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Tax Alerts

Two quarterly newsletters have been added—one about personal issues, and one about corporate issues.

The Canadian tax system is a complex one, and while there are some deductions and credits—like RRSP contributions or charitable donations—which are familiar to just about every taxpayer, others are not so well known. One of those is the deduction which can be claimed by any taxpayer who must pay union dues or professional fees or professional liability insurance premiums.

Thousands of Canadians, usually retirees, spend some or all of the Canadian winter as far south of the border as possible, often in Florida or Arizona. While the declining value of the Canadian dollar has made such sojourns much more expensive, meaning that some vacation plans may have to be scaled back, many Canadians will be planning at least a short stay in a warmer place this winter.

One of the many changes resulting from developments in Canada’s economy over the past quarter century has been the need for, more or less, continuous learning. At one time, it was possible to set a career goal, acquire the necessary training or skills for that work and make a lifelong career in that field. It’s abundantly clear that that is no longer the reality for most Canadian workers, whatever their field of work.

Most Canadians are aware that the deadline for contributing to one’s registered retirement savings plan (RRSP) is 60 days after the calendar year end. Many also know that contributions to a tax-free savings account (TFSA) can be made at any time during the year. Consequently, when Canadians start thinking about year-end tax planning or saving strategies, RRSPs and TFSAs aren’t often top-of-mind. The fact is, however, that there are some situations in which planning strategies involving TFSAs and RRSPs have to be put in place by the end of the calendar year; some of those are outlined below.

Two quarterly newsletters have been added—one about personal issues, and one about corporate issues.

This month, millions of Canadians will receive unexpected mail from the Canada Revenue Agency (CRA). That mail will contain an unfamiliar form—a 2015 Instalment Reminder. On that form, the CRA suggests to the recipient that he or she should make instalment payments of income tax on September 15 and December 15 2015, and will identify the amount which should be paid on each date.

Earlier this year, it was announced that the annual contribution limit to tax-free savings accounts (TFSAs) would be nearly doubled, increasing from $5,500 to $10,000, and that that increase would be effective for the 2015 and subsequent tax years.

Fraud isn’t and never has been a seasonal business—every day of the year, attempts are made to cheat individuals out of their hard-earned income or savings. There are, however, times of the year when some types of scams are more prevalent and tax scams flourish during tax filing season.

As the end of the school year draws closer, and with it the start of two months of summer holidays, families who don’t have a stay-at-home parent (and likely some who do) must start thinking about how to keep the kids supervised and busy throughout the summer months. There is no shortage of options—at this time of year, advertisements for summer activities and summer camps abound—but nearly all the available options have one thing in common, and that’s a price tag. Some choices, like day camps provided by the local recreation authority can be relatively inexpensive, while the cost of others, like summer-long residential camps or elite-level sports or arts camps, can run into the thousands of dollars.

Keeping up with reporting, remitting, and payment obligations for income taxes, goods and services, or harmonized sales tax and employee source deductions is a constant headache for many small business owners, who would rather be spending their time working to grow their businesses. Staying on top of such obligations is particularly challenging for new small business owners, to whom all such calculations, forms, and remittance deadlines represent new and unfamiliar territory.

By the second week of May 2015, the Canada Revenue Agency (CRA) had processed about 22 million individual income tax returns filed for the 2014 tax year. Just under two-thirds of those returns (about 64%) resulted in a refund to the taxpayer. About 14% of returns filed and processed required payment of a tax balance by the taxpayer. Just under 20% were what are called “nil” returns – returns where no tax is owing and no refund claimed and the taxpayer is filing in order to provide income information which will be used to determine his or her eligibility for tax credit payments (like the Canada Child Tax Benefit or the HST credit).

Most older Canadians would prefer to stay in their own homes for as long as possible—so-called “aging in place”. Staying in one’s own home throughout retirement has a number of strong points—a familiar environment in a familiar community and, most often, more privacy, independence, and autonomy. There are financial advantages, as well, to aging in place. Care provided in an assisted-living setting (whether a retirement home, a long-term care facility, or a nursing home) is expensive. And, while home ownership means expenses as well, for most retirees the biggest home-related cost—mortgage payments—are no longer a concern.

Two quarterly newsletters have been added—one about personal issues, and one about corporate issues.

Spring is the traditional season for real estate sales and purchases, and the spring of 2015 is proving to be no exception. In fact, the residential real estate market is particularly active this year. According to statistics compiled by the Canadian Real Estate Association (CREA), “actual (not seasonally adjusted) activity in March stood 9.5% above levels reported in March 2014 and slightly above the 10-year average for the month.”

According to figures posted on the Canada Revenue Agency (CRA) website, the Agency had, by April 19, 2015, received almost 16 million 2014 individual income tax returns, and had processed slightly more than 14 million of those returns. Those returns already processed represent about half of the total number of returns to be filed for the year: last year, the total number of T1 individual income tax returns filed was just over 28 million.

There was much speculation—and more than a few hints dropped—that this year’s federal budget would include an increase in the amount which individual Canadians can contribute to a Tax-Free Savings Account (TFSA). That increase was announced as anticipated and, effective with the 2015 tax year, eligible individuals can now contribute up to $10,000 per year to a TFSA. The former limit was $5,500.

