Français

Newsletters

Tax Alerts

Tax-free savings accounts (TFSAs) have been part of the Canadian tax system now for nearly a decade, and millions of Canadians utilize them as a savings vehicle, whether for short-term or long-term purposes.

Of all of the tax-deferral or tax-savings plans available to Canadians, TFSAs undoubtedly provide the greatest flexibility, as the TFSA rules allow taxpayers to both carryover allowable contribution room to future years and to re-contribute amounts withdrawn. However, that very flexibility (especially the ability to re-contribute previous withdrawals) also has the potential to cause taxpayers to run afoul of the rules by getting into an inadvertent overcontribution position, resulting in the imposition of penalty taxes.


As the Canada Revenue Agency (CRA) notes on its website, new tax scams are devised every single day of the week. And, despite the cautionary tales which appear frequently in the media and the warnings posted by the CRA on its website, Canadians continue, with regularity, to fall victim to each new (and old) tax scam and tax fraud.


The variety of amounts and kinds of income, deductions taken, and credits claimed on individual income tax returns filed by Canadians each spring is almost limitless. Each of those returns, however, has one thing in common, and that is that each will be assessed by the Canada Revenue Agency (CRA), which will then issue a Notice of Assessment summarizing the Agency’s conclusions with respect to the information filed by the taxpayer. Most important, from the taxpayer’s point of view, the CRA will communicate the amount of federal and provincial tax it believes the taxpayer is required to pay for the tax year just passed.


By now, halfway through the 2017 tax year, almost all Canadian individual taxpayers will have filed their income tax return for 2016, and most will have received the Notice of Assessment which summarizes their tax situation for that year – income, deductions, credits, and tax payable.


In recent years, it seems that the arrival of spring has coincided with a natural or man-made disaster somewhere in Canada. Spring is also, of course, tax return preparation and filing season for most Canadian taxpayers, but it’s likely taxes were the last thing on the minds of families and individuals affected by this spring’s floods. And, in most cases, those families and individuals will not be penalized for failing, in such circumstances, to fulfill their tax obligations in a timely way.


For many years, post-secondary students have financed their educations in part through private savings and often in part through government student loans, which are generally interest-free while the student is in school. As well, the bulk of costs incurred to attend post-secondary education (or to finance it) have been eligible for a tax deduction or credit, at both the federal and provincial/territorial levels. Beginning in 2017, however, changes to that regime at both the federal level and in some provinces will mean changes to the way students (and their parents) pay for post-secondary education.  


If spring is the season for real estate sales in Canada, then summer is the time when all those real estate buyers and sellers pack up their belongings and move to their newly purchased homes. And, while buying a new home and making that move is usually something home buyers are doing by choice, that doesn’t make the actual process of moving any less stressful or costly.


Once they’ve completed and filed their 2016 tax return, most Canadians give a sigh of relief that the dreaded annual chore is done, and that income taxes will be out of sight and out of mind until the next filing deadline rolls around.

If all goes as planned, that is how events will unfold. In the best case scenario, the Canada Revenue Agency (CRA) will issue a Notice of Assessment which indicates that the Agency agrees with the taxpayer’s summary of his or her income, deductions, credits, and taxes payable for the past year, and that it has no further questions or concerns. And, for the vast majority of Canadians, that is exactly how things will unfold. For many others, however, there will be a few more questions to be answered or steps to be taken before the tax filing and assessment process for the year is finally completed.


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


Older taxpayers who have recently completed and filed their tax returns for 2016 may face an unpleasant surprise when that return is assessed. The unpleasant surprise may come in the form of a notification that they are subject to the Old Age Security “recovery tax” – known much more familiarly to Canadians as the OAS clawback.


As just about everyone knows, individual income tax returns for the 2016 tax year must be filed, by most Canadians, and any tax balance owed must be paid by all individual Canadians, on or before May 1, 2017. And, most Canadians do file that return, and pay any tax balance owed, on or before the deadline. As of April 24, 2017, the Canada Revenue Agency (CRA) had received just over 18 million individual income tax returns for the 2016 tax year. There are, however, a significant minority of Canadians who don’t file a return, or pay taxes owed (or both) by the annual deadline. The reasons for that are as varied as the individuals involved. In some cases, taxpayers are unable to pay a tax balance owing by the deadline and they think (wrongly) that there’s no point to filing a return where taxes owed can’t be paid. They may even think that they can fly “under the radar” and escape at least the immediate notice of the tax authorities by not filing the return. In other cases, it is just procrastination – virtually no one actually likes completing their tax return, especially where there’s the possibility of a tax bill to be paid once that return is done.


The Canadian tax system is in a constant state of change and evolution, as new measures are introduced and existing ones are “tweaked” through a never-ending series of budgetary and other announcements. However, even by normal standards, 2017 is a year in which there are larger than usual number of tax changes affecting individual taxpayers. And, unfortunately, most of those changes involve the repeal of existing tax credits which are claimed by millions of Canadian taxpayers.


For the majority of Canadians, the due date for filing of an individual tax return for the 2016 tax year is May 1, 2017. (Self-employed Canadians and their spouses have until June 15, 2017 to get that return filed.) In the best of all possible worlds, the taxpayer, or his or her representative, will have prepared a return that is complete and correct, and filed it on time, and the Canada Revenue Agency (CRA) will issue a Notice of Assessment indicating that the return is “assessed as filed”, meaning that the CRA agrees with the information filed and tax result obtained by the taxpayer. While that’s the outcome everyone is hoping for, it’s a result which can be “short-circuited” in a number of ways.


