Author Topic: Can"EH"dian Tax - You have questions, I have answers  (Read 100668 times)

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #500 on: March 08, 2016, 09:27:04 AM »
Thanks for the reply Barbu.

We are not concerned about what funds per se. Perhaps I was not clear enough.

A) Holding investments within the company (having only been taxed at approximately 15%), having for money to invest now, and cashing out later, paying taxes when the money has to be taken out of the company, still through a declared dividend. Not quite as beneficial as an RRSP in the terms of tax deferral, but I'm uncertain how the gains in the company would be treated tax-wise.

B) Taking the money out of the company with dividends now, and investing with less "after-tax" money. Less money invested now, but primarily tax free when it comes time to use it.

To answer your other question, yes RESP is currently maxed for the little one, and would prefer to be mortgage free. Those numbers I used let me hit my savings number and be mortgage free at the same time.

Hi Cowboy -

This is a joint reply here to both messages - but first I want to narrow something down.

This is a very common problem for Entrepreneurs - getting cash out of a successful business can be taxing (ha) but sometimes worthwhile. However - everyone misses this question.

Do you have investments in your own business, which would provide a significant ROI? There is absolutely no point in buying index funds, when you're sitting on the opportunity to invest in the business and double it in the first year.

So - if the answer to the above is yes - just do it.

If no - a few things.

1) Investments held in the company are NOT eligible for the CCPC deduction, as they are not considered active business income. These earnings would be considered "GRIP" (general rate income pool) deductions - so they are eligible for enhanced dividend tax credits when you take it down personally, but it is taxed at the 30% ish rate.

2) Holding cash/investments in the business will exempt you from the capital gains deduction unless you plan ahead. You need 50% of assets used in active business income for the two years prior to sale, and 90% at the time of sale, to qualify for this CCPC deduction. It's not a huge deal with planning - but it can mean taking lots of dividends suddenly down the road.

3) TFSA investments are great - RRSP's are great to some extent - however if your spouse will be earning a significant pension in retirement, it takes away much of the benefits of the RRSP.

4) Take advantage of owning the business. If you have a home office, car needed for the business, etc. etc., take a portion of your 'personal' expenses and transfer them to the business! Charge the business rent for the home office space (based on square footage) and deduct this on the corporate return. These little things can be extraordinarily helpful, and will help pay down that mortgage faster.

Life insurance in the company is a wonderful way to pull out money tax free down the road. The issue is obviously the expense and the necessity to have a valuation performed on the policy prior to pulling the cash out. I wouldn't recommend it at this point for you, but perhaps in a few years.

Hope this is helpful,

CPA CB




cowboy

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #501 on: March 08, 2016, 07:54:34 PM »
Hi CPA,

The business currently operates entirely online. Expenses are minimal, mainly home office and advertising. Previously they were claimed on our personal returns, now, yes, we will be shifting them to the corporation. As such, it also requires minimal investment to operate. Financial resources of the business will have little to no impact on its growth.

The life insurance things is really weighing on me right now. I'm uncertain of if it is a better option than just pulling the money and investing it personally. I see the tax free aspect of it, and how the cash valuation can grow, but I'm uncertain if that will play into the timeline correctly

Premium would be just under 10K for 20 years, so it's neither cheap, nor short term. I know pulling out early would be a waste, but I also know getting in at a young healthy age is advantageous. The cost isn't a concern in the sense of not having the money or impeding cash flow - it's that it's large sum that would have to be committed long term - and I'm unable to determine if that's a better play or not. Again looking to be FI in 12-13 years, so I don't know if drawing on other investments before that matures would make it work, or if it's not going to work, but I keeping hearing if you can affording it, it's got a lot of pros. Trying to get an unbiased assessment from someone educated enough to speak about it, but not trying to sell it to me!! :D

Hoping to hang it up in 2029....

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #502 on: March 09, 2016, 08:19:54 AM »
Hi CPA,

The business currently operates entirely online. Expenses are minimal, mainly home office and advertising. Previously they were claimed on our personal returns, now, yes, we will be shifting them to the corporation. As such, it also requires minimal investment to operate. Financial resources of the business will have little to no impact on its growth.

The life insurance things is really weighing on me right now. I'm uncertain of if it is a better option than just pulling the money and investing it personally. I see the tax free aspect of it, and how the cash valuation can grow, but I'm uncertain if that will play into the timeline correctly

Premium would be just under 10K for 20 years, so it's neither cheap, nor short term. I know pulling out early would be a waste, but I also know getting in at a young healthy age is advantageous. The cost isn't a concern in the sense of not having the money or impeding cash flow - it's that it's large sum that would have to be committed long term - and I'm unable to determine if that's a better play or not. Again looking to be FI in 12-13 years, so I don't know if drawing on other investments before that matures would make it work, or if it's not going to work, but I keeping hearing if you can affording it, it's got a lot of pros. Trying to get an unbiased assessment from someone educated enough to speak about it, but not trying to sell it to me!! :D

Hi Cowboy -

An unbiased opinion on insurance? What's that??? Haha.

It's a tough question in fairness and is only partially tax oriented but I will give it a go in better detail for you.

Pros

1) You're insured early and at low mortality rates
2) Ability to borrow against the plan value tax free (and repay upon demise through the estate)
3) The life insurance upon demise is tax free
4) It can be highly valuable if the business remains active for decades

Cons

1) Once you're in - you're in
2) It is somewhat expensive
3) Uncertainty regarding future performance of the business
4) Uncertainty that this loophole may be closed in future (possible, but the insurance lobby is quite strong)


The perfect candidate for this plan is a young professional (doctor, lawyer, etc.) who just started their practice. They have decades of practice ahead of them, consistent high earnings, and certainty of cash flow. In addition, they have tremendous job security (as the boss) and will continue to practice until late in life. People always need Doctors and Lawyers and (hopefully) Accountants.

By contrast, you have a one year-old online business with little overhead and high profitability. It could be a flash in the pan one-off business, or it could be a thirty year profit generator. It's harder to say, but with what little information I have, I'm more likely to lean on the former versus the latter.

In this case, committing to a plan two decades out doesn't seem like it is in your best interests. Remember you can always adjust this in a few years after you see more consistency in earning potential, maybe then it would be worthwhile.

The more consistent the business, the longer you plan to operate, the better this insurance "scheme" works.

Hopefully this helps!

Cheers,

CPA CB

daverobev

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #503 on: March 12, 2016, 10:43:48 AM »
Every year, I think I've got things straight and going forward I'll know all I need to know. Every year, some oddness comes up and leaves me scratching my head...