Most Canadians, especially those nearing retirement, have saved money through a registered retirement savings plan (RRSP). For all those individuals, no matter what the size of their RRSP or what other sources of retirement income they have, the same rule applies. By the end of the year in which they turn 71, an RRSP holder must collapse that RRSP. There are, essentially, three options available to the individual at that point. First, he or she can simply collapse the plan and have all funds in that plan treated (and taxed) as income for that year. Unless the amount within the RRSP is very small, that’s obviously not a tax-efficient plan, and not a recommended one. Second, the individual can collapse the RRSP and use the funds to purchase an annuity, which will provide a (taxable) income stream for the term of the annuity. That term can be for a fixed number of years, or for the rest of the individual’s life, or some combination of the two. The advantage of an annuity is that it does provide income security for the individual. However, annuity payout rates are based on the interest rates in effect at the time the annuity is purchased, and the current low interest rate environment means that annuity rates are not currently, by historic standards, particularly generous.

An old but still valid axiom of tax planning is that the best year-end tax planning starts on January 1st. The concept of year-end tax planning as a year-round activity may indeed be the ideal, but it’s certainly not the reality for most Canadian taxpayers. Some may be alerted to the need to think about current-year taxes by the approach of the calendar year end, while others have their memories jogged by an imminent RRSP contribution deadline. For many (if not most) Canadians, however, taxes aren’t thought of until it’s time to complete the annual tax return. But, even for those taxpayers, options to reduce the annual tax bill are still available, through careful completion of that return.

Two reports released recently by Statistics Canada and by Canadian credit reporting agency TransUnion indicate that Canadians continue to rack up household and personal debt, but also that they might, perhaps, be getting better at managing that debt load.

Like the rest of the world, the Canada Revenue Agency (CRA) has moved in recent years to dealing with its client group—the Canadian taxpayer—online, through the Agency’s website. To do so, the CRA has steadily expanded its roster of online services, while at the same time reducing or eliminating the in-person, telephone, or paper service options it once provided.

For even the most determined of procrastinators, the deadline for filing an individual income tax return for the 2014 tax year is imminent. That deadline will come on Thursday, April 30 for most Canadians, and on Monday, June 15 for the self-employed and their spouses.

Canadians whose adult memories reach back a quarter century to the early 1990s will likely remember a series of television ads picturing middle-aged individuals or couples enjoying life in an idyllic setting, the result of having retired at the age of 55. The concept of that a financially comfortable retirement could be achieved before the traditional retirement age of 65 was a relatively novel one, and for working Canadians of that generation, the term “Freedom 55” came to represent an ideal.

As our tax system has become more and more complex, the number of individuals willing to brave the annual trip through 485 lines of the tax return and a 68-page tax guide on their own is declining. Consequently, the percentage of Canadians who have their return prepared by someone else with, presumably, more expertise has continued to increase.

Spring is, of course, income tax return filing season in Canada, and over the next four months millions of Canadians will file a return for the 2014 tax year. The filing deadline for this year is Thursday, April 30 for most taxpayers, and Monday June 15 for self-employed taxpayers and their spouses.

Every annual tax filing season brings with it a number of changes to the annual return. In some years those changes are broad-based, affecting large numbers of taxpayers, while in others the changes are more targeted, and of interest to only specific groups within the overall population.

Two quarterly newsletters have been added—one about personal issues, and one about corporate issues.

Canadian taxpayers don’t need a calendar to know that the registered retirement savings plan (RRSP) contribution deadline is approaching—the glut of television, radio, and internet ads which fill the airwaves and computer screens this time of year are reminder enough. And, while RRSP planning and retirement planning generally are best approached as an ongoing, year-round activity, it is true that an imminent deadline tends to focus the minds of taxpayers on such issues.

The announcement of a change in our tax laws to permit income splitting within families in order to reduce the overall family tax burden has received a lot of attention in the media of late. What’s not as well known is the fact that older Canadian taxpayers have in fact been able for several years to benefit from a similar income splitting strategy. Generally speaking, the opportunity to split pension income is available to couples who are 65 and over, and are receiving income from either RRSP/RRIF savings or from an employer-sponsored pension plan.

The early months of the new calendar year can feel like a never-ending series of bills and other financial obligations. Credit card bills from holiday spending, or perhaps a mid-winter vacation, are due or coming due. The RRSP deadline of March 2, 2015 is approaching, and the April 30, 2015 deadline for payment of 2014 taxes owed is not far behind.

As everyone knows—even those who aren’t parents—raising children is expensive. Even though basic needs like education and health care are publicly funded, there is still a never-ending list of discretionary and non-discretionary costs to be paid.

Planning for 2015 taxes even before the New Year is rung in may seem more than a little premature. Nonetheless, taking some time to review one’s tax situation—and perhaps putting a few strategies in place—at the beginning of the year can help avoid a cash flow crisis or other financial shock when the RRSP contribution deadline looms or it is tax filing (and tax payment) time in the spring of 2016. And, while many tax-planning and tax-saving strategies can be implemented throughout the tax year, getting an early start on such planning usually leads to the best results.

The Employment Insurance premium rate for 2015 is 1.88%.

