Author Topic: Can"EH"dian Tax - You have questions, I have answers  (Read 94651 times)

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #600 on: April 27, 2016, 01:06:49 PM »
CPA CB, I think you are wonderful!
Can you weigh in on my situation please?
http://forum.mrmoneymustache.com/ask-a-mustachian/er-take-pension-now-or-later/msg1066311/#msg1066311

Thank you!

Absolutely - but it will be next week as things are quite busy here in CPA land.

Cheers,

CPA CB

eric77

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #601 on: May 30, 2016, 03:12:12 AM »
Hey CPA CB!

I sent you some questions via PM if you have any time to look at them. It's a great help to the community here you're providing, thanks in advance!

Maya

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #602 on: June 15, 2016, 02:02:14 PM »
legality question...

DH and I would eventually like to start up a coorporation to hold our (future) rental properties. Could the coorporation own our residence and we rent from them? Is that allowed or are there clauses preventing that?

Retire-Canada

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #603 on: June 15, 2016, 02:05:01 PM »
legality question...

DH and I would eventually like to start up a coorporation to hold our (future) rental properties. Could the coorporation own our residence and we rent from them? Is that allowed or are there clauses preventing that?

As an aside if that was possible you'd lose the primary residence capital gains exemption which can be a pretty huge tax benefit.

Prairie Stash

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #604 on: June 16, 2016, 10:15:14 AM »
legality question...

DH and I would eventually like to start up a coorporation to hold our (future) rental properties. Could the coorporation own our residence and we rent from them? Is that allowed or are there clauses preventing that?
I'm not sure that would save money. You have to pay market rent, all rentals must show a reasonable expectation of profit, you can't pay half rent and get tax deductions, that's not a loop hole. All profit would then be subject to corporation taxes and dividend taxes when its returned to you. Market rent means your rent would need to increase at the same rate as your other rentals, from the corporations view your just another renter (no special favours for the owners).

Essentially the question boils down to is it better to rent forever or own a house?  What's the benefit for you? As an aside check out the "Smith Maneuver", it discusses leveraging your house for investing.

http://www.theglobeandmail.com/real-estate/mortgages-and-rates/the-smith-maneuver-a-canadian-mortgage-tax-deductible-plan/article12059456/


Retire-Canada already touched upon capital gains tax exemption, that's pretty huge. You would also need to appraise it to sell it to the corporation, you can't sell it at an inflated rate to hide extra capital gains.

Maya

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #605 on: June 18, 2016, 05:34:14 PM »
Thanks, yes would definitely have to run the numbers. At the moment we are selling our house, so if we were do it this down the line there would be no selling into the corporation, the corporation would just buy it from the start.

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #606 on: June 20, 2016, 08:49:35 AM »
Thanks, yes would definitely have to run the numbers. At the moment we are selling our house, so if we were do it this down the line there would be no selling into the corporation, the corporation would just buy it from the start.

Hi Maya -

Yes, it certainly is possible to purchase the house through the business and rent it to yourself and husband. If you don't pay rent per se, you would have to take the market value unpaid as a personal taxable benefit on your taxes.

The major downfalls are the loss of the principal residence exemption as was rightly brought up. This is a significant loss, and I wouldn't recommend opting out of this.

The alternative however, is that you rent space in your future home to the corporation, and have the corporations take deductions on a sq ft basis. So, if the business takes up 25% of the space of the home, you can expense 25% of the utilities, interest, maintenance, etc., and also charge a reasonable amount of rent to the corporation. This should lower your overall taxable income and taxes every year.

Hope this helps

CPA CB

hunniebun

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #607 on: June 20, 2016, 09:06:15 AM »
I have a question - that only popped into my head when I saw your post (so thank you for this thread, otherwise I would have signed on the dotted line and been clueless later!)

We are planning to enter into a conservation agreement to rehabilitate a wetland on a property that we own. The program will pay us 500$ per acre for land that is reclaimed as wetland and we are looking at approximately 20 acres.  Do you know if this would be taxable or where I can find some information about it?  My quick google did not reveal anything, but I am not even sure what I am looking for! 

Prairie Stash

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #608 on: June 23, 2016, 12:11:02 PM »
I have a question - that only popped into my head when I saw your post (so thank you for this thread, otherwise I would have signed on the dotted line and been clueless later!)

We are planning to enter into a conservation agreement to rehabilitate a wetland on a property that we own. The program will pay us 500$ per acre for land that is reclaimed as wetland and we are looking at approximately 20 acres.  Do you know if this would be taxable or where I can find some information about it?  My quick google did not reveal anything, but I am not even sure what I am looking for!
Its rental land, unless there's some sort of charitable tax break. I'm assuming its for a set time period of 10 years at which point it could revert back to farm land. You can deduct taxes and mortgage interest as well as other expenses. What you're doing sounds a little different than a normal rental agreement though. Do they pay it all up front or make annual payments? If its annual its easier to make tax deductions and if its lump sum then you might owe all the taxes in the year you get the money (now). 

http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-15e.pdf

hunniebun

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #609 on: June 23, 2016, 12:16:07 PM »
I have a question - that only popped into my head when I saw your post (so thank you for this thread, otherwise I would have signed on the dotted line and been clueless later!)

