December 22, 2016

Big Tax Changes for Small Business (1 of 4)

The current Canadian government’s proposed C-29 will surprise a lot of small businesses. There will be big changes to what income is eligible for the Small Business Deduction. To be fair, some taxpayers were pushing the limits of the law. That being said, the government’s solution puts so much of a burden on small business that it threatens use of the Small Business Deduction. Over four blogs, I will explain what the Small Business Deduction is, who is eligible for the Deduction, describe the changes and why they are being made, and the outcome for small business. The Small Business […]
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 […]
November 2, 2016

JTWROS – Part 2

Previously, I discussed Joint Tenancy, and focused on JTWROS. I discussed how JTWROS led to capital gains issues. For that post, click here. Focusing on inheritance, Joint Tenancy with Right of Succession (JTWROS) is in part about Succession. If one person dies, the other often succeeds them in full title (100% ownership) of the asset. Sounds simple, and there is no problem if two people are involved. It is based on the Common-Law Presumption of Advancement, which basically means a property transferred to a spouse or child is presumed to be a gift and owned by the spouse or child. […]
October 30, 2016

Joint Tenancy: Be Careful!

Joint Tenancy With Rights of Succession (JTWROS) and Joint Tenancy-in-Common are becoming more and more popular. On the surface, they offer a fast-track of inheritance, avoidance of probate, and opportunity to provide asset management help. The fact is they are complex. JTWROS, for example, has complex tax and inheritance issues that require careful attention. As the population ages, succession to and inheritance of assets is becoming a more important issue. As Estates take a long time to clear for distribution, and as probate fees may be high, a quick alternative fix may seem attractive. JTWROS offers that, as well as […]
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 […]
February 18, 2016

Tax-Free Savings Accounts

Tax-Free Savings Accounts (TFSAs) allows adult Canadian residents to earn investment income (interest, dividends, and capital gains) on a tax-free basis. Contributions may be made throughout the year. Starting in 2009, contribution room for taxpayers was $5,000 or above. TFSA contribution room builds up over time. You or your tax preparer may check your contribution room online. Be warned, however, that if you contribute to a TFSA, and then withdraw from the TFSA, the contribution room is lost until January 1 of the next year. So, if I took $100 out of my TFSA in September, I would have to […]
February 2, 2016


Registered Retirement Savings Programs (RRSPs) are an excellent way to save for retirement and save on taxes. The benefits are that one can save for retirement in a tax-efficient way, and get an immediate tax deduction. A drawback is that RRSP money becomes taxed as income when it is withdrawn. First, RRSPs offer a tax deduction. Looking at the 2015 federal tax rates, there are four marginal tax rates. Someone making between about $43,000 and $87,000 is most common. At the federal level, every extra dollar that person makes is taxed at 22% (more provincially). RRSPs, as a deduction, reduce […]
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 22, 2015

Family Tax Credit

The New Family Tax Credit is just as it is written: a credit for families. There are a few limitations on it, including a cap in the dollar amount. It works best when the couple make different amounts. It also requires that the couple have a child under 18 years of age. It gets a little more complicated in some situations, so contact your tax professional for more information. Update: This credit was removed by the new government, so is only good for some previous years.