The Canada Pension Plan contribution rate for 2015 is unchanged at 4.95% of pensionable earnings for the year.

Dollar amounts on which individual non-refundable federal tax credits for 2015 are based, and the actual tax credit claimable, will be as follows:

The indexing factor for federal tax credits and brackets for 2015 is 1.7%. Consequently, the following federal tax rates and brackets will be in effect for individuals for the 2015 tax year.

Each new tax year brings with it a listing of tax payment and filing deadlines, as well as some changes with respect to tax-planning strategies. Some of the more significant dates and changes for individual taxpayers for 2015 are listed herein.

In virtually every province and territory, the winter of 2014-15 has arrived early. Although the calendar may say that it’s still autumn, Canadians right across the country have already had to take out the snow shovels and re-learn winter driving skills. It’s no surprise, then, that the thought of escaping the Canadian winter for at least for a few weeks or months for a vacation down south is a priority for many Canadians.

It seems incongruous to talk about taxes in relation to seasonal holiday celebrations. And, while it’s true that there are no tax implications to most holiday events and traditions, unexpected tax consequences and costs can arise where gifts and celebrations take place in the context of an employment relationship.

While individual tax returns for 2014 don’t have to be filed, at the earliest, until April 30, 2015, it’s worth taking the time now to evaluate one’s tax situation and consider possible strategies to reduce the tax bill for 2014. With the exception of RRSP contributions (in most cases) and pension income splitting, tax-planning strategies intended to reduce one’s tax payable for this year must be put in place by December 31st, 2014. And, perhaps the only thing more frustrating than finding, on filing a return, that money is owed to the government is the realization that the option of taking steps to reduce or eliminate that tax bill is no longer available.

The prospect of being able to split income within a family group so as to reduce overall tax payable has been on the tax horizon for a few years now. A recent announcement indicates that the federal government intends to make such income splitting possible—to a certain extent.

Two quarterly newsletters have been added—one about personal issues, and one about corporate issues.

To an ever-increasing degree Canadians, including Canadian businesses, are managing their tax affairs and dealing with the Canada Revenue Agency (CRA) online, through the CRA website. That’s a trend that the Agency is eager to encourage and, to that end, it continues to add to the kinds of services and options which are available through the website. The most recent such changes add to the services available to Canadian businesses through the website service My Business Account.

After getting off to a somewhat bumpy start when they were first introduced in 2009, tax-free savings accounts (TFSAs) have become extremely popular with Canadians. The misunderstandings and mistakes which were all too common during the rollout of the program now occur with less frequency, and most Canadians who put aside savings on a regular basis have utilized TFSAs as a tax and savings vehicle.

As the number of Canadians approaching retirement age increases, so too does the concern that not enough of them are financially prepared for that retirement. Those concerns arise from two sources. First, the number of Canadians who are members of employer-sponsored registered pension plans has declined steadily over the past few decades, and now fewer than one-third of Canadian workers can count on receiving payments from such a plan in retirement. Even fewer are covered by the “gold standard” of pension plans—a defined benefit pension plan—which guarantees the payment of benefits at a pre-determined amount throughout retirement. Second, Canadians who are not members of registered pension plans are able to save for retirement through registered retirement savings plans (RRSPs). However, while many Canadians do contribute to their RRSPs each year, the amount contributed is, in many cases, significantly less than the maximum possible contribution which can be made by an individual for the year. As well, many Canadians have a significant RRSP contribution carryforward amount, indicating a pattern of contributing less than the allowable maximum in previous years.

Providing children with the opportunity to participate in organized sports or other athletic activities can be a very expensive undertaking. The cost of enrollment in such programs is sometimes just the start, as parents also face expenditures for uniforms and equipment (which children inevitably outgrow) and, sometimes, the cost of travel to games or tournaments.

It’s a fact of life that since 9/11 any kind of travel—especially cross-border travel to the United States—has become a much more time-consuming and difficult process. Greater security measures have led to increased documentation requirements, more restrictions on the contents of carry-on bags, earlier check-in times at airports, and much longer line-ups resulting in delays at land border crossings.

Being charged a fee for just about every bank service from using an ATM to making an e-transfer of funds to simply receiving a printed bank statement each month is a perennial irritant to many Canadians, as is the fact that such fees seem to increase on a regular basis. Canadian banks have sometimes been willing to waive or reduce such charges for some groups, such as seniors or students, but policies haven’t been consistent from bank to bank and could be changed or even eliminated at the bank’s discretion.

Receiving unexpected correspondence from the tax authorities is almost guaranteed to unsettle the taxpayer who receives that correspondence, even where there’s no reason to believe that anything is wrong. But, as the Canada Revenue Agency (CRA) begins its annual post-assessment tax return review process in the summer and fall, it’s an experience which will soon be shared by millions of Canadian taxpayers.

The federal government has announced that small and medium-sized Canadian businesses will be able to pay lower employer EI premiums, beginning January 1, 2015. While the program recently announced by the Minister of Finance is entitled the “Small Business Job Credit”, the credit actually operates by reducing, for a two-year period, the portion of Employment Insurance premiums paid by employers.

During the month of August, millions of Canadians received unexpected mail from the Canada Revenue Agency (CRA) containing an unfamiliar form—a 2014 Instalment Reminder. On that form, the CRA suggested to the recipient that he or she should make instalment payments of income tax on September 15 and December 15, 2014, and identified the amount which should be paid on each date.