This year's: I'm using the CRA's auto-download thingy. It's pulled in T5008 info from Questrade.

I closed one account with them. For the things that were in that account, it's showing info in box 21 (proceeds), but nothing in box 20 (cost). WTF do I do with that?! I'm using SimpleTax - if I select "Capital" as the "Type of Income", it then seems to assume a zero cost basis and I get dinged cap gains on the entire proceeds. Can I fill in my own ACB in box 20?! Or do I need to not submit those slips (per Simple Tax's help: if there is nothing in box 20, you may not need to submit...). Does this all get straightened out with a T3 somehow (coming at the end of the month, apparently).

Also for one security, they have the currency as USD, but haven't filled in an exchange rate, just the value in USD. Do I need to work that out myself, too (this one also doesn't have anything in box 20...).

If I look at Questrade's T5008 pdf you can download, it isn't broken down into boxes or anything - it is literally just a summary. Date, amount, security, price, total. In another account, I have the downloaded T5008, but there has been nothing put into SimpleTax - is that because there have, as yet, been no sales from this account?

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #504 on: March 12, 2016, 06:01:04 PM »
It is your responsability to track and report acurate ACB, you can use adjustedcostbase.ca to do so.

I am also waiting some T5 but this use to come late. Are you talking about individual stock, ETF or other kind of investment?
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CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #505 on: March 12, 2016, 06:05:39 PM »
Every year, I think I've got things straight and going forward I'll know all I need to know. Every year, some oddness comes up and leaves me scratching my head...

This year's: I'm using the CRA's auto-download thingy. It's pulled in T5008 info from Questrade.

I closed one account with them. For the things that were in that account, it's showing info in box 21 (proceeds), but nothing in box 20 (cost). WTF do I do with that?! I'm using SimpleTax - if I select "Capital" as the "Type of Income", it then seems to assume a zero cost basis and I get dinged cap gains on the entire proceeds. Can I fill in my own ACB in box 20?! Or do I need to not submit those slips (per Simple Tax's help: if there is nothing in box 20, you may not need to submit...). Does this all get straightened out with a T3 somehow (coming at the end of the month, apparently).

Also for one security, they have the currency as USD, but haven't filled in an exchange rate, just the value in USD. Do I need to work that out myself, too (this one also doesn't have anything in box 20...).

If I look at Questrade's T5008 pdf you can download, it isn't broken down into boxes or anything - it is literally just a summary. Date, amount, security, price, total. In another account, I have the downloaded T5008, but there has been nothing put into SimpleTax - is that because there have, as yet, been no sales from this account?



Hi daverobev,

Yes the auto fill feature is a great thing...but it does have some flaws! I have noticed if there are multiple T5008's, it is not pulling all of them into the software.  You can access them individually via CRA my account under T4s and other tax slips, but none of the ones I have accessed have a cost base listed.

Fill in Box 20 manually, if it is showing as zero. You should receive the T5008's in the mail, and it will have the boxes that each belong to. Proceeds should be Box 21, Adjusted Cost Base Box 20. Your Gain/Loss should also be on the summary and should match what you have entered.  If it is in US currency and has not been exchanged, you will have to exchange into Canadian. Box 13 should state if it is in a foreign currency.  You can get the exchange rates off the Bank of Canada website.

Have fun!
CPA CB

daverobev

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #506 on: March 12, 2016, 06:35:10 PM »
Every year, I think I've got things straight and going forward I'll know all I need to know. Every year, some oddness comes up and leaves me scratching my head...

This year's: I'm using the CRA's auto-download thingy. It's pulled in T5008 info from Questrade.

I closed one account with them. For the things that were in that account, it's showing info in box 21 (proceeds), but nothing in box 20 (cost). WTF do I do with that?! I'm using SimpleTax - if I select "Capital" as the "Type of Income", it then seems to assume a zero cost basis and I get dinged cap gains on the entire proceeds. Can I fill in my own ACB in box 20?! Or do I need to not submit those slips (per Simple Tax's help: if there is nothing in box 20, you may not need to submit...). Does this all get straightened out with a T3 somehow (coming at the end of the month, apparently).

Also for one security, they have the currency as USD, but haven't filled in an exchange rate, just the value in USD. Do I need to work that out myself, too (this one also doesn't have anything in box 20...).

If I look at Questrade's T5008 pdf you can download, it isn't broken down into boxes or anything - it is literally just a summary. Date, amount, security, price, total. In another account, I have the downloaded T5008, but there has been nothing put into SimpleTax - is that because there have, as yet, been no sales from this account?



Hi daverobev,

Yes the auto fill feature is a great thing...but it does have some flaws! I have noticed if there are multiple T5008's, it is not pulling all of them into the software.  You can access them individually via CRA my account under T4s and other tax slips, but none of the ones I have accessed have a cost base listed.

Fill in Box 20 manually, if it is showing as zero. You should receive the T5008's in the mail, and it will have the boxes that each belong to. Proceeds should be Box 21, Adjusted Cost Base Box 20. Your Gain/Loss should also be on the summary and should match what you have entered.  If it is in US currency and has not been exchanged, you will have to exchange into Canadian. Box 13 should state if it is in a foreign currency.  You can get the exchange rates off the Bank of Canada website.

Have fun!
CPA CB

Thanks. Questrade doesn't mail out slips, AFAIK, you just get a pdf online. But, the pdf doesn't look like a 'proper' T5008; there are no box numbers.

So - it's ok for me to add info in to the T5008 I submit, even if it isn't there on the CRA/Questrade version? I can correct/update/complete information not provided?

For the US security, it currently says currency: USD; a value in box 21 (the correct value); and nothing in box 20. Of course, the exchange rate when I bought and when I sold are different - can I just correctly convert to CAD, and change currency to CAD? That seems to be what Interactive Brokers have done...
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daverobev

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #507 on: March 12, 2016, 06:36:18 PM »
It is your responsability to track and report acurate ACB, you can use adjustedcostbase.ca to do so.

I am also waiting some T5 but this use to come late. Are you talking about individual stock, ETF or other kind of investment?

T3 deadline is end of this month. T5s should all be done by now. I'm talking about ETFs and an ADR.
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Le Barbu

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #508 on: March 12, 2016, 07:33:22 PM »
Did you looked at CDS innovation? I got my numbers from there while waiting the slips
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CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #509 on: March 12, 2016, 08:06:17 PM »
Every year, I think I've got things straight and going forward I'll know all I need to know. Every year, some oddness comes up and leaves me scratching my head...

This year's: I'm using the CRA's auto-download thingy. It's pulled in T5008 info from Questrade.