We are planning to enter into a conservation agreement to rehabilitate a wetland on a property that we own. The program will pay us 500$ per acre for land that is reclaimed as wetland and we are looking at approximately 20 acres.  Do you know if this would be taxable or where I can find some information about it?  My quick google did not reveal anything, but I am not even sure what I am looking for!
Its rental land, unless there's some sort of charitable tax break. I'm assuming its for a set time period of 10 years at which point it could revert back to farm land. You can deduct taxes and mortgage interest as well as other expenses. What you're doing sounds a little different than a normal rental agreement though. Do they pay it all up front or make annual payments? If its annual its easier to make tax deductions and if its lump sum then you might owe all the taxes in the year you get the money (now). 

http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-15e.pdf

Thank you for the reference and the info. The payment comes in a single lump sum and the agreement lasts for the 10 year period.  I am hoping there will be some sort of charitable tax break, it is funded by Environment Canada.  At least I know to ask them before we sign!

taularian

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #610 on: July 12, 2016, 08:45:02 PM »
Question about asset location

I read on CCP that all asset are taxed differently when you buy stock or EFT but he never talked about mutual fund.
I follow his recommandation using the TD eSeries funds with the assertive balance (25% can, 25% USA, 25 int, 25 bond)

The question is : Is there a different in taxation when you use mutual fund like EFT?  If i have maxed my TFSA and RRSP should i try to have bond in TFSA and RRSP, USA in RRSP and CAN in non registred account?

Thx!

Le Barbu

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #611 on: July 13, 2016, 05:44:56 AM »
Question about asset location

I read on CCP that all asset are taxed differently when you buy stock or EFT but he never talked about mutual fund.
I follow his recommandation using the TD eSeries funds with the assertive balance (25% can, 25% USA, 25 int, 25 bond)

The question is : Is there a different in taxation when you use mutual fund like EFT?  If i have maxed my TFSA and RRSP should i try to have bond in TFSA and RRSP, USA in RRSP and CAN in non registred account?

Thx!

Sometime, thinking to much about taxes is kind of hair splitting. Your saving rate is the most important, by far. You could have a mix in each account if you want. Only remember if you have to invest in taxable account, CAN stocks are the best. Now, if you have any kind of debt, you better pay off your debt instead of investing in bonds (my take). If you think your TFSA will be used for a cash down or as your EF, some bonds are ok.
"The real reason this blog exists, is simply to save the entire human race from destroying itself through overconsumption of its own habitat"

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CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #612 on: July 13, 2016, 08:22:30 AM »
I have a question - that only popped into my head when I saw your post (so thank you for this thread, otherwise I would have signed on the dotted line and been clueless later!)

We are planning to enter into a conservation agreement to rehabilitate a wetland on a property that we own. The program will pay us 500$ per acre for land that is reclaimed as wetland and we are looking at approximately 20 acres.  Do you know if this would be taxable or where I can find some information about it?  My quick google did not reveal anything, but I am not even sure what I am looking for!
Its rental land, unless there's some sort of charitable tax break. I'm assuming its for a set time period of 10 years at which point it could revert back to farm land. You can deduct taxes and mortgage interest as well as other expenses. What you're doing sounds a little different than a normal rental agreement though. Do they pay it all up front or make annual payments? If its annual its easier to make tax deductions and if its lump sum then you might owe all the taxes in the year you get the money (now). 

http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-15e.pdf

Thank you for the reference and the info. The payment comes in a single lump sum and the agreement lasts for the 10 year period.  I am hoping there will be some sort of charitable tax break, it is funded by Environment Canada.  At least I know to ask them before we sign!

Usually any grants or contributions from the government are considered taxable - however generally you recognize the revenue as the expenses are outlaid for the property for your taxable income would be $nil assuming the grant makes up for expenses of holding the land.

I.e. if you incur property taxes of $10,000 - you'd recognize the grant revenue of $10,000 on your tax return to make up for the expense.

Hope this helps!

CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #613 on: July 13, 2016, 08:24:16 AM »
Question about asset location

I read on CCP that all asset are taxed differently when you buy stock or EFT but he never talked about mutual fund.
I follow his recommandation using the TD eSeries funds with the assertive balance (25% can, 25% USA, 25 int, 25 bond)

The question is : Is there a different in taxation when you use mutual fund like EFT?  If i have maxed my TFSA and RRSP should i try to have bond in TFSA and RRSP, USA in RRSP and CAN in non registred account?

Thx!

Sometime, thinking to much about taxes is kind of hair splitting. Your saving rate is the most important, by far. You could have a mix in each account if you want. Only remember if you have to invest in taxable account, CAN stocks are the best. Now, if you have any kind of debt, you better pay off your debt instead of investing in bonds (my take). If you think your TFSA will be used for a cash down or as your EF, some bonds are ok.

Sorry - do you mean Asset Location? Or Allocation?

Are you a US Citizen?

CPA CB

Le Barbu

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #614 on: July 13, 2016, 02:52:57 PM »
Question about asset location

I read on CCP that all asset are taxed differently when you buy stock or EFT but he never talked about mutual fund.
I follow his recommandation using the TD eSeries funds with the assertive balance (25% can, 25% USA, 25 int, 25 bond)

The question is : Is there a different in taxation when you use mutual fund like EFT?  If i have maxed my TFSA and RRSP should i try to have bond in TFSA and RRSP, USA in RRSP and CAN in non registred account?

Thx!

Sometime, thinking to much about taxes is kind of hair splitting. Your saving rate is the most important, by far. You could have a mix in each account if you want. Only remember if you have to invest in taxable account, CAN stocks are the best. Now, if you have any kind of debt, you better pay off your debt instead of investing in bonds (my take). If you think your TFSA will be used for a cash down or as your EF, some bonds are ok.

Sorry - do you mean Asset Location? Or Allocation?

Are you a US Citizen?