The Canada Revenue Agency (CRA) is constantly seeking to enhance and upgrade its online services, and to encourage Canadians to manage their tax affairs through the Agency’s website. Those efforts have taken another step forward with the release of the CRA’s newest mobile app for small and medium-sized businesses.

Recently the Fraser Institute released a study (The Canadian Consumer Tax Index, 2014 edition) indicating that, for 2013, the payment of taxes consumed just under 42% of the average family’s income, and that the tax bill of the average Canadian family had increased by 1,832% percent since 1961. Both were startling figures and the results of the study were consequently widely reported in the media. As with all statistical studies and results, it’s useful to look behind those figures to understand the underlying data and methodology, and how the figures were arrived at.

Living with a significant disability, whether physical or mental, isn’t easy. In many instances, that disability can prevent an individual from working, or limit the person to part-time work, both of which affect financial well-being. In addition, disabled Canadians often must incur expenses not faced by other Canadians in order to enable them to live as independently as possible.

Two quarterly newsletters have been added—one about personal issues, and one about corporate issues.

Virtually all businesses in Canada which sell goods or services must collect goods and services tax (GST) or harmonized sales tax (HST) from purchasers of those goods and services. However, an exemption is provided for businesses whose taxable sales for a single quarter or over the previous four quarters total less than $30,000. Such businesses are known as "small suppliers", and they are not obligated to register for GST/HST purposes. Such businesses may, however, register voluntarily, in order to be able to claim input tax credits on the GST/HST they pay on their own purchases. Where such voluntary registration is done, the business must then remit GST/HST amounts collected on its own sales of goods and services to the federal government.

Canadians benefit from a health care system in which the cost of health care is paid out of public funds and the standard of care is equal to any in the world. While in other countries the cost of treatment for a major illness can literally push an individual or family into bankruptcy, Canadians can be assured that getting good medical treatment in Canada does not depend on having the money to pay for such treatment.

Canada’s mortgage lending rules (and banking practices in general) have always been more stringent and conservative that those which prevail in the United States. In large part because of that, Canada was spared the lending crisis which took place in the U.S. in 2007-2008, after a significant number of ill-advised sub-prime mortgages went into default and eventual foreclosure.

As summer starts winding down, post-secondary students will start thinking about choosing courses and finding a place to live during the coming academic year. Their parents’ attention will more likely be focused on the cost of that year, and the upcoming deadlines for payment of first semester tuition and housing costs.

Although they aren’t usually thought of in those terms Canadian charities, as measured by the amount of money they receive and administer, can be big businesses. However, because they collect and dispense that money in order to support and advance causes which create a public benefit, charities are accorded special status under our tax laws. Our tax system effectively subsidizes the activities of charitable organizations by providing a tax deduction or tax credit to companies and individuals that contribute to those organizations. To ensure that their activities are in furtherance of their charitable purposes, charities are required to file an annual information return outlining those activities. Recent changes made to that information return focus on situations in which political activities are undertaken by registered charities.

Tax-free savings accounts (TFSAs) were first made available by the federal government in 2009. While there were some early difficulties which led to many taxpayers inadvertently breaching TFSA rules, Canadian taxpayers and their financial advisers have now become accustomed to using TFSAs as a standard part of financial, tax, and retirement planning.

It goes without saying that developments in technology have made their mark in just about all areas of personal and business life. One of those changes has been the use of computer systems to record and document business transactions, including point-of-sale (POS) transactions in retail businesses. And, inevitably, the use of such systems has given rise to the development of software intended to defeat them. The possession and use of such software—known as electronic suppression of sales (ESS) software or, more familiarly, “zapper software”, is now an offence under Canada’s income tax and excise tax legislation.

It’s not unusual for a taxpayer to disagree with the Canada Revenue Agency’s (CRA) assessment of his or her tax return. When that happens, the first step is to get in touch with the CRA, by phone or letter, to determine just where the disagreement lies and whether it can be resolved. Where the CRA and the taxpayer can’t come to an agreement or compromise on what the taxpayer’s tax liability for the year should be, it’s time to move to the next level.

The picture that many Canadians have of corporate directors is that of a highly-paid director of a blue-chip multinational, travelling on the company jet to attend directors meetings in exotic locations. While there are certainly corporate directors who fulfill that perception, the reality is most Canadian companies are small or medium-sized owner-managed businesses. In such small operations, it’s not unusual for family members or friends to be asked to become directors of the company—often, when the business is first incorporated. In other instances, someone may agree to sit on the board of a local non-profit organization, as a way of supporting the activities of that organization. While many directors, especially first-time directors of small companies, view their position as purely nominal or honorary, the fact is that taking a position as a corporate director means taking on very real responsibilities. And, no matter what size the company or organization may be, the responsibilities of those directors are the same.

