for individuals has not been enacted into law, the government has confirmed that the change would be effective June 25, 2024.
06/11/2024
Tax Tips and Traps 145 2024 - 2nd Quarter
Tax Tidbits
Some quick points to consider…
- Taxpayers can register for the CRA’s My Account and get immediate access rather than waiting for a security code by mail.
- A portion of the federal carbon tax will be returned to Canadian-controlled private corporations (CCPCs) with fewer than 500 employees who file their 2023 tax return by July 15, 2024. The automatic rebate, based on the number of employees, will be paid to CCPCs in AB, SK, MB, ON, NB, NS, PEI and NL without needing an application.
- Depositing a cryptocurrency with a trading platform could constitute a disposition resulting in a taxable event.
02/29/2024
Tax Tips and Traps 145 2024 - 1st Quarter
Tax Tidbits
Some quick points to consider…
- The 2024 RRSP contribution limit is $31,560, requiring earned income in 2023 of at least $175,333. The 2025 limit will be $32,490 (requiring earned income in 2024 of at least $180,500).
- The annual TFSA contribution limit for 2024 is $7,000.
- The annual interest rate charged by CRA on late tax and installment payments has increased to 10% for the first quarter of 2024. Additional penalties may apply on underpaid installment payments.
- Over 6,100 audits on COVID-19 wage subsidies have been completed or are in progress. In terms of dollar figures, $8.9 billion in claims have been audited, and $7.5 billion in claims are currently being audited. Of the audited claims, $458 million of claims have been denied.
12/13/2023
Tax Tips and Traps, 2023 - Year-end - Speical Edition
December 31, 2023 is fast approaching… see below for a list of tax planning considerations. Please contact us for further details or to discuss whether these may apply to your tax situation.
SOME 2023 YEAR-END TAX PLANNING TIPS INCLUDE:
1) Certain expenditures made by individuals by December 31, 2023 will be eligible for 2023 tax deductions or credits, including digital news subscriptions, moving expenses, labour mobility tax credit expenditures, multigenerational home renovation expenditures (NEW), child care expenses, charitable donations, political contributions, registered journalism organization contributions, medical expenses, alimony, eligible employment expenses, union, professional or like dues, carrying charges and interest expense. Ensure you keep all receipts that may relate to these expenses.
2) A senior whose 2023 net income exceeds $86,912 will lose all, or part, of their old age security pension. Senior citizens will also begin to lose their age credit if their net income exceeds $42,335. Consider limiting income over these amounts, if possible. Another option would be to defer receiving old age security receipts (for up to 60 months) if it would otherwise be eroded due to high-income levels.
3) If you own a business or rental property, consider making a capital asset purchase by the end of the year. Many capital assets purchased and made available for use in 2023 will be eligible for a 100% CCA write-off under the immediate expensing rules.
Some zero-emission electric vehicles purchased by businesses may be eligible for a 100% write-off (limited in some cases to the first $61,000). Alternatively, zero-emission vehicles purchased in 2023 may be eligible for a federal incentive rebate of up to $5,000.
11/10/2023
Tax Tips & Traps 143, 2023 4th Quarter
Tax Tidbits
Some quick points to consider…
- CRA has produced various basic tax education and literacy tools, such as seven learning modules with videos and quizzes.
- As of January 1, 2024, where more than five information returns of a particular type (such as T4s, T5s, T3s, T4As, NR4s and T5018s) are filed on paper (as opposed to electrically) for a particular filer, a penalty of $125/form will apply. Businesses filing five or fewer forms can still do so on paper without penalty.
- Renovations to create a safe play and therapy area for a child with a mental
09/07/2023
Tax Tips & Traps 143, 2023 3rd Quarter
Tax Tidbits
Some quick points to consider…
- Most CPP retirement, disability, survivor and child benefits can only be paid retroactively for up to 11 months after applying. Make sure to apply on time to avoid losing access to benefits.
- The Canada Disability Benefit Act, which received Royal Assent on June 23, 2023, is intended to provide financial security to working-age persons with disabilities. Neither eligibility criteria nor benefit amounts have been announced; however, consultations are ongoing.
- A series of investment tax credits relating to clean economies were announced in the fall of 2022 and spring of 2023. The government is currently conducting a consultation on the design and implementation of these initiatives.
05/01/2023
Tax Tips & Traps 141, 2023 2nd Quarter
Tax Tidbits
Some quick points to consider…
- New federal rules have been proposed that would prohibit arrangements designed to restrict competition in the labour markets. These include, for example, wage-fixing arrangements intended to fix, maintain, decrease or control salaries, wages or terms and conditions of employment.
- Financial institutions began offering tax-free first home savings accounts in April. The plans are a valuable tool for first-time home buyers as contributions (up to $8,000/year and $40,000 over a lifetime) are deductible, while eligible withdrawals (including growth in the account) are not taxable.
- It is possible to borrow funds from your RRSP for various purposes, such as using the home buyers plan to assist in buying your first home and the lifelong learning plan to fund education and training.
01/31/2023
Tax Tips & Traps 141, 2023 1st Quarter
Tax Tidbits
Some quick points to consider…
- For 2023, the maximum amount that may be deducted for non-taxable allowances paid to an employee using a personal vehicle for business purposes has increased by 7₵ to 68₵/km for the first 5,000 kms driven and to 62₵ for each additional km. For Yukon, the Northwest Territories and Nunavut, the tax-exempt allowance will continue to be 4₵/km higher.
- Rapid inflation has resulted in a significant increase of 6.3% to personal income tax and benefit amounts for 2023. For example, the income level at which OAS repayments commence is now $86,912 (from $81,761), the capital gains exemption for the sale of certain small businesses is now $971,190 (from $913,630), and the annual TFSA contribution limit has increased to $6,500 (from $6,000).
- Legislation that requires more trusts to file trust returns and more information to be disclosed has been enacted. The commencement date was recently deferred by a year to apply to fiscal years ending on or after December 31, 2023. These filing requirements include bare trust arrangements, such as in-trust bank accounts that a parent or grandparent may have with their child or grandchild, unless a specific exception applies.
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