CPA CB

CCP indeed talked about the assets location. So, after you decided your assets allocation, you should choose wich asset fits best in each account. Taxes are importants to consider but volatility and grow potential are also importants.
"The real reason this blog exists, is simply to save the entire human race from destroying itself through overconsumption of its own habitat"

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Redstone5

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #615 on: July 13, 2016, 04:03:29 PM »
I have a question about the Canadian child tax credit. My husband and I usually get about $533/month for our three kids (4, 8 and 14). We are now separated, and according to the estimator on the gov site, I should be getting $633/month child tax credit (estimated), now that we're sharing custody 50%. Do I have to wait until I do my taxes for 2016 before I can start getting the increased child tax credit, or is it possible to apply to get it changed in advance?

K-ice

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #616 on: July 18, 2016, 05:41:16 AM »
I have a question about the Canadian child tax credit. My husband and I usually get about $533/month for our three kids (4, 8 and 14). We are now separated, and according to the estimator on the gov site, I should be getting $633/month child tax credit (estimated), now that we're sharing custody 50%. Do I have to wait until I do my taxes for 2016 before I can start getting the increased child tax credit, or is it possible to apply to get it changed in advance?

I can't comment on the amount or custody issue. But I got a very generic notice in the mail that said the new payment will go into direct deposit like the old one.

In my case this should be less money as we are married with only 1 kid about to turn 6.

Oh well, I guess we make enough money the government thinks we don't need more.

 


Prairie Stash

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #617 on: July 18, 2016, 02:06:42 PM »
I have a question about the Canadian child tax credit. My husband and I usually get about $533/month for our three kids (4, 8 and 14). We are now separated, and according to the estimator on the gov site, I should be getting $633/month child tax credit (estimated), now that we're sharing custody 50%. Do I have to wait until I do my taxes for 2016 before I can start getting the increased child tax credit, or is it possible to apply to get it changed in advance?
http://www.cra-arc.gc.ca/bnfts/mrtl/menu-eng.html

You need to notify CRA immediately about the separation or any marital changes, separations take 90 days before they become official. You can update it at CRA's "My Account" and the changes will take effect. If you are getting too much, based on the change you will need to pay it back, if its too little then you'll get more. Your husband will also need to update, right now you'll be getting all the money for both (typically females get it, its CRA policy) and when the CRA finds out they will make you repay the money.

http://www.cra-arc.gc.ca/E/pub/tg/t4114/t4114-16e.pdf    - this is the long detailed version
« Last Edit: July 18, 2016, 02:09:31 PM by Prairie Stash »

Redstone5

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #618 on: July 18, 2016, 02:24:20 PM »
I have a question about the Canadian child tax credit. My husband and I usually get about $533/month for our three kids (4, 8 and 14). We are now separated, and according to the estimator on the gov site, I should be getting $633/month child tax credit (estimated), now that we're sharing custody 50%. Do I have to wait until I do my taxes for 2016 before I can start getting the increased child tax credit, or is it possible to apply to get it changed in advance?
http://www.cra-arc.gc.ca/bnfts/mrtl/menu-eng.html

You need to notify CRA immediately about the separation or any marital changes, separations take 90 days before they become official. You can update it at CRA's "My Account" and the changes will take effect. If you are getting too much, based on the change you will need to pay it back, if its too little then you'll get more. Your husband will also need to update, right now you'll be getting all the money for both (typically females get it, its CRA policy) and when the CRA finds out they will make you repay the money.

http://www.cra-arc.gc.ca/E/pub/tg/t4114/t4114-16e.pdf    - this is the long detailed version

Thank you so much! This is exactly the information I was looking for.

K-ice

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #619 on: July 18, 2016, 06:40:07 PM »
I have a question about the Canadian child tax credit. My husband and I usually get about $533/month for our three kids (4, 8 and 14). We are now separated, and according to the estimator on the gov site, I should be getting $633/month child tax credit (estimated), now that we're sharing custody 50%. Do I have to wait until I do my taxes for 2016 before I can start getting the increased child tax credit, or is it possible to apply to get it changed in advance?
http://www.cra-arc.gc.ca/bnfts/mrtl/menu-eng.html

You need to notify CRA immediately about the separation or any marital changes, separations take 90 days before they become official. You can update it at CRA's "My Account" and the changes will take effect. If you are getting too much, based on the change you will need to pay it back, if its too little then you'll get more. Your husband will also need to update, right now you'll be getting all the money for both (typically females get it, its CRA policy) and when the CRA finds out they will make you repay the money.

http://www.cra-arc.gc.ca/E/pub/tg/t4114/t4114-16e.pdf    - this is the long detailed version

Thank you so much! This is exactly the information I was looking for.

I know someone getting a divorce & in the separation agreement it said they could each claim one of two kids for tax reasons. Maybe something like that will work for you.

Cannot Wait!

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #620 on: July 19, 2016, 07:47:19 PM »
(typically females get it, its CRA policy)

typically the lower income earner gets it 
FTFY
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CPA CB

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #621 on: July 20, 2016, 06:41:11 AM »
(typically females get it, its CRA policy)

typically the lower income earner gets it 
FTFY

Hi there - it completely depends on the separation agreement - It's only typical that the lower income earner gets it because that's the person who is applying...

Make sure you spell this out in the agreement who gets to claim what child. Most divorces are vindictive and take the attitude of "I get nothing so you get nothing" which is counter productive. You both can claim a child, just decide on which, and go from there. It's a net positive to you, to your divorcee, and the family as a whole. Don't get into a fight on this.

CPA CB

Cannot Wait!