The spring and summer months are the traditional time for moving in Canada. Moving during these months allows Canadians to both take advantage of the warmer weather and to get settled into the new location in time for the upcoming school year. Canadians move for a lot of reasons—a new job or a job transfer, moving to be closer to family, moving when a growing family needs a larger home or, conversely, downsizing in anticipation of retirement. Whatever the reasons and whatever the distance, however, moving always involves costs and stress. Whether it’s the cost involved in preparing the current home to be put on the market, trips to the new location to search for a home, or just the cost of packing and transporting one’s belongings and driving to the new location, the financial outlay of moving can be considerable. In some circumstances, however, our tax system will provide for a deduction to help offset moving costs.

By now, most Canadians, (with the exception of the self employed and their spouses, who have until June 16) will have filed their 2013 income tax returns. And, since the goal of the Canada Revenue Agency (CRA) is to have returns processed and assessed within a maximum of six weeks from the time of filing, many of those who have filed will by now have received a Notice of Assessment for their 2013 return from the CRA.

ll Canadian businesses must report and pay tax on any income arising from their business activities, whether those activities are carried out from a traditional bricks and mortar office or storefront, or through one or more websites. The Canada Revenue Agency (CRA) has become increasingly concerned, in recent years, about income generated through e-commerce on the Internet, and particularly about the possibility that such income may go unreported and therefore untaxed.

Two quarterly newsletters have been added—one about personal issues, and one about corporate issues.

While the recent publicity around the “Heartbleed” computer bug has highlighted the vulnerability of taxpayers to gaps in computer security systems, such security glitches aren’t the only way in which the personal data of taxpayers can be compromised or taxpayers can be victimized by scams. Fraud isn’t, unfortunately, a seasonal business—every day of the year, attempts are made to cheat individuals out of their hard-earned savings or property. That said, the fact that it is tax-filing season makes it easier for those seeking to defraud others to carry out such ventures by passing themselves off as representatives of the Canada Revenue Agency.

Watching gas prices rise as the weather grows (slightly) warmer is a regular experience for Canadians—a rite of spring, if you will. The difference this year is that gas prices, which are, in mid-April, already at a three-year high in some provinces (at around $1.50 per litre in Montreal and Vancouver) seem likely to break new records this summer.

The issue of retirement financing is a hot topic these days. The concern is that too many Canadians are not financially prepared for retirement or, put more bluntly, that many of those approaching retirement simply won’t have sufficient resources to support them throughout their retirement years.

By now, almost everyone has heard of the “Heartbleed” computer bug, a programming error which left many computer systems around the world vulnerable to unauthorized access.

Over the past few years, there have been a lot of changes to the Canada Pension Plan, both in terms of contributions made to the plan, and with respect to the receipt of CPP retirement benefits. One of the least well-known and least understood of those changes is the CPP Post-Retirement Benefit, or PRB.

While most Canadians try to avoid the inevitable for as long as possible, there’s no escaping the fact that the tax payment deadline (for all Canadians) and the tax filing deadline (for the majority of Canadians) is now only a few weeks away. For all individual Canadians, the deadline for payment of all income taxes owed for the 2013 tax year is Wednesday, April 30, 2014—no exceptions and, in the absence of very unusual circumstances, no extensions.

By the beginning of April (and usually earlier), Canadian taxpayers will have in hand all of the information needed to prepare their 2013 income tax returns. Employers who issue T4 slips to their employees and financial institutions which provide T5 slips outling investment income (including interest and dividends) earned during 2013 by investors must issue such information slips to employees, shareholders, and account holders by the end of February 2014. Self-employed taxpayers, who must calculate their own business income for 2013, will certainly be in a position to do so by the end of the first quarter of 2014. Finally, retirees who receive pension income, either from a former employee or from the Canada Pension Plan or Old Age Security program will have received T4A information slips from the pension plan administrator or the government of Canada documenting that income for 2013.

By the time most Canadians sit down to organize their various tax slips and receipts, and undertake to complete their tax return for 2013, the most significant opportunities to minimize the tax bill for the year are no longer available. Most such tax-planning or saving strategies, in order to be effective for 2013, must have been implemented by the end of the calendar year. The major exception to that is, of course, the making of registered retirement savings plan (RRSP) contributions, but even that had to be done on or before March 1, 2014 in order to be deducted on the return for 2013.

This time of year the taxes that most Canadians are thinking of are the 2013 income taxes due on April 30. However, many Canadians will be reminded that the Canada Revenue Agency (CRA) is already thinking of taxes which will be owed for 2014 when they find an instalment reminder in their mail. For Canadians who have received many of such notices in the past, the reminder and the tax instalment process are familiar, although not necessarily welcome. For those who are new to that process, however, both the reminder itself and figuring out how to deal with it can be baffling.

With all the focus this time of year on making RRSP contributions and getting one’s 2013 tax return in on time, it may seem premature to start thinking of how to minimize tax payable for 2014. There nevertheless remain reasons why this is, in fact, a good time to be contemplating one’s tax liability for the current year

Pension income splitting is likely the best tax benefit around that almost no one knows about. It is also likely to be one of the few exceptions to the rule that if something sounds too good to be true, it probably is. What pension income splitting offers is the opportunity to save tax without any expenditure of time or money, or any need to pre-plan. In a nutshell, pension income splitting allows married taxpayers over the age of 65 (or, for some types of income, those over the age of 60) to, when filing their tax returns, divide their private pension income in a way which creates the best possible tax result, meaning the lowest possible tax bill.