I closed one account with them. For the things that were in that account, it's showing info in box 21 (proceeds), but nothing in box 20 (cost). WTF do I do with that?! I'm using SimpleTax - if I select "Capital" as the "Type of Income", it then seems to assume a zero cost basis and I get dinged cap gains on the entire proceeds. Can I fill in my own ACB in box 20?! Or do I need to not submit those slips (per Simple Tax's help: if there is nothing in box 20, you may not need to submit...). Does this all get straightened out with a T3 somehow (coming at the end of the month, apparently).

Also for one security, they have the currency as USD, but haven't filled in an exchange rate, just the value in USD. Do I need to work that out myself, too (this one also doesn't have anything in box 20...).

If I look at Questrade's T5008 pdf you can download, it isn't broken down into boxes or anything - it is literally just a summary. Date, amount, security, price, total. In another account, I have the downloaded T5008, but there has been nothing put into SimpleTax - is that because there have, as yet, been no sales from this account?



Hi daverobev,

Yes the auto fill feature is a great thing...but it does have some flaws! I have noticed if there are multiple T5008's, it is not pulling all of them into the software.  You can access them individually via CRA my account under T4s and other tax slips, but none of the ones I have accessed have a cost base listed.

Fill in Box 20 manually, if it is showing as zero. You should receive the T5008's in the mail, and it will have the boxes that each belong to. Proceeds should be Box 21, Adjusted Cost Base Box 20. Your Gain/Loss should also be on the summary and should match what you have entered.  If it is in US currency and has not been exchanged, you will have to exchange into Canadian. Box 13 should state if it is in a foreign currency.  You can get the exchange rates off the Bank of Canada website.

Have fun!
CPA CB

Thanks. Questrade doesn't mail out slips, AFAIK, you just get a pdf online. But, the pdf doesn't look like a 'proper' T5008; there are no box numbers.

So - it's ok for me to add info in to the T5008 I submit, even if it isn't there on the CRA/Questrade version? I can correct/update/complete information not provided?

For the US security, it currently says currency: USD; a value in box 21 (the correct value); and nothing in box 20. Of course, the exchange rate when I bought and when I sold are different - can I just correctly convert to CAD, and change currency to CAD? That seems to be what Interactive Brokers have done...

Yes

Update the amounts to include the ACB most definitely.

Cheers,

CPA CB

daverobev

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #510 on: March 13, 2016, 06:53:20 AM »
Thanks. Making progress. Just need that T3, and my wife's self-employment stuff. Looks like I'm getting a refund (I know, "not optimal", but seeing as the CRA is sitting on some cash from a previous year I'll happily take it...)
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CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #511 on: March 13, 2016, 07:24:22 AM »
Thanks. Making progress. Just need that T3, and my wife's self-employment stuff. Looks like I'm getting a refund (I know, "not optimal", but seeing as the CRA is sitting on some cash from a previous year I'll happily take it...)

It could be worse! I took on a new client this year who I had to tell he owes CRA $120k.


daverobev

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #512 on: March 13, 2016, 08:35:50 AM »
Thanks. Making progress. Just need that T3, and my wife's self-employment stuff. Looks like I'm getting a refund (I know, "not optimal", but seeing as the CRA is sitting on some cash from a previous year I'll happily take it...)

It could be worse! I took on a new client this year who I had to tell he owes CRA $120k.

Ouch!

It's not that I mind paying the damn tax, it's all this messing about to work out what I actually owe. T1135 is a favourite. What was the max value during the year? Well how the hell should I know, there are two variables - exchange rate and value in the foreign currency!

Ah well.
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Filliteracy

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #513 on: March 14, 2016, 01:35:50 PM »


I went through the same a while ago. The $280,000 would normally all be required to go into the LIRA account. The $111,000 can be put to any remaining personal RRSP room and the balance must be taxed and paid in cash. You can apply to unlock LIRA accounts, but it certainly does not appear to be a straight forward, easy process. It generally covers hardship, special circumstances, or small amounts. I would simply plan to draw down your RRSP first and then apply to unlock the LIRA once the RRSP runs low and you can provide a better case for unlocking that account. The rules do differ a bit based on each province or the federal rules.

Thanks for the reply!  I did not realize that it was the cash portion that can be allocated to remaining RRSP room, good to know. I kind of figured I would have to plan to just draw down my accessible moneys until I trully needed the locked up money, at which point it may be easier to retrieve. I live in Ontario which I believe has sightly less forgiving regs compared to Alberta as far as locked in accounts go.

Max

Max,

I'm trying to figure out the value of my own pension if commuted (Canadian Forces), do you mind saying what pension plan it was and how many years of work/service you did to get there?

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #514 on: March 15, 2016, 10:25:16 AM »
Hi,

I am wondering if I borrow money to buy reits that pay out 100 percent tax deferred in an unregistered account whether I can deduct the interest from my income tax on the money borrowed. I have already maxed my TFSA and my RRSP so these are not options.

Thanks

BTW would be nice if the forum had a sub section for Canada.
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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #515 on: March 16, 2016, 06:42:13 AM »
Hi,

I am wondering if I borrow money to buy reits that pay out 100 percent tax deferred in an unregistered account whether I can deduct the interest from my income tax on the money borrowed. I have already maxed my TFSA and my RRSP so these are not options.

Thanks

BTW would be nice if the forum had a sub section for Canada.

Hi Captain

You found the Canadian sub section! MMM Taxes' most read and replied to topic.

Yes - interest on investment income is certainly deductible. The caveat is that it needs to be an income producing investment (income, dividends, etc.) so you don't want to invest only in shares which distribute ROC and Capital Gains. Mix it up, and invest in a few other income producing investments.

Happy sailing

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #516 on: March 16, 2016, 03:46:34 PM »
Hey MMM'ers

I'm a Canadian Chartered Accountant with a significant amount of tax experience.

Just throwing this out there - this is the time to reassess your taxes and get questions answered. The holidays is far too late for appropriate tax planning.

If you have questions about Can"eh"dian taxes - I would be more than happy to offer the MMM discount of free advice. I hope this can serve as a reference point for future discussions for those of us who choose to live in Igloo's and drink Maple Syrup, as the tax discussions in the forum tend to revolve around our Southern NeighBOURS.

You ask - I'll do my best to answer based on what you provide.

Let the boring tax discussion begin!

Hi CPA CB,

Thanks for the offer. You're a legend! Our tax situation is relatively straightforward...We live in AB. I earn approx. $75,000 before tax, my wife about $30,000. We have a small house that is not paid off.

I have only been in Canada since 2013, so my RRSP and TFSA are maxed out. Also have another $20k in a non-registered account.

