Tax Accountant

March 11, 2017

Changes to the Principal Residence Exemption (Part 2 of 2)

In my previous blog, I introduced the Principal Residence Exemption, or PRE. There is a new reporting requirement on the sale of the principle residence. I’ll discuss it briefly here. As always, discuss complex tax issues with a tax accountant. Tax is often the biggest cash disbursement for most years, so proper planning may save you money. For a long time there has been Principal Residence Exemption. A couple buys a home, designates it as their principle residence, and sell it years later. There are no taxes on capital gains if the PRE is used. Until recently, the use of […]
March 9, 2017

Changes to the Principal Residence Exemption (Part 1 of 2)

There is a new reporting requirement for the Principal Residence Exemption (PRE). When you sell your principle residence and use the PRE, you have to report it.  First, I’ll discuss the PRE and in the next blog I’ll discuss the new report.  As tax is the largest payment one makes each year, it is a good idea to have your taxes reviewed by a tax accountant.   The Principal Residence Exemption is an opportunity to keep the capital gains tax-free on your principle residence that you have owed for longer than a year, and where you have lived for at […]
March 5, 2017

Taxable Benefits

Taxable Benefits are valuable services or access to items that one gets from work. In a nutshell, if you have access to something or some service because you work at a job, and your neighbour does not, that is a taxable benefit. Taxable benefits are a complex topic. Consider getting a tax accountant to help with personal income tax preparation. One example is a company car. There are two types of taxable benefits there: A standby charge and an operating charge. A standby charge is a taxable benefit just because you have access to the car 24/7. An operating charge […]
February 23, 2017

Big Changes for Small Business (Part 4 of 4)

On December 15th, 2016, Royal Assent was given to C-29, a budget implementation bill. C-29 means big changes for companies using the Small Business Deduction. Previously, I discussed the Small Business Deduction, who uses it, and what C-29 changed. Here,  I will briefly discuss the effects on small businesses. As always, consult a tax accountant to review your situation and for tax planning.   It used to be the biggest issue was Association: if two companies had 25% or more ownership in common, they were Associated, and had to share the $500,000 Small Business Deduction. Now, Specified Corporate Income goes […]
February 20, 2017

Big Changes for Small Business (Part 3 of 4)

As of December 2016, Bill C-29 is poised to make major changes to Small Business. In previous blogs, I discussed what the Small Business Deduction is, and what companies can use the Small Business Deduction. In this blog I’ll review the changes, and in the next blog I’ll discuss C-29’s impact. As always, talk to a tax accountant to review your particular situation and to get involved in tax planning. There is a new definition of Specified Corporate Income (new Section 125(7) of the Act). If two companies held by related owners do business with each other, that income won’t […]
November 27, 2016

How Bartering is Treated by Tax Law

In the normal course of business, bartering occurs. It is important to carefully approach this as the tax laws are strict. Basically, one should include the regular normal income as revenue and the cost of the barter as an expense. For example, let’s say John rents a basement apartment for $600 a month to Stuart. John and Stuart agree to cut the rent by $100 a month for snow removal, and lawn maintenance. It is a net of $500 income for John. The CRA wants to see the $600 and $100 figures in the income and expense areas, respectively. For […]
March 17, 2016

How Tax Accountants Save You Money

I recently worked with a client who wants to sell a rental property (house). The client lived in the house until a few years ago. If they choose that house as a ‘Principle Residence’ and use the ‘Principle Residence Exemption’ for the years they lived in the house, the years they occupied the house has no capital gains payable when sold. Now, the years when they used the house as a rental leads to rental income and also capital gains (if the house increased in value over the rental years). They thought it would be straightforward capital gains on the […]
March 12, 2016

CRA’s AutoFill Return (AFR)

The CRA started a new AutoFill Return (AFR) service. Basically, the data the CRA has is downloaded into tax software. If one hires a tax preparer, make sure they have level 2 of the online access as it is required ( T1013 form). Is it faster? yes. However, there is no guarantee as to the quality of the information. For example, when I first used AFR for a client’s file I downloaded all the CRA information. All the data that had income (i.e. T4s, T5s) was downloaded. Good! However, a few deductions were missing. I guess the CRA missed those […]
December 17, 2015

Year-End Tax Strategies

Year-End Tax Planning   There are a few things to optimize taxes for 2015. RRSPs, charitable donations, and tax-loss selling will be discussed here.   Registered Retirement Savings Programs (RRSPs) can be contributed to in 2015, and in the first sixty days of 2016 for the 2015 tax year. RRSPs are used to save for retirement. Contributions to your RRSP are tax-deductible (meaning it lowers your taxable income). It is limited to 18% of income, net of pension. More on RRSPs in a later blog.   Charitable donations are also good for year-end tax planning. There is a 15% tax […]
March 8, 2015

What is a Marginal Tax Rate?

A Marginal Tax Rate (MTR) is the tax rate (%) paid on each additional dollar earned. It is called ‘Marginal’ as it refers to the next incremental dollar earned. The tax rates change with higher income. The more income, the likely the tax rate is higher. Federally, there are currently (2014 tax year) four tax brackets: Pay 15% on the first $43,953. Pay 22% on every extra dollar between $43,953 and $87,907, and so on for two higher brackets. Provincially, there are many more tax brackets. This means a smaller increase in income is more likely to lead to an increase in […]