The one constant in tax is change. As such, the income tax return form filed by millions of Canadians each spring is never exactly the same as the one filed for the previous year. In certain years changes are broad-based, affecting a substantial percentage of tax filers, while in other years (like this one) those changes are narrower in their application and effect.

Under Canadian law, all residents of Canada are subject to Canadian income tax. However, the reach of the Canadian tax system does not stop at the Canadian border, as all Canadian residents are taxable on their worldwide income, no matter where that income arises.

The growth in the use of digital currency has been increasingly in the news over the past year as the price of the most well-known type of digital currency, bitcoin, has increased significantly and its use more mainstream. Bitcoin ATMs are now available in three Canadian cities (Vancouver, Toronto, and Ottawa) and certain online retailers now accept them as a payment method.

Although the winter of 2013-14 is barely half-way over, many Canadians must feel as though it has already worn out its welcome. Even before winter officially started on December 21, much of the country had already experienced unusually cold temperatures. That was followed by ice storms and blizzards which disrupted holiday travel and left hundreds of thousands of Canadians stranded or without power, in many cases for several days.

Soon, television and radio, as well as the internet, will be filled with advertisements reminding Canadians that it is, once again, registered retirement savings plan (RRSP) season.

Two quarterly newsletters have been added -- one about personal issues, and one about corporate issues.

The Canada Pension Plan contribution rate for 2014 is unchanged at 4.95% of pensionable earnings for the year.

The indexing factor for federal tax credits and brackets for 2014 is 0.9%. Consequently, the following federal tax rates and brackets will be in effect for individuals for the 2014 tax year ...

Talking about planning for 2014 taxes when the year has barely started may seem more than a little premature. Nonetheless, taking some time to review one’s tax situation – and perhaps putting a few strategies in place – at the beginning of the year can help avoid unpleasant surprises (or even a cash flow crisis) at the end of the year, or at tax filing time in the spring of 2015. And, while tax planning and tax saving strategies can, in most cases, be implemented throughout the tax year, getting an early start on such planning usually leads to the best results.

The Employment Insurance premium rate for 2014 is 1.88%.

Dollar amounts on which individual non-refundable federal tax credits for 2014 are based, and the actual tax credit claimable, will be as follows ...

Each new tax year brings with it a listing of tax payment and filing deadlines as well as changes with respect to tax planning strategies. Some of the more significant dates and changes for individual taxpayers for 2014 are listed below.

The time of year is approaching when many Canadian employees look forward to something “extra” from their employer such as a Christmas or Hanukkah gift, a year-end bonus, or an invitation to the annual employer-sponsored holiday party. While it doesn’t necessarily fit well with the holiday spirit, it’s a fact that many such gifts (even, sometimes, attendance at the annual employee holiday party) may have tax consequences, sometimes in unexpected ways.

Every year, thousands of Canadians (mostly retirees) escape our winter by traveling south, usually to the U.S., for periods lasting up to even the entirety of winter. And while the value of the Canadian dollar relative to the U.S. dollar changes on a daily basis, the two currencies have been close to par now (or the Canadian dollar above par) for the last few years, making the cost of such a vacation easier to manage.

As December 31st approaches, the need to decide on and implement tax planning strategies for the year becomes top-of-mind for many Canadians. Under general tax rules, tax-free savings account (TFSA) contributions and withdrawals can be made at any time during the year, and registered retirement savings plans (RRSP) contributions for 2013 don’t generally have to be made before March 1, 2014. As outlined below, there are some situations, however, in which planning strategies involving TFSAs and RRSPs have to be put in place by the end of the calendar year.

Canadians have a well-deserved reputation for responding with generosity to assist those affected by natural disasters, and the current crisis in the Philippines is no exception. As of mid-November, almost $20 million in private donations had been raised for relief efforts following the November 8th typhoon.

Two quarterly newsletters have been added -- one about personal issues, and one about corporate issues.

The current fiscal year of the federal government runs from April 1, 2013, to March 31, 2014, and the Department of Finance has released revenue and expenditure figures for the first quarter of that fiscal year. The federal government’s budgetary position at the end of the first quarter is summarized in The Fiscal Monitor, available on the Department of Finance website at

With the exception of RRSP contributions (in most cases) and pension income splitting, any tax planning strategies intended to reduce one’s tax payable for 2013 must be implemented by the end of the calendar year.

Since they were introduced in 2009, TFSAs (tax-free savings accounts) have proven to be a popular vehicle for Canadians seeking to put money aside, whether for a specific future goal like a vacation or a new car, or just as tax-sheltered savings against the proverbial rainy day.

The internet has changed many aspects of the way business is conducted, and the Canadian tax system has had to adapt to those changes, as the tax authorities seek to keep pace with types of business structures and transactions that were unknown a short time ago.

Most business owners want to spend the minimum amount of time possible on tax-related matters, and to get such matters dealt with and resolved as quickly as possible. The Canada Revenue Agency shares at least the second objective, and is continually rolling out services which try to streamline requirements and speed up the processes which business owners must follow to meet those requirements.