The wife does not have any accounts set up.

My question is...is it necessary for us to hire an accountant to do our taxes or are we still ok to do them online? If you think it's ok for us to do them online, is there a software you recommend?

Thanks again and all the best.

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #517 on: March 16, 2016, 04:55:38 PM »
Q: Is it okay for a Corporation to pay late?

My understanding is that my Corporate return must be filed by June 30th, but that interest on any tax due starts sooner (end of March??).

It will take me a while to do my Corporate return. Maybe $3000 will be due, I don't know. I could pay that and then see what it actually comes to and accept a reimbursement. However, for the first time in my life, I feel comfortable being "late" with something and paying interest, and would rather pay exactly what is due vs create another transaction (reimbursement or tiny additional payment).

Besides interest building, is there any reason to avoid late payment?

daverobev

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #518 on: March 16, 2016, 04:56:07 PM »
Hey MMM'ers

I'm a Canadian Chartered Accountant with a significant amount of tax experience.

Just throwing this out there - this is the time to reassess your taxes and get questions answered. The holidays is far too late for appropriate tax planning.

If you have questions about Can"eh"dian taxes - I would be more than happy to offer the MMM discount of free advice. I hope this can serve as a reference point for future discussions for those of us who choose to live in Igloo's and drink Maple Syrup, as the tax discussions in the forum tend to revolve around our Southern NeighBOURS.

You ask - I'll do my best to answer based on what you provide.

Let the boring tax discussion begin!

Hi CPA CB,

Thanks for the offer. You're a legend! Our tax situation is relatively straightforward...We live in AB. I earn approx. $75,000 before tax, my wife about $30,000. We have a small house that is not paid off.

I have only been in Canada since 2013, so my RRSP and TFSA are maxed out. Also have another $20k in a non-registered account.

The wife does not have any accounts set up.

My question is...is it necessary for us to hire an accountant to do our taxes or are we still ok to do them online? If you think it's ok for us to do them online, is there a software you recommend?

Thanks again and all the best.

Not a/the CPA, but Simpletax is free and works fine for me (simpletax.ca). And my stuff is complex enough. Needs some reading, though (or asking questions, which is what this thread is for).

If you're new and have over $100k CAD in *foreign* assets, you MUST fill out T1135, which is a pain but whatever.

Having a house makes no difference here, paid off or not - no deduction for interest (unless you use home as an office when self employed, for example).
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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #519 on: March 17, 2016, 10:55:59 AM »
Q: Is it okay for a Corporation to pay late?

My understanding is that my Corporate return must be filed by June 30th, but that interest on any tax due starts sooner (end of March??).

It will take me a while to do my Corporate return. Maybe $3000 will be due, I don't know. I could pay that and then see what it actually comes to and accept a reimbursement. However, for the first time in my life, I feel comfortable being "late" with something and paying interest, and would rather pay exactly what is due vs create another transaction (reimbursement or tiny additional payment).

Besides interest building, is there any reason to avoid late payment?

Hi scrubby,

Just interest. If you owe over $3,000, you will be put on instalments for the following tax year, and then interest will start from when the instalment payments are due. 

Cheers, CPA CB


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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #520 on: March 17, 2016, 10:59:35 AM »
Hey MMM'ers

I'm a Canadian Chartered Accountant with a significant amount of tax experience.

Just throwing this out there - this is the time to reassess your taxes and get questions answered. The holidays is far too late for appropriate tax planning.

If you have questions about Can"eh"dian taxes - I would be more than happy to offer the MMM discount of free advice. I hope this can serve as a reference point for future discussions for those of us who choose to live in Igloo's and drink Maple Syrup, as the tax discussions in the forum tend to revolve around our Southern NeighBOURS.

You ask - I'll do my best to answer based on what you provide.

Let the boring tax discussion begin!

Hi CPA CB,

Thanks for the offer. You're a legend! Our tax situation is relatively straightforward...We live in AB. I earn approx. $75,000 before tax, my wife about $30,000. We have a small house that is not paid off.

I have only been in Canada since 2013, so my RRSP and TFSA are maxed out. Also have another $20k in a non-registered account.

The wife does not have any accounts set up.

My question is...is it necessary for us to hire an accountant to do our taxes or are we still ok to do them online? If you think it's ok for us to do them online, is there a software you recommend?

Thanks again and all the best.

Hi dyson,

It is not necessary, but depending on the situation (complexity) as well as the time/knowledge of the person, an accountant can be helpful.

Sometimes clients miss deductions, take an unreasonable deduction, or mandatory forms, and end up getting penalized or audited/reviewed. You can always have it done by a professional one year, and when they complete it, they will provide you a copy of your return. Then you can use this as a layout for the future returns, pending no major changes.

Cheers,
CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #521 on: March 17, 2016, 12:50:50 PM »
Just interest. If you owe over $3,000, you will be put on instalments for the following tax year, and then interest will start from when the instalment payments are due.

Thank you, CPA CB! :)   When I think about it, I realize I probably owe far less than that, but neither here nor there, all is well.

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #522 on: March 18, 2016, 08:43:15 AM »
Hi CPA CB, I was told by RBC Direct Investing that there is no T5/R3(Québec) isued for ETFs.

I own shares of ZCN in a taxable account and only need these slips to complete my taxes and get my refund for 2015. I already knew this kind of slips comes later than T4/R1 but now, I am a bit disapointed to learn I will get a T3 slip wich is a "Statement of Trust Income Allocations and Designations". Why would'nt they issue T5 "Statement of Investment Income" for ETFs?

Am I missing something here?

Thanks
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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #523 on: March 18, 2016, 11:09:36 AM »
Oh! Le Barbu, you just explained a slip I had received and was very confused by!

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #524 on: March 18, 2016, 02:42:04 PM »
Hi CPA CB, I was told by RBC Direct Investing that there is no T5/R3(Québec) isued for ETFs.

I own shares of ZCN in a taxable account and only need these slips to complete my taxes and get my refund for 2015. I already knew this kind of slips comes later than T4/R1 but now, I am a bit disapointed to learn I will get a T3 slip wich is a "Statement of Trust Income Allocations and Designations". Why would'nt they issue T5 "Statement of Investment Income" for ETFs?

Am I missing something here?

Thanks

I just received T3/R16 and they included the december distribution paid on 16/07/01 wich surprise me a bit! I think I should include my december interest costs paid on 2016/04/01 to be consistent (and keep the same patern next year). Also, on CDS Innovation website, Foreign tax Income paid was a -1.57$ but on T3 form, it looks like a positive number...Should I just enter these slips as they are and stop thinkering about it?
 