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


As is reported in the news at least once a month, there doesn’t seem to be an end or a limit to the inexorable rise in Canadian house prices. While the cost of housing in Vancouver and Toronto outstrips prices everywhere else, even smaller metropolitan areas are posting record increases.


By the time the summer is over and everyone’s back to school and work, most taxpayers have completed and forgotten about their tax obligations for the year. Returns have been filed and Notices of Assessment have been received. Income tax refunds have been spent or saved, and any amount still owing for taxes has generally been paid. For the Canada Revenue Agency (CRA), however, taxes are a year-round business, and fall marks the move from one phase of its activities to another—specifically, to the start of its annual post-assessment tax return review process.


For several years the Canada Revenue Agency (CRA) has encouraged taxpayers to begin receiving payments from the Agency by means of direct deposit to their bank accounts, rather than by receiving cheques sent through the mail. By the spring of 2016, that second option will no longer be available.


Time and again, Canadians have shown that where there is a humanitarian crisis anywhere in the world, whether caused by a natural disaster or arising for reasons of politics or economics, they are prepared to extend a helping hand. In many such past instances, the federal government has indicated that it will augment the generosity of Canadians by matching donations which are made.


For most Canadians, having to pay for legal services is an infrequent occurrence, and most of us would like to keep it that way. In most instances, the need to seek out and obtain legal services (and to pay for them) is associated with life’s more unwelcome occurrences—a divorce, a death, or a job loss. 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) would be being able to claim a tax credit or deduction for the fees paid.


The current election campaign has once again focused the attention of Canadians, especially the baby boomers, on changes announced in 2012 to Canada’s retirement income system. One of the results of those changes is that Canadians aged 65 and over can, as of July 1, 2013, choose to defer receipt of their Old Age Security (OAS) benefits. What’s more difficult is deciding, on an individual basis, whether it makes sense to defer receipt of those benefits and, if so, for how long.


A number of circumstances and developments have come together to make working from home an attractive prospect for both employers and employees. Soaring house prices in major Canadian cities have driven those who work in those cities further and further afield in the search for affordable housing. Consequently, there are increasing numbers of Canadians who must travel into a major urban centre for work each day, putting already crowded highways and city streets into near-gridlock much of the time. And the summer of 2015 has been more difficult than most for commuters. In addition to the usual delays caused by the summer construction schedule, special events held in major cities have closed or narrowed the usual commuter routes. Any commuter spending hours a day just trying to get to and from work might well wonder whether it’s worth it.


By this time of the year, most Canadian taxpayers have filed their returns for 2014 and received a Notice of Assessment with respect to those returns. Many will have received a refund, while others have received the unwelcome news that money is owed to the Canada Revenue Agency (CRA) and have paid up, however unwillingly.


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.


This summer, millions of Canadians have been affected by a series of disasters ranging from forest fires to droughts and other kinds of severe weather, and many of those Canadians have been temporarily displaced from their homes and businesses as a result.


In October 2014, the federal government announced a number of changes to tax and benefit programs affecting families with young children. One such change altered the Universal Child Care Benefit (UCCB) program, effective January 1, 2015, to increase the amount of that taxable benefit for families having children under the age of 6 and to create a new benefit for those with children aged 6 to 17. The first payment of the new or increased benefit was made in July, in the form of a lump sum payment representing the accrued benefits for the first half of 2015. Since then, this being an election year, there have been claims and counter-claims about the amount of the net benefit to Canadian families of the changes to the UCCB, and about the kind of tax planning families receiving that benefit need to undertake. The existing and new tax rules which determine the overall net benefit of the changes for Canadian families are as follows. 


While for elementary and secondary school students, the summer is just beginning, post-secondary students are already halfway through their summer break between school years. And, as summer starts winding down, these 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.


Canadians will go to the polls for the next federal election on October 19, 2015, and the campaign by all parties to win votes in that election is already on. And, while no two election campaigns are alike, either in the way they are run or the ultimate outcome, they all have one thing in common—money. It costs a great deal of money to run a national election campaign, and each party and candidate seeking election or re-election in October has been and will be seeking contributions from individual Canadians to help them finance their campaigns. The task of raising that money is made somewhat easier by the fact that Canadian taxpayers who donate money to political parties or candidates can claim a federal tax credit for those donations.


Conventional wisdom with respect to the cycle of income, debt, and savings over an individual’s lifetime is based on certain assumptions. Generally, it is assumed that Canadians in their 20s and 30s will see their financial affairs weighted far more heavily on the debt side of the equation, as they pay off student loans, buy a home (and take on a mortgage), and meet the financial demands of raising children while building a career. As those individuals move into their 40s and 50s, it’s assumed that the financial demands of raising that family will eventually decline and the mortgage will be paid off. As well, the two decades between 40 and 60 have traditionally been the peaking earning years and, as other financial obligations are reduced, some of those higher earnings can be redirected to saving for retirement. Ultimately, the cycle ends with retirement around the age of 60 or 65, with a paid-for home, no debt, and adequate savings for retirement.


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.


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.


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.


Accounting: Assurance: Taxation: Business Advisory