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #622 on: July 20, 2016, 05:29:25 PM »
I claimed the youngest, so I can claim him longer. 
I hope that's how it works anyway!
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Prairie Stash

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #623 on: July 25, 2016, 01:41:58 PM »
(typically females get it, its CRA policy)

typically the lower income earner gets it 
FTFY
No, I think it was correct. Its on the CRA website that they assume females (in a male/female house) to be the primary caregiver. Since they're splitting the assumption going in was she was the primary caregiver unless they had already written CRA stating otherwise. Notice how CRA requires the male in the relationship to provide a note along with the application, females aren't required for a note from their male partner (feel free to check it out yourself). It actually has nothing to do with income levels, in the absence of direction from the parents they just make an assumption. They have to assume someone is the primary, in a combined family it really doesn't matter that much.

"For CCB purposes, when a male and a female parent live together in the same household as the child, the female parent is usually considered to be primarily responsible for the child. In this situation, the female parent should apply. If the male parent is primarily responsible, he must attach a note to his application from the female parent. The note must state that he is primarily responsible for all of the children in the household." - CRA

I claimed the youngest, so I can claim him longer. 
I hope that's how it works anyway!

Each parent gets 50% of the total in Shared Custody arrangements.
"Both individuals must be primarily responsible for the child's care and upbringing when the child lives with them. Each eligible individual will get 50% of the payment he or she would have received if the child lived with him or her all of the time. If you have just entered into a shared custody situation you have to apply for benefit" - CRA

scrubbyfish

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #624 on: July 29, 2016, 09:43:54 AM »
Can someone please tell me about the Working Income Tax Benefit and its associated Disability Supplement?

On several sites, it says the calculation includes income from employment, business, or self-employment. On the Govt's calculator site, it tells us to include EVERY source of income, including nonwork, pensions, etc.

1. What income sources are included in the calculation?

2. For the Disability Supplement, is it the basic threshold PLUS the DS threshold? Or does a person eligible for the DS ignore info re: basic threshold and look ONLY at the latter?

Cathy

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #625 on: July 29, 2016, 04:47:05 PM »
Can someone please tell me about the Working Income Tax Benefit and its associated Disability Supplement?

On several sites, it says the calculation includes income from employment, business, or self-employment. On the Govt's calculator site, it tells us to include EVERY source of income, including nonwork, pensions, etc.

1. What income sources are included in the calculation?

2. For the Disability Supplement, is it the basic threshold PLUS the DS threshold? Or does a person eligible for the DS ignore info re: basic threshold and look ONLY at the latter?

The formula for the working income tax credit takes into account two separate concepts of income -- "working income" and "adjusted net income". See section 122.7(2) of the Income Tax Act, RSC 1985, c  1 (5th Supp) ("ITA"). The disability supplement is an additional provision of the legislation and has its own formula. If the result of the disability supplement calculation is greater than zero, that amount is received in addition to the normal working income tax credit. ITA § 122.7(3). Both formulas have a number of special cases.

The CRA provides a worksheet that can be used to calculate the values of these benefits: Schedule 6 to the Individual Income Tax Return.
This post contains only general information on the issues raised by this topic. This post does not provide help tailored to your specific situation. There are many facts that could be relevant to your specific situation and I am not in possession of those facts. If you need help tailored to your specific situation, you should retain an appropriate professional and not rely on this post.

scrubbyfish

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #626 on: July 29, 2016, 05:38:22 PM »
Thanks very much, Cathy! (Also, I was just thinking about you the other day, wondering where you'd gone and trying to think how to reach you. Great you're here!) This WITB/DS worksheet seems much more clear than CRA's online calc. I'll work through it.

Meisje72

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #627 on: August 12, 2016, 12:27:08 AM »
Hi,
First, thanks for doing this!  You Rock!
I am starting at page one and reading all the posts from this thread as there is so much great advice and clarifications :)
For myself, I have one (hopefully quick) question...

We have a rental property with a mortgage.  We have owned it for 10 years.  We live and the property is in Ontario.  I prepare my own year end to give to the accountant, but I just realize that I have shorted ourselves by not including mortgage interest for the last 10 years.  ooopps! my bad ;O.
Also, we are selling it this year, so this will be the last return with it.

Best regards, thank you!

Any recommendation to fix it?

Prairie Stash

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #628 on: August 19, 2016, 12:33:11 PM »
We have a rental property with a mortgage.  We have owned it for 10 years.  We live and the property is in Ontario.  I prepare my own year end to give to the accountant, but I just realize that I have shorted ourselves by not including mortgage interest for the last 10 years.  ooopps! my bad ;O.
Also, we are selling it this year, so this will be the last return with it.

Best regards, thank you!

Any recommendation to fix it?
Refile the past 10 years of returns. Its not a big deal, it will go pretty quick if its the same mistake each year. I attached the link with the adjustment form, its really fast to fill, I think it will take longer to determine the interest amounts (which is also pretty fast).

http://www.cra-arc.gc.ca/changereturn/

Filliteracy

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #629 on: August 26, 2016, 10:57:33 AM »
CPA CB,

How much do you know about non-resident tax withheld on dividends from foreign countries? I purchased TOTAL S.A. (ADR) shares several years ago and realized that the dividends were being taxed at source at a rate of 30%. I was able to find out that Canada had a tax treaty with France so I should be able to reduce that tax from 30 to 15%, recuperate what was overtaxed, and rectify it for the future payments. I've read many articles (couchpotatoe, globe and mail) that all say that this will not be possible with a TFSA. I'm about to send a letter plus forms 5000-EN and 5001-EN to my financial institution and get them to send it to the French tax authorities. How likely is it that I will get refunded?

ptenn

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #630 on: September 04, 2016, 08:33:04 AM »
This thread is awesome, I'm so glad I found it.