« Last Edit: March 18, 2016, 02:47:07 PM by Le Barbu »
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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #525 on: March 19, 2016, 07:12:55 PM »
Hi there CPA CB,

I found your thread through Canadian Money Forum, what a great service you're providing here!

I'd like to throw a scenario at you, if I may.  A few years ago, my wife and I jointly purchased some vacant land for what seemed like a bargain with the intention of developing and selling it for profit.  As it turned out, the land would be very challenging to develop due to its small size and close proximity to neighbours' wells, etc, so not much of a bargain in the end.  In 2015, we realized it wasn't going to be profitable so we sold the land without having built on it.  It sold for a slight amount more than we paid for it, however factoring in expenses such as acquisition costs and improvements to the land that we made (driveway, electrical connection, filling and grading, etc.) we lost about $20k. 

I believe our endeavor constitutes an "adventure or concern in the nature of trade", as the CRA says, and so I figure we should be able to declare this $20k as a business loss and deduct it against our other income, does that sound right?  Neither of us are developers by trade; my wife is a teacher and I am in the military.  So I am wondering if the CRA might see this as a "hobby business" and disallow the losses.  Also, we never registered a business or declared anything about this in the 3.5 years that we owned the land, so I'm not sure if that would work against us.

Appreciate you having a look at this, cheers!

Tim


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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #526 on: March 19, 2016, 07:26:21 PM »
Hi there CPA CB,

I found your thread through Canadian Money Forum, what a great service you're providing here!

I'd like to throw a scenario at you, if I may.  A few years ago, my wife and I jointly purchased some vacant land for what seemed like a bargain with the intention of developing and selling it for profit.  As it turned out, the land would be very challenging to develop due to its small size and close proximity to neighbours' wells, etc, so not much of a bargain in the end.  In 2015, we realized it wasn't going to be profitable so we sold the land without having built on it.  It sold for a slight amount more than we paid for it, however factoring in expenses such as acquisition costs and improvements to the land that we made (driveway, electrical connection, filling and grading, etc.) we lost about $20k. 

I believe our endeavor constitutes an "adventure or concern in the nature of trade", as the CRA says, and so I figure we should be able to declare this $20k as a business loss and deduct it against our other income, does that sound right?  Neither of us are developers by trade; my wife is a teacher and I am in the military.  So I am wondering if the CRA might see this as a "hobby business" and disallow the losses.  Also, we never registered a business or declared anything about this in the 3.5 years that we owned the land, so I'm not sure if that would work against us.

Appreciate you having a look at this, cheers!

Tim

Your expenses may not be deductible against other incomes but some of them (like improvement) can offset your tinny capital gain.
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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #527 on: March 19, 2016, 07:40:07 PM »
Your expenses may not be deductible against other incomes but some of them (like improvement) can offset your tinny capital gain.

Thanks for the reply Le Barbu.  Indeed, at least the costs incurred should offset the small increase in property value (about $3k) to avoid a capital gain.  And maybe create a capital loss that could be carried over to use against future capital gains.  But the best option from my perspective would be declaring it a business loss, and deducting it against income from our day jobs (at least I think that's possible, if I'm reading the rules correctly), so that's what I'm hoping to find out.

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #528 on: March 21, 2016, 05:33:34 AM »
Hi,

I am wondering if I borrow money to buy reits that pay out 100 percent tax deferred in an unregistered account whether I can deduct the interest from my income tax on the money borrowed. I have already maxed my TFSA and my RRSP so these are not options.

Thanks

BTW would be nice if the forum had a sub section for Canada.

Hi Captain

You found the Canadian sub section! MMM Taxes' most read and replied to topic.

Yes - interest on investment income is certainly deductible. The caveat is that it needs to be an income producing investment (income, dividends, etc.) so you don't want to invest only in shares which distribute ROC and Capital Gains. Mix it up, and invest in a few other income producing investments.

Happy sailing

CPA CB

OK I had assumed it was OK thanks for the update
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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #529 on: March 22, 2016, 08:07:37 AM »
Hi there CPA CB,

I found your thread through Canadian Money Forum, what a great service you're providing here!

I'd like to throw a scenario at you, if I may.  A few years ago, my wife and I jointly purchased some vacant land for what seemed like a bargain with the intention of developing and selling it for profit.  As it turned out, the land would be very challenging to develop due to its small size and close proximity to neighbours' wells, etc, so not much of a bargain in the end.  In 2015, we realized it wasn't going to be profitable so we sold the land without having built on it.  It sold for a slight amount more than we paid for it, however factoring in expenses such as acquisition costs and improvements to the land that we made (driveway, electrical connection, filling and grading, etc.) we lost about $20k. 

I believe our endeavor constitutes an "adventure or concern in the nature of trade", as the CRA says, and so I figure we should be able to declare this $20k as a business loss and deduct it against our other income, does that sound right?  Neither of us are developers by trade; my wife is a teacher and I am in the military.  So I am wondering if the CRA might see this as a "hobby business" and disallow the losses.  Also, we never registered a business or declared anything about this in the 3.5 years that we owned the land, so I'm not sure if that would work against us.

Appreciate you having a look at this, cheers!

Tim

Hi Tim,

Canadian Money Forum? Cool! Never heard of it but happy to hear word is spreading.

Sorry it's taken so long to respond - but here goes.

My first question (and I think I know the answer here) is this - did you go and buy another property subsequent to this?

If the answer to this is no - then I think you're best to claim this as a capital loss.

CRA is very aggressive when it comes to attacking this kind of a loss if you attempt to claim it as either an ABIL (allowable business investment loss) or as a CNIL (cumulative net investment loss) as these losses are 100% deductible vs. 50%. Unsurprisingly, when you're making money on this type of investment, suddenly they push to call it a business! Go figure.

It certainly was an adventure into something, I just think based on the circumstances you describe you would be on thin ice to claim this as a business loss vs. capital loss.

Cheers,

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #530 on: March 22, 2016, 08:13:34 AM »
Hi CPA CB, I was told by RBC Direct Investing that there is no T5/R3(Québec) isued for ETFs.

I own shares of ZCN in a taxable account and only need these slips to complete my taxes and get my refund for 2015. I already knew this kind of slips comes later than T4/R1 but now, I am a bit disapointed to learn I will get a T3 slip wich is a "Statement of Trust Income Allocations and Designations". Why would'nt they issue T5 "Statement of Investment Income" for ETFs?

Am I missing something here?