For most Canadians, spending hard-earned money on legal fees is about as appealing a prospect as paying income taxes. And, to make matters worse, a need for legal services is often associated with life’s more unwelcome occurrences (e.g., divorce, death, job loss, etc.). About the only thing that mitigates the pain of paying legal fees (aside, hopefully, from a successful resolution of the problem that created the need for legal advice) is being able to claim a tax credit or deduction for the fees paid.

For many Canadians planning their retirement, a pervasive worry is outliving one’s savings. A big part of the reason why they fear such an eventuality is that such savings could as a result of unexpected major medical costs be depleted.

The Canada Revenue Agency wants Canadians to deal with their tax affairs – especially the filing of their annual tax returns – online, rather than in the traditional paper format. For several years, the CRA has sought to move Canadians to the online management of their taxes and benefits by pointing out the benefits of doing so like the faster processing of returns and the quicker receipt of refunds. This year, those efforts also included no longer mailing a personalized return form to Canadians.

The fact that Canadians, both individually and in family units, are carrying a lot of consumer debt isn’t news and hasn’t been for some time. Consumer debt levels hit a then-record of 108% of disposable income in the fall of 2005, rising to 162% of disposable income as measured in the fall of 2012. The National Consumer Credit Trends Report for the second quarter of 2013, as recently released by Equifax Canada, confirms a continuing trend of rising debt but also reveals a surprising and troubling new pattern to that debt acquisition.

For Canadians who came of working age in the immediate post-war era and who retired before the advent of the new millennium (generally, the parents of today’s baby boomers), retirement planning was a relatively straightforward proposition. For nearly all such individuals, a lifetime of working (often for a single employer) was followed at age 65 by a complete departure from the work force, the start of collecting their Canada Pension Plan and Old Age Security benefits (often an employer-paid pension), and settling into a comfortable retirement.

The Canada Revenue Agency doesn’t publish information or statistics on the number of individual taxpayers who owe it money in the form of back taxes, interest, or penalties. Nonetheless, it is a safe assumption that some percentage of the 25 million or so Canadians who filed a tax return this past spring either couldn’t pay their 2012 taxes when due or still owe money from past years – or both. Being unable to pay one’s bills on time and as due obviously isn’t desirable no matter who the creditor is. There are, however, a number of detailed reasons why owing money to the tax authorities is a particularly bad situation to be in.

Canadians who choose self-employment generally enjoy more autonomy in their working lives and can claim a number of tax benefits not available to those who earn their income from employment. What the self-employed have to do without, however, is the security that comes from being covered under Canada’s Employment Insurance program as those who are self-employed can only count on receiving income when working. By contrast, Canadians who work as employees can, in almost all cases, receive Employment Insurance (EI) benefits when they are temporarily out of the work force because of a job loss, illness, or the birth or adoption of a child. Such EI benefits were, until recently, not available to the self-employed.

It shouldn’t be news to anyone that while the cost of obtaining a post-secondary education continues to rise, the government’s financial support of post-secondary institutions has, no less, declined. Additionally, the generous government student loan and grant programs available to earlier generations of students are no longer as generous as they once were. A realistic annual budget (including tuition, residence, and textbooks) for even a general arts or science undergraduate program now runs between $15,000 and $20,000. And, where a student decides to pursue post-graduate work or to enter a professional study program like law, dentistry, or medicine, those costs will skyrocket.

Though it is obviously preferable, when it comes to taxes, filing on time and making sure the information provided to the CRA is complete and accurate (as each taxpayer must certify on the last page of his or her return) is not always guaranteed. For any number of reasons, taxpayers may put off what everyone agrees is an unpleasant task and consequently find themselves several years in arrears with respect to filing (which is sure to only compound their difficulties). Others may have filed returns on time but have understated income or falsely inflated expenses in order to reduce the amount of tax payable. The dilemma which then arises, of course, is whether to come clean with the tax authorities or to keep quiet and hope that the failure to file, or error or omission, is never discovered.

August is the month in which millions of Canadian taxpayers receive an instalment reminder from the Canada Revenue Agency. In some cases, taxpayers are receiving such a notice for the first time and are often at a loss to know what it means and how to respond.

The baby boom generation, whose members are now between the ages of 48 and 67, is also known, with good reason, as the “sandwich generation”. Many baby boomers are now in the position of needing to provide some degree of practical support or care to aging parents while also trying to save for their own retirement and to provide for their children. Those children are, in many cases, enrolled in costly post-secondary education programs or, having finished their education, remain living in the family home.    

As July arrives and the school year has ended, families that do not have a stay-at-home parent have to make plans for keeping the kids busy and supervised over the school summer vacation. There is no shortage of options—at this time of year, advertisements for summer camps and summer activities abound—but nearly all the available options have one thing in common, and that's a price tag. Some choices, like day camps provided by the local recreation authority can be relatively inexpensive, while the cost of others, like summer-long residential camps or elite-level sports or arts camps, can run into the thousands of dollars.

By now, both the filing and payment deadlines for 2012 individual income tax returns and tax payments have passed. Those who had a balance owed for 2012 are being charged interest on any amount outstanding and those who have not yet filed but who owe money on filing have been (or will be) assessed a late-filing penalty of at least 5% of that amount. (Higher penalty amounts apply where there has been a recent prior instance of late filing.)