I've got a couple wealth management type questions:

Under what circumstances is it worth creating a holding company to hold investments? Tips/caveats about where to incorporate, who should hold shares, assets to hold, and how to get money out of it eventually?

Same as above but for trusts - what are the differences of a domestic trust vs an international trust (all jurisdictions are different; looking for general thoughts)

Also, if one of the CPAs on here could weigh in on all the tax dodging stuff in the press lately that would be really interesting to read about. I'm thinking about Panama Papers and that stuff with KPMG and the Isle of Man.

FIRE_at_45

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #631 on: October 01, 2016, 09:22:04 AM »
My question is regarding owning land.  I've owned a parcel of land and paid property taxes for 12 years.  When there was interest on the line of credit we claimed it on our taxes.  Can you claim the property tax as it really is a cost of the investment as this isn't a primary residence (I.e. It is dirt only)?  Is it possible to go back that many years since I've claimed nothing to this point?

Also, upon selling can you claim the realtor fees against your capital gains?

Awesome thread that I plan to review entirely! 
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RidinTheAsama

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #632 on: October 18, 2016, 03:23:16 PM »
A question for you about 'fixing' old tax returns.

The background is that when I was younger I just handed over my tax stuff to my Dad's accountant and let him handle everything.  Eventually I took over the job myself and have been sending in my own returns for about 5 years now.  For my 2014 return I realized that I had a substantial amount of unclaimed RRSP contributions - contributions I had made but not yet claimed to offset any income tax.  I now understand that these were being held so that they could be used against my expected future higher income but didn't realize it then.  I claimed all of it which meant about $10k was used to offset lower tax-bracket income.

So the question is: Is it possible to go back and adjust my previous tax return to 'un-claim' those RRSP contributions, and instead spread them out over the next couple years where they can offset the income in my current peak tax bracket?  I would end up owing more on my 2014 taxes, but should be able to save even more still on my 2016 and 2017 taxes.  If possible, what would the process entail?


Thanks!

K-ice

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #633 on: October 18, 2016, 04:35:42 PM »
Partners in a rental property, mortgage interest deduction question:

My spouse and I own a rental property. We have always shared the expenses and income 50:50.

It’s worth about $300,000 and has a $200,000 mortgage on it.

My spouse is in the position to pay out their share of the mortgage with savings, I am not, and would rather Vanguard invest. (The pay-off mortgage vs invest is not something we agree on.)

The mortgage now goes down to $100K and will probably still be in both of our names (if that matters).

So, if I take over the mortgage payments for the $100K remaining mortgage from my share of the income can I deduct 100% of the interest from my taxes while my spouse deducts nothing?

Heckler

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #634 on: November 05, 2016, 10:18:33 AM »
CPA, I'd love to get your input over here.  Thanks!

http://forum.mrmoneymustache.com/taxes/canada-fire-with-rrsps/

Heckler

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #635 on: November 13, 2016, 10:37:56 PM »
VUN vs VTI question for the group


What if any are the implications of owning more than $100k of VTI in an RSP account?

I see T1135 Foriegn Income Verification Statement.  Does that mean I just have to report owning > 100k of VTI in RSP,  but does it affect my taxes or anything other than filling in the additional form at tax time?

http://www.cra-arc.gc.ca/E/pbg/tf/t1135/README.html
« Last Edit: November 13, 2016, 10:40:37 PM by Heckler »

daverobev

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #636 on: November 14, 2016, 07:15:10 AM »
VUN vs VTI question for the group


What if any are the implications of owning more than $100k of VTI in an RSP account?

I see T1135 Foriegn Income Verification Statement.  Does that mean I just have to report owning > 100k of VTI in RSP,  but does it affect my taxes or anything other than filling in the additional form at tax time?

http://www.cra-arc.gc.ca/E/pbg/tf/t1135/README.html

You don't need to report if it's registered.

The T1135 is just a sort of "heads up" or tracking mechanism for the government, so large sums of money don't magically appear. IE, you buy a house overseas, you sell it, you MUST declare the cap gain. The T1135 on its own doesn't do this, but it helps. And, if you have to file one, they can basically review your taxes forever.

But yeah, it's only if you have > $100k of foreign stuff outside tax shelters, and not for personal use only.
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SweetLife

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Oh oh ... I think I screwed up ...
« Reply #637 on: December 07, 2016, 04:03:23 PM »
CPA ... I was sure I could just take money out of my TFSA and do whatever I wanted with it??? But I read in a post that there was a tax implication :(

Can you tell me for sure one way or the other??? It was a couple thousand I had put in but then decided it would be better used to put it on paying down my Line of Credit.

Thank you!!!

Retire-Canada

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Re: Oh oh ... I think I screwed up ...
« Reply #638 on: December 07, 2016, 04:48:24 PM »
CPA ... I was sure I could just take money out of my TFSA and do whatever I wanted with it??? But I read in a post that there was a tax implication :(

Can you tell me for sure one way or the other??? It was a couple thousand I had put in but then decided it would be better used to put it on paying down my Line of Credit.

Thank you!!!

You can take your money out of the TFSA and do what you want with it tax free.

https://www.tdcanadatrust.com/products-services/banking/accounts/tax-free-savings-account/tfsa-qa.jsp

Quote
Q: When can I withdraw my money?

A: You can withdraw funds from your TFSA any time you want – you don’t have to reach a certain age before you withdraw your money.