Thanks

I just received T3/R16 and they included the december distribution paid on 16/07/01 wich surprise me a bit! I think I should include my december interest costs paid on 2016/04/01 to be consistent (and keep the same patern next year). Also, on CDS Innovation website, Foreign tax Income paid was a -1.57$ but on T3 form, it looks like a positive number...Should I just enter these slips as they are and stop thinkering about it?

Enter as is on this one. Include your December interest costs. Probably not a material difference, the key is consistency year over year.

Cheers,

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #531 on: March 22, 2016, 09:09:58 AM »
Hi CPA CB, I was told by RBC Direct Investing that there is no T5/R3(Québec) isued for ETFs.

I own shares of ZCN in a taxable account and only need these slips to complete my taxes and get my refund for 2015. I already knew this kind of slips comes later than T4/R1 but now, I am a bit disapointed to learn I will get a T3 slip wich is a "Statement of Trust Income Allocations and Designations". Why would'nt they issue T5 "Statement of Investment Income" for ETFs?

Am I missing something here?

Thanks

I just received T3/R16 and they included the december distribution paid on 16/07/01 wich surprise me a bit! I think I should include my december interest costs paid on 2016/04/01 to be consistent (and keep the same patern next year). Also, on CDS Innovation website, Foreign tax Income paid was a -1.57$ but on T3 form, it looks like a positive number...Should I just enter these slips as they are and stop thinkering about it?

Enter as is on this one. Include your December interest costs. Probably not a material difference, the key is consistency year over year.

Cheers,

CPA CB

Thank you CPA CB, I'll just enter the slips as they are and include my december's interests (paid on Jan. 4th) and then, stay consistent over years.

Our household income for 2015 was in the 110k$ range and average taxes is 13.25%!!! I hope the Morneau's budget wont crank it up to much (because of the income splitting loss)
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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #532 on: March 22, 2016, 01:01:34 PM »
Hi CPA CB, I was told by RBC Direct Investing that there is no T5/R3(Québec) isued for ETFs.

I own shares of ZCN in a taxable account and only need these slips to complete my taxes and get my refund for 2015. I already knew this kind of slips comes later than T4/R1 but now, I am a bit disapointed to learn I will get a T3 slip wich is a "Statement of Trust Income Allocations and Designations". Why would'nt they issue T5 "Statement of Investment Income" for ETFs?

Am I missing something here?

Thanks

I just received T3/R16 and they included the december distribution paid on 16/07/01 wich surprise me a bit! I think I should include my december interest costs paid on 2016/04/01 to be consistent (and keep the same patern next year). Also, on CDS Innovation website, Foreign tax Income paid was a -1.57$ but on T3 form, it looks like a positive number...Should I just enter these slips as they are and stop thinkering about it?

Enter as is on this one. Include your December interest costs. Probably not a material difference, the key is consistency year over year.

Cheers,

CPA CB

Thank you CPA CB, I'll just enter the slips as they are and include my december's interests (paid on Jan. 4th) and then, stay consistent over years.

Our household income for 2015 was in the 110k$ range and average taxes is 13.25%!!! I hope the Morneau's budget wont crank it up to much (because of the income splitting loss)

We keep getting asked for our expectations on today's budget.

Not expecting anything good. I'll be putting up a post tonight or tomorrow on the topic when all comes clear.

MMM principles are as applicable to governments as they are people. Superfluous spending isn't the road to FIRE!

Best,

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #533 on: March 22, 2016, 01:49:10 PM »


We keep getting asked for our expectations on today's budget.

Not expecting anything good. I'll be putting up a post tonight or tomorrow on the topic when all comes clear.

MMM principles are as applicable to governments as they are people. Superfluous spending isn't the road to FIRE!

Best,

CPA CB
[/quote]

A MMM style government would certainly kick asses but will never happen because we keep voting for people with no more than 5th grade level sciences and maths.

Not surprising, just look who is voting. My co-workers, even the ones from the accounting dont get the difference between "paying taxes" and "getting a tax return". If I say something like "Our household paid a total of 15k$ fed-prov. taxes for 2015 and we get a 7k$ return in april". They are just CLUELESS if you say got a return, why do you say you pay taxes? (facepalm)

Another one? We talked about the TFSA, one lady said "TFSA provide crappy returns of about 1%" then I asked in what the funds were invested. The answer was "You must be kidding me, he? I just told you it's in my TFSA" (double-facepalm)
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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #534 on: March 22, 2016, 03:45:07 PM »
MMM principles are as applicable to governments as they are people. Superfluous spending isn't the road to FIRE!


Sorry I can't agree with that. Large scale economics and personal finance are not the same thing. Canada isn't looking to retire.

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #535 on: March 22, 2016, 04:08:06 PM »
MMM principles are as applicable to governments as they are people. Superfluous spending isn't the road to FIRE!


Sorry I can't agree with that. Large scale economics and personal finance are not the same thing. Canada isn't looking to retire.

We must have been in different Economics classes then - Haven't seen a single economist ever recommend what they considered superfluous spending.


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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #536 on: March 22, 2016, 04:17:07 PM »
Preliminary 2016 Budget Report -

Hi All -

As you know, today was the announcement of the 2016 Federal Budget.

There are significant differences from 2015 - I will be doing a detailed post TOMORROW on these changes and their effects on YOU!

Highlights are a change to the child benefit.

No more income splitting.

No change in the small business deduction rates.

Significant deficit spending! 29.4 Billion this year, 29 next year, 23 the year following. I think about 118.3 or so total over the next four years. The Canadian Labour Force is 18 million people or so - that adds up to around about $6,500 in taxes per working Canadian that will need to be repaid eventually. Ouch.

TFSA has dropped of course. And the top marginal rate for those over $200k per annum has increased substantially.

Details to follow tomorrow. Have a great evening folks.

CPA CB


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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #537 on: March 22, 2016, 04:46:30 PM »
MMM principles are as applicable to governments as they are people. Superfluous spending isn't the road to FIRE!


Sorry I can't agree with that. Large scale economics and personal finance are not the same thing. Canada isn't looking to retire.

superfluous spending.


This is where the definition of superfluous comes into play. For me, investing in the environment and aboriginal communities is far from superfluous. For other people, it is a waste of "taxpayers'" money. I think generally, this government is delivering the majority of what they said they would do if elected.
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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #538 on: March 23, 2016, 08:08:37 PM »
Hi Tim,

Canadian Money Forum? Cool! Never heard of it but happy to hear word is spreading.

Sorry it's taken so long to respond - but here goes.

My first question (and I think I know the answer here) is this - did you go and buy another property subsequent to this?

If the answer to this is no - then I think you're best to claim this as a capital loss.