The Canada Revenue Agency (CRA) is required to review and assess each tax return filed by a taxpayer, and the law requires such assessment to be carried out and communicated to the taxpayer "with all due dispatch". In practical terms, the CRA manages to issue an assessment for most tax returns filed within six to eight weeks after the filing takes place. Once the assessment is issued, the taxpayer then has the right to dispute any part of that assessment. Generally, once a taxpayer files a Notice of Objection to an assessment issued by the CRA, the CRA is prohibited from taking any collection action in respect of the taxes contained in that assessment.

In the second quarter of 2005, the average debt load carried by Canadian families hit a new record, and it wasn't a record to celebrate. In that quarter, for the first time, Canadian households carried about $1.08 in debt for every dollar of their disposable income – in other words, their debt load was, on average, 108% of disposable income. And after that, the news just kept getting worse, as average debt loads climbed higher and higher. By the fall of 2012, the average debt load of Canadian families stood at 162% of net income, having risen by almost two-thirds over the previous 7 years. Perhaps even worse, much of that debt was unsecured debt, mostly in the form of unsecured lines of credit and credit cards. At the end of 2012, the average Canadian individual (not family) was carrying just over $27,000 in personal (non-mortgage) debt.

The underground economy has always been a source of lost tax revenues, and consequently has always been a concern for both federal and provincial governments. Whether it's cash wages paid for casual labour or a "cash discount" for payments for goods or services supplied, transactions which go unrecorded mean lost tax revenue, whether on the income tax or sales tax side.

Spring and summer are, in any year, typically the busiest season for real estate sales and, consequently, the time when most moves take place. It's also the season when many post-secondary students are moving home for the summer and back to school as fall approaches. For any number of reasons, therefore, a lot of people will be moving this summer.

The availability and type of benefits offered by an employer can be a significant factor in a prospective employee's decision on whether to accept a particular job offer. One of the considerations governing choices made by an employee is whether a particular benefit is taxable or not. As of the 2013 taxation year, new considerations will come into play as changes in the assessing policies of the Canada Revenue Agency (CRA) will make some formerly non-taxable benefit amounts taxable to Canadian employees.

By early June, the Canada Revenue Agency (CRA) has issued millions of Notices of Assessment for 2012 individual income tax returns which were filed earlier this year. When a taxpayer files his or her income tax return, the figures reported on that return— income, deductions, credits and, at the end, total tax payable for the year—represent the taxpayer's best understanding of what each of those amounts are for the year. The Notice of Assessment, in turn, outlines the CRA's conclusions with respect to the same amounts.

Two quarterly newsletters have been added -- one about personal issues, and one about corporate issues.

Two quarterly newsletters have been added—one about personal issues, and one about corporate issues.

Canadians have a well-deserved reputation for supporting charitable causes, through donations of money and goods. Our tax system supports that generosity by providing a tax credit, at both the federal and provincial/territorial levels, for donations made.

Beginning July 1, 2013, Canadians who are 65 years of age will, for the first time, need to decide when they want to begin receiving their Old Age Security benefit.

As of the middle of April, the Canada Revenue Agency (CRA) had received just under 10 million individual income tax returns for the 2012 tax year. It’s a near certainty that some number of those 10 million tax filers will discover, after the return is filed, that a mistake was made—that information on some sources of income was inadvertently omitted, that figures were stated or added incorrectly, or that a deductible or creditable expense or expenses were overlooked.

A little-noticed provision contained in this year’s federal budget could result in some business owners not receiving their GST/HST refunds as expected.

Virtually all businesses in Canada must register for GST/HST purposes. Excluding businesses in certain specialized sectors (like charities), all businesses which have annual taxable sales of goods and/or services (that is, sales on which harmonized sales tax (HST) or goods and services tax (GST) must be charged) totaling more than $30,000 must register their business for GST/HST purposes.

In recent years, the Canada Revenue Agency (CRA) has moved increasingly toward providing taxpayer services for both individuals and businesses online, and toward having taxpayers handle all or nearly all tax-related matters through the CRA Web site.

In the 2011 federal Budget, the federal government announced a hiring credit for Canadian small businesses, to provide an incentive for such businesses to take on new employees. That program provided small business owners with a tax credit equal to any year-over-year increase in EI premiums paid by the business. The maximum credit available was $1,000 and any amount receivable was automatically credited to the employer’s payroll account with the Canada Revenue Agency (CRA). There was no requirement for the business owner to apply for the credit, as any available credit amount would be calculated by the CRA from the T4 information filed by the business for the current and previous taxation years. For purposes of the credit, a small business owner was defined as one whose total employer EI premiums for the previous year was $10,000 or less. Employers who created a new business would also be eligible for the credit.

Judging from news coverage, the two personal finance issues which are top of mind for Canadians right now (aside from the amount of debt held by Canadian families) are the state and future direction of the Canadian real estate market and the extent to which Canadians are saving adequately for retirement. And for many Canadians who are approaching retirement, those two issues are very much intertwined.

For even the most determined of procrastinators, there’s no escaping the fact that the deadline for filing and payment of individual income taxes for the 2012 taxation year is now only a few weeks away. This year, the Canada Revenue Agency (CRA) has made a number of changes in its administrative practices with respect to filing of returns, and those changes have come with their share of glitches, which may make filing—especially last-minute filing—more challenging.