Q: Do I have to pay income tax on my withdrawals?

A: No, you don’t have to pay tax on the amounts you withdraw.

Because TFSA withdrawals don’t count as taxable income, they don’t affect Federal income-tested benefits or tax credits you may receive, including the Canada Child Tax Benefit, the Working Income Tax Benefit, the Goods and Services Tax Credit and the Age Credit. TFSA withdrawals also won’t reduce benefits based on your income level, such as Old Age Security, the Guaranteed Income Supplement and Employment Insurance benefits.

GuitarStv

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #639 on: December 07, 2016, 06:32:17 PM »
Funny question for you.

My wife and I both got a notice of reassessment from the CRA in the mail today.  I have to pay about three grand extra (plus about 100$ for paying late), she gets about three grand back (plus about 40$ for overpaying . . . which is apparently taxable income for next year).

The explanation of changes for my wife's assessment:
- We deleted your universal child care benefit since the spouse or common-law partner with the lower net income has to report this income.
- We gave you a deduction of 8,000$ for child care expenses since you have a lower net income.  For more information, see form T778, Child Care Expenses Deduction for 2015.

The explanation of changes for my assessment:
- We included the universal child care benefit since the spouse or common-law partner with the lower net income has to report this income.
- Based on the information we have, we have disallowed your child care expenses.  The person with the lower net income must claim these expenses.  For more information, see form T778, Child Care Expenses Deduction for 2015.

My wife and I have very close net income amounts for last year when you don't account for the UCCB and child care deduction.

Serious questions:
- Are they just fucking with me?
- Is this worth fighting, or should I just pay the amount?

K-ice

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #640 on: December 09, 2016, 08:05:04 AM »
Serious questions:
- Are they just fucking with me?
- Is this worth fighting, or should I just pay the amount?

Lol. Their reasons sound soooo contradictory. I don't have a knowledgable answer but my guess is there was an error on your part in the order in which you total your income and then take the deductions.

I would call to discuss a clarification and potentially get the $100 fine waved since it's not like the government didn't have their money. It was just from the wrong person.

And at least you are married. I know a reciently seperated couple who were still married on Dec 31. This exact thing happend so imagine how pleased the paying patent was.


GuitarStv

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #641 on: December 12, 2016, 01:05:07 PM »
Well . . . I've called the CRA to ask them what was going on today.

1st phone call - after about five minutes of canned messages was told that call volume is too high and nobody can talk to me.

2nd phone call (made immediately after hanging up from first call) - got put on hold for about ten minutes, got through to an agent, performed all security checks (name, DOB, address, SSN, line 150 and line 350 of last return), explained problem.  I was put on hold for twenty minutes, then she came back and said that she couldn't answer my question.  I was transferred to another person (15 minute hold wait).

The second person that I talked to (after we performed all security checks again - name, DOB, address, SSN, line 150 and line 350 of last return) said that the calculation of net income for UCCB is made by the CRA before applying the child care expenses deduction.  My net income is about a hundred dollars lower than my wife's before the UCCB and child care deductions.  The CRA therefore claimed the UCCB as my own expense - which raises my net income above my wife's, which disallows me to claim the child care expenses.

If they had done things in the reverse order (my net income is initially lower/I claim the child care expenses, then my net income is higher/my wife claims the UCCB) then things work out exactly as I originally claimed them.

I asked if there was any information available (online or in the forms) to tax filers that the order the CRA followed is the order that must be followed when filing a return.  First the agent told me not to worry, the CRA accountants are much smarter than I am, so they definately did it right.  Then she gave me several references to internal CRA documents, and I asked where I could find them online.  Then she told me that the documents aren't available to people who don't work for the CRA.  So I asked again if there are any documents that are available to tax filers that would explain the correct order to apply things.  I was told to look up the Income Tax Act section 56 (6) and 56 (9.1), they would make it all clear.

So, after talking with her I looked up the Income Tax Act online for the sections mentioned:

Quote
56(6) - Child care benefit

(6) There shall be included in computing the income of a taxpayer for a taxation year the total of all amounts each of which is a benefit paid under section 4 of the Universal Child Care Benefit Act that is received in the taxation year by

(a) the taxpayer, if

(i) the taxpayer does not have a cohabiting spouse or common-law partner (within the meaning assigned by section 122.6) at the end of the year and the taxpayer does not make a designation under subsection (6.1) for the taxation year, or

(ii) the income, for the taxation year, of the person who is the taxpayer’s cohabiting spouse or common-law partner at the end of the taxation year is equal to or greater than the income of the taxpayer for the taxation year;

(b) the taxpayer’s cohabiting spouse or common-law partner at the end of the taxation year, if the income of the cohabiting spouse or common-law partner for the taxation year is greater than the taxpayer’s income for the taxation year; or

(c) an individual who makes a designation under subsection (6.1) in respect of the taxpayer for the taxation year.

Marginal note:Designation

(6.1) If, at the end of the taxation year, a taxpayer does not have a cohabiting spouse or common-law partner (within the meaning assigned by section 122.6), the taxpayer may designate, in the taxpayer’s return of income for the taxation year, the total of all amounts, each of which is a benefit received in the taxation year by the taxpayer under section 4 of the Universal Child Care Benefit Act, to be income of

(a) if the taxpayer deducts an amount for the taxation year under subsection 118(1) because of paragraph (b) of the description of B in that subsection in respect of an individual, the individual; or

(b) in any other case, a child who is a qualified dependant (as defined in section 2 of the Universal Child Care Benefit Act) of the taxpayer.