CRA is very aggressive when it comes to attacking this kind of a loss if you attempt to claim it as either an ABIL (allowable business investment loss) or as a CNIL (cumulative net investment loss) as these losses are 100% deductible vs. 50%. Unsurprisingly, when you're making money on this type of investment, suddenly they push to call it a business! Go figure.

It certainly was an adventure into something, I just think based on the circumstances you describe you would be on thin ice to claim this as a business loss vs. capital loss.

Cheers,

CPA CB

Hi CPA CB,

You're correct, we didn't purchase any other property after that.  Better not be too greedy, and just claim it as a capital loss.  Much appreciate you taking the time to offer your opinion.

Tim

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #539 on: March 24, 2016, 12:51:41 PM »
Tax Bulletin 2016

Hello Can'eh'dian MMM'ers!

After some deliberation regarding the 2016 Budget, I've put together brief summary of changes which I think are most applicable to the general readership here.

That being said, there are many specific, and what I would call "boutique" changes to the ITA this year which won't be covered below. If you do have questions regarding these, put them up here or PM me and I will happily give some direction.

Overall, this Budget represents a drastic shift in overall economic policy from the previous decade or so. This is to be expected as clearly we have a new Prime Minister.

Coles Notes - more spending, enhanced benefits, and more tax for some.

Small Business? What's that?

Small Businesses were largely ignored this budget. This is a large change from previous Governments.

Small Business Rate
There was a previously legislated change which was promised to be kept in tact during Election season, which was to keep the small business rate declining from 10.5% (2016) all the way down to 9% come 2019. This has been reversed entirely.

The small business rate will now remain at 10.5% for the foreseeable future.

Other speculated changes

Other than a few changes to break up some tax avoidance using small business rate eligible corporations, there were no other changes here.

It was speculated far and wide that owners of Professional Corporations would no longer be allowed to split income - this didn't happen. It was speculated that even for regular CCPC owners this wouldn't be available, which didn't happen. There were rumours of a wholesale change and the disappearance of the small business rate for CCPC's - this didn't happen. Heavy sigh of relief.

These changes may happen in the future, so we brace for the worst and hope for the best.

Personal Tax

The larger focus here in this budget was Personal Tax. Here are the major changes.

TFSA Limit

Bye bye $10,000 - hello $5,500 and indexing in future years. We all knew this was happening - just reiterating that it did happen.

Bracket Changes

The 2nd bracket rate has been adjusted downwards from 22% to 20.5% effective in the 2016 taxation year. This will help many Canadians (albeit not as big a change as one would think in the grand scheme).

A new bracket has been introduced for the over $200k crowd now, which is 33%. This is a whopping change and leads to marginal tax rates in excess of 50% for many provinces for the top bracket. Ontario is 49.53 percent, but when including the Ontario Health Premium it is around 53%. You can almost hear the Beatles playing in the background.

Income Splitting

Pensions are still yes (and are a sacred cow). The Income Splitting introduced for 2014 and 2015 is gone in 2016. That simple.

Teachers

$1,000 non-refundable tax credit on eligible supplies. This represents a savings of $150 per year.

Northern Resident Deduction

The daily rate has now increased from $8.25 to $11.00 per eligible taxpayer. Same rules regarding 6 months applies.

Child Care Benefit

This is what you've all been waiting for!

The UCCB and CCTB are gone as of June 2016. Commencing July 2016.
Education and Tuition Tax Credits will be gone as at 2017 (50% 2016)
Fitness and Arts Tax Credits will be gone as at 2017 (50% 2016).

It is broken down like this. Sorry if it gets messy.

Family Income Under $30k

Each Child under 6 - $6,400 per annum
Children 6 to 17 - $5,400 per annum.

Family Income from $30k to $65k

1 Child Household - total benefit phaseout of 7% per dollar.
2 Child Household - total benefit phaseout of 13.5% per dollar.
3 Child Household - total benefit phaseout of 19% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 23% per dollar.

Family Income Over $65k

On remaining benefit after above...

1 Child Household - total benefit phaseout of 3.2% per dollar.
2 Child Household - total benefit phaseout of 5.7% per dollar.
3 Child Household - total benefit phaseout of 8% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 9.5% per dollar.

NOTE: THESE AMOUNTS ARE TAX FREE - this is an important distinction.

If you earn over $200,000 as a family net income, you'll receive very little or nothing.


As always I look forward to your questions and commentary - hope you have found this a helpful summary of the most pertinent changes.

All the best,

CPA CB






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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #540 on: March 24, 2016, 02:06:53 PM »
Family Income Under $30k

Each Child under 6 - $6,400 per annum
Children 6 to 17 - $5,400 per annum.

Family Income from $30k to $65k

1 Child Household - total benefit phaseout of 7% per dollar.
2 Child Household - total benefit phaseout of 13.5% per dollar.
3 Child Household - total benefit phaseout of 19% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 23% per dollar.

Family Income Over $65k

On remaining benefit after above...

1 Child Household - total benefit phaseout of 3.2% per dollar.
2 Child Household - total benefit phaseout of 5.7% per dollar.
3 Child Household - total benefit phaseout of 8% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 9.5% per dollar.


http://www.budget.gc.ca/2016/tool-outil/ccb-ace-en.html

To figure out how much your specific situation will give you.

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #541 on: March 25, 2016, 07:45:58 AM »
MMM principles are as applicable to governments as they are people. Superfluous spending isn't the road to FIRE!


Sorry I can't agree with that. Large scale economics and personal finance are not the same thing. Canada isn't looking to retire.

superfluous spending.


This is where the definition of superfluous comes into play. For me, investing in the environment and aboriginal communities is far from superfluous. For other people, it is a waste of "taxpayers'" money. I think generally, this government is delivering the majority of what they said they would do if elected.

Superfluous - spending over and above what is necessary to achieve a desired result or return on investment.

This can as easily be applied to environmental spending as it is to tax cuts - tax cuts where the marginal cost of the cut exceeds the overall benefit to the economy would be something I would call superfluous.



RetiredAt63

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #542 on: March 26, 2016, 07:08:03 AM »
Super quick and easy question.  I gave a presentation for a local group and received an honorarium ($100). My first post-retirement "income"  ;-)    Is this taxable income? I'm perfectly willing to declare it if it is, but is it?
The measure of civilization is how people treat one another.

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CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #543 on: March 26, 2016, 10:48:57 AM »
Super quick and easy question.  I gave a presentation for a local group and received an honorarium ($100). My first post-retirement "income"  ;-)    Is this taxable income? I'm perfectly willing to declare it if it is, but is it?

Yes it is!

Deduct any expenses to reach the location against this income however. Congrats!