Quote
56 (9.1) - For the purposes of subsection (6), income of a person for a taxation year means the amount that would, in the absence of that subsection, paragraphs (1)(s) and (u) and 60(v.1), (w) and (y) and section 63, be the income of the person for the taxation year.

 . . . since that didn't seem to answer my question:

3rd phone call - waited about ten minutes to get a hold of someone), performed all security checks (name, DOB, address, SSN, line 150 and line 350 of last return), explained situation again.  I then explained the problem that the order you apply the deductions matters in this case, and that I'd like to be shown the form or online documentation for how to file the return correctly.  Was put on hold for 30 minutes and then was disconnected.

Guess I'll try again tomorrow.  At least I've answered my first question - yes, they do appear to just be fucking with me.  :P
« Last Edit: December 12, 2016, 01:08:59 PM by GuitarStv »

Prairie Stash

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #642 on: December 12, 2016, 04:04:31 PM »
Funny question for you.

My wife and I both got a notice of reassessment from the CRA in the mail today.  I have to pay about three grand extra (plus about 100$ for paying late), she gets about three grand back (plus about 40$ for overpaying . . . which is apparently taxable income for next year).

The explanation of changes for my wife's assessment:
- We deleted your universal child care benefit since the spouse or common-law partner with the lower net income has to report this income.
- We gave you a deduction of 8,000$ for child care expenses since you have a lower net income.  For more information, see form T778, Child Care Expenses Deduction for 2015.

The explanation of changes for my assessment:
- We included the universal child care benefit since the spouse or common-law partner with the lower net income has to report this income.
- Based on the information we have, we have disallowed your child care expenses.  The person with the lower net income must claim these expenses.  For more information, see form T778, Child Care Expenses Deduction for 2015.

My wife and I have very close net income amounts for last year when you don't account for the UCCB and child care deduction.

Serious questions:
- Are they just fucking with me?
- Is this worth fighting, or should I just pay the amount?
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/117-eng.html
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/214/wh/menu-eng.html

Lower income (GuitarStv) has to claim UCCB - its not based on mother/father or who receives the money.

Then deductions start based on net income; in this case your net is now higher so your partner claims. The order is in the counting system; line 117 comes before line 214 (sorry, its not what you want to hear). The tax form is intended to go front to back (with a handful of related forms to slow it down).

You don't get to choose how to allocate the income/deductions, I wish we could. I use simpletax which auto allocates the household stuff, its helpful to use a check on your filing.

The weird thing about UCCB is it assumes mothers are the primary caregiver (fathers need to get a signed note from the mother if they are the primary caregiver, mothers do not need a note). Yet at tax time the lower income claims it. In your case your wife is assumed to be the primary care, she likely gets the cheque, which is why you probably put it on her taxes. For tax purposes the recipient and the person claiming are not necessarily the same person (like your case). I get why you did it, it probably happens fairly often.

You will end up paying (IMO). You can try to get reduced charges but I have no experience with that so I can only wish you good luck.

GuitarStv

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #643 on: December 12, 2016, 06:07:29 PM »
Funny question for you.

My wife and I both got a notice of reassessment from the CRA in the mail today.  I have to pay about three grand extra (plus about 100$ for paying late), she gets about three grand back (plus about 40$ for overpaying . . . which is apparently taxable income for next year).

The explanation of changes for my wife's assessment:
- We deleted your universal child care benefit since the spouse or common-law partner with the lower net income has to report this income.
- We gave you a deduction of 8,000$ for child care expenses since you have a lower net income.  For more information, see form T778, Child Care Expenses Deduction for 2015.

The explanation of changes for my assessment:
- We included the universal child care benefit since the spouse or common-law partner with the lower net income has to report this income.
- Based on the information we have, we have disallowed your child care expenses.  The person with the lower net income must claim these expenses.  For more information, see form T778, Child Care Expenses Deduction for 2015.

My wife and I have very close net income amounts for last year when you don't account for the UCCB and child care deduction.

Serious questions:
- Are they just fucking with me?
- Is this worth fighting, or should I just pay the amount?
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/117-eng.html
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/214/wh/menu-eng.html

Lower income (GuitarStv) has to claim UCCB - its not based on mother/father or who receives the money.

Then deductions start based on net income; in this case your net is now higher so your partner claims. The order is in the counting system; line 117 comes before line 214 (sorry, its not what you want to hear). The tax form is intended to go front to back (with a handful of related forms to slow it down).

You don't get to choose how to allocate the income/deductions, I wish we could. I use simpletax which auto allocates the household stuff, its helpful to use a check on your filing.

The weird thing about UCCB is it assumes mothers are the primary caregiver (fathers need to get a signed note from the mother if they are the primary caregiver, mothers do not need a note). Yet at tax time the lower income claims it. In your case your wife is assumed to be the primary care, she likely gets the cheque, which is why you probably put it on her taxes. For tax purposes the recipient and the person claiming are not necessarily the same person (like your case). I get why you did it, it probably happens fairly often.

You will end up paying (IMO). You can try to get reduced charges but I have no experience with that so I can only wish you good luck.

Well, that makes more sense than anything the CRA was able to tell me today over three phone calls.

Yes, my wife does get the cheque.  That's probably why I put it on her income tax to begin with.

Sigh.

GuitarStv

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #644 on: December 12, 2016, 07:30:43 PM »
Funny question for you.

My wife and I both got a notice of reassessment from the CRA in the mail today.  I have to pay about three grand extra (plus about 100$ for paying late), she gets about three grand back (plus about 40$ for overpaying . . . which is apparently taxable income for next year).