RetiredAt63

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #544 on: March 26, 2016, 04:23:05 PM »
10 km driving, and some supplies for demo which were minor and will be reused.  So no point.  Good to know in case I ever do one further from home.  Just for interest sake, what if it had been 50 km away, so 100 km round trip.  Federal mileage rate?

quote author=CPA CB link=topic=25093.msg1027194#msg1027194 date=1459010937]
Super quick and easy question.  I gave a presentation for a local group and received an honorarium ($100). My first post-retirement "income"  ;-)    Is this taxable income? I'm perfectly willing to declare it if it is, but is it?

Yes it is!

Deduct any expenses to reach the location against this income however. Congrats!
[/quote]
The measure of civilization is how people treat one another.

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CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #545 on: March 28, 2016, 06:47:15 AM »
10 km driving, and some supplies for demo which were minor and will be reused.  So no point.  Good to know in case I ever do one further from home.  Just for interest sake, what if it had been 50 km away, so 100 km round trip.  Federal mileage rate?

quote author=CPA CB link=topic=25093.msg1027194#msg1027194 date=1459010937]
Super quick and easy question.  I gave a presentation for a local group and received an honorarium ($100). My first post-retirement "income"  ;-)    Is this taxable income? I'm perfectly willing to declare it if it is, but is it?

Yes it is!

Hi,

Expense the supplies and also the mileage - the rate is $0.54 cents per km for the first 5000 km.



Deduct any expenses to reach the location against this income however. Congrats!
[/quote]

RidinTheAsama

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #546 on: March 28, 2016, 12:13:40 PM »

Family Income from $30k to $65k

1 Child Household - total benefit phaseout of 7% per dollar.
2 Child Household - total benefit phaseout of 13.5% per dollar.
3 Child Household - total benefit phaseout of 19% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 23% per dollar.

Family Income Over $65k

On remaining benefit after above...

1 Child Household - total benefit phaseout of 3.2% per dollar.
2 Child Household - total benefit phaseout of 5.7% per dollar.
3 Child Household - total benefit phaseout of 8% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 9.5% per dollar.

NOTE: THESE AMOUNTS ARE TAX FREE - this is an important distinction.

If you earn over $200,000 as a family net income, you'll receive very little or nothing.


Thanks again for all the info you share here CPA CB.
A couple questions on the above...

First, A phaseout of x% per dollar.  How does that calculation work?  My literal reading of it would put a family income of $30,200 already phased out to basically $0 in benefits... ($200 above the start point, therefore benefits reduced by a factor of [1-x]^200) So obviously I'm wrong...

Second, I read that the actual calculation of benefits will be based on the 'adjusted family net income'.  This takes RRSP contributions into account right?  So the more RRSP contributions I make and the lower I get my net income to be, the higher this benefit will be?

You're probably quite busy this time of year, and this doesn't really matter until the June, so I understand if you can't respond any time soon... no worries.

daverobev

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #547 on: March 28, 2016, 04:18:03 PM »

Family Income from $30k to $65k

1 Child Household - total benefit phaseout of 7% per dollar.
2 Child Household - total benefit phaseout of 13.5% per dollar.
3 Child Household - total benefit phaseout of 19% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 23% per dollar.

Family Income Over $65k

On remaining benefit after above...

1 Child Household - total benefit phaseout of 3.2% per dollar.
2 Child Household - total benefit phaseout of 5.7% per dollar.
3 Child Household - total benefit phaseout of 8% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 9.5% per dollar.

NOTE: THESE AMOUNTS ARE TAX FREE - this is an important distinction.

If you earn over $200,000 as a family net income, you'll receive very little or nothing.


Thanks again for all the info you share here CPA CB.
A couple questions on the above...

First, A phaseout of x% per dollar.  How does that calculation work?  My literal reading of it would put a family income of $30,200 already phased out to basically $0 in benefits... ($200 above the start point, therefore benefits reduced by a factor of [1-x]^200) So obviously I'm wrong...

Second, I read that the actual calculation of benefits will be based on the 'adjusted family net income'.  This takes RRSP contributions into account right?  So the more RRSP contributions I make and the lower I get my net income to be, the higher this benefit will be?

You're probably quite busy this time of year, and this doesn't really matter until the June, so I understand if you can't respond any time soon... no worries.

7% per dollar means you lose 7c/dollar. For every $100 net, you lose $7. $10k, $700. $35k, ~$2500. After you hit household $65k, $100 net means $3.20 lost. For $90k, that means you've lost $2500 at the first bracket, and roughly another thousand in the second bracket.

Yes, paying in to an RRSP reduces your net income. It's more-worth bumping your RRSP payments for child benefit if your household net income is under $65k!
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TrMama

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #548 on: March 28, 2016, 04:52:33 PM »
Family Income Under $30k

Each Child under 6 - $6,400 per annum
Children 6 to 17 - $5,400 per annum.

Family Income from $30k to $65k

1 Child Household - total benefit phaseout of 7% per dollar.
2 Child Household - total benefit phaseout of 13.5% per dollar.
3 Child Household - total benefit phaseout of 19% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 23% per dollar.

Family Income Over $65k

On remaining benefit after above...

1 Child Household - total benefit phaseout of 3.2% per dollar.
2 Child Household - total benefit phaseout of 5.7% per dollar.
3 Child Household - total benefit phaseout of 8% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 9.5% per dollar.


http://www.budget.gc.ca/2016/tool-outil/ccb-ace-en.html

To figure out how much your specific situation will give you.

Do you know if that calculator uses net or gross household income? I get wildly different numbers depending on which figure I plug into it.

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #549 on: March 28, 2016, 05:42:12 PM »
Family Income Under $30k

Each Child under 6 - $6,400 per annum
Children 6 to 17 - $5,400 per annum.

Family Income from $30k to $65k

1 Child Household - total benefit phaseout of 7% per dollar.
2 Child Household - total benefit phaseout of 13.5% per dollar.
3 Child Household - total benefit phaseout of 19% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 23% per dollar.

Family Income Over $65k

On remaining benefit after above...

1 Child Household - total benefit phaseout of 3.2% per dollar.
2 Child Household - total benefit phaseout of 5.7% per dollar.
3 Child Household - total benefit phaseout of 8% per dollar.
4 or More (The Brady Bunch) - total benefit phaseout of 9.5% per dollar.


http://www.budget.gc.ca/2016/tool-outil/ccb-ace-en.html

To figure out how much your specific situation will give you.

Do you know if that calculator uses net or gross household income? I get wildly different numbers depending on which figure I plug into it.

Net - Line 236