The explanation of changes for my wife's assessment:
- We deleted your universal child care benefit since the spouse or common-law partner with the lower net income has to report this income.
- We gave you a deduction of 8,000$ for child care expenses since you have a lower net income.  For more information, see form T778, Child Care Expenses Deduction for 2015.

The explanation of changes for my assessment:
- We included the universal child care benefit since the spouse or common-law partner with the lower net income has to report this income.
- Based on the information we have, we have disallowed your child care expenses.  The person with the lower net income must claim these expenses.  For more information, see form T778, Child Care Expenses Deduction for 2015.

My wife and I have very close net income amounts for last year when you don't account for the UCCB and child care deduction.

Serious questions:
- Are they just fucking with me?
- Is this worth fighting, or should I just pay the amount?
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/117-eng.html
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/214/wh/menu-eng.html

Lower income (GuitarStv) has to claim UCCB - its not based on mother/father or who receives the money.

Then deductions start based on net income; in this case your net is now higher so your partner claims. The order is in the counting system; line 117 comes before line 214 (sorry, its not what you want to hear). The tax form is intended to go front to back (with a handful of related forms to slow it down).

You don't get to choose how to allocate the income/deductions, I wish we could. I use simpletax which auto allocates the household stuff, its helpful to use a check on your filing.

The weird thing about UCCB is it assumes mothers are the primary caregiver (fathers need to get a signed note from the mother if they are the primary caregiver, mothers do not need a note). Yet at tax time the lower income claims it. In your case your wife is assumed to be the primary care, she likely gets the cheque, which is why you probably put it on her taxes. For tax purposes the recipient and the person claiming are not necessarily the same person (like your case). I get why you did it, it probably happens fairly often.

You will end up paying (IMO). You can try to get reduced charges but I have no experience with that so I can only wish you good luck.

Wait a sec.  Upon more thinking that doesn't make sense.

My gross income was higher than my wife's last year.  I made more RRSP contributions which created deductions that lowered my net income to just slightly below hers.  Why are those deductions OK to effect my net income, but the child care rebate deductions not OK to effect my net income when determining who claims the UCCB?  That doesn't make sense.
« Last Edit: December 13, 2016, 07:13:10 AM by GuitarStv »

Prairie Stash

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #645 on: December 13, 2016, 09:38:41 AM »


Wait a sec.  Upon more thinking that doesn't make sense.

My gross income was higher than my wife's last year.  I made more RRSP contributions which created deductions that lowered my net income to just slightly below hers.  Why are those deductions OK to effect my net income, but the child care rebate deductions not OK to effect my net income when determining who claims the UCCB?  That doesn't make sense.
wow, you guys really were close, be careful with it this year too! On the back of the childcare form they have the procedure (linked). Childcare deductions go to the lower income after calculating out the net income. To figure it out you would have had to have RRSP, UCCB and all your net income calculated before determining who receives the childcare deduction. Please don't shoot the messenger, direct all anger at the CRA ;)

Congrats on the RRSP contributions. To make it better catch up RRSP were worth the federal 22% between 45-90K bracket, now worth 20.5%. Plus you get a larger UCCB cheque this year for contributing to RRSP's last year.  For 2 kids its worth 5.7%, so if you paid an extra $1,000 it would get you $57 (from UUCB) and $15 (higher tax rate in 2015) which covers the penalty (yours-wife was about $60?). So you still did the smart thing, sometimes good intentions don't work out.

http://www.cra-arc.gc.ca/E/pbg/tf/t778/t778-15e.pdf
Your net income, and that of the other person, is used to determine
which person can claim child care expenses. This is the amount
from line 236 of your returns. However, do not include amounts
for child care expenses (line 214) and social benefits repayment
(line 235).

snacky

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #646 on: December 28, 2016, 10:39:36 AM »
TFSA limit for 2017 is $5,500.
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Canadian Ben

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #647 on: December 28, 2016, 10:49:51 PM »
I've been trying to learn and get more knowledge on the intricacies of our tax code, and I was wondering if there are any free/low cost programs to study more effectively.

I have gone through most of the Tax Tips.ca site, but reading the actual tax code document from the CRA is quite a head-ache.

Thanks!

Aurora Borealis

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #648 on: January 13, 2017, 12:54:04 AM »
Hi, I have a question about some interpretations in the tax code:

I'm a sub-contracted employee in Alberta. For the past year or so, I have been trying to get my payroll department to correct what I believe is an error in my T4. I am given a living allowance due to the location of my worksite, which is far outside the confines of civilization. On my T4, this is separated as a taxable benefit 'Box 40.' However, I believe that allowance should be categorized under the rules of "Remote Work Site," section 6(6) of the Income Tax Act, and IT91.
http://www.cra-arc.gc.ca/E/pub/tp/it91r4/it91r4-e.html

I called the CRA, and for what it is worth, their quick overview with an adjustor seemed to agree with me. They suggested that the easiest way to deal with this is if I ask my employer to issue an amended T4, as it should be done on an employer level. I did so, and then after months of un-returned emails and phone calls, I received a response. Despite all other pre-requisites being met in IT91, they had two objections. The message explained that because my worksite has a medic, that qualifies as "Certain Medical Assistance" and disqualifies it from being "Remote." Furthermore, since the work-camp has a cafeteria, that qualifies it as a "Self-Contained Domestic Establishment."

When I questioned their reasoning behind this response, I was told that they are 'under no obligation to share their accounting practices with me,' and further they had just passed a CRA audit two years prior. I have my doubts about this, as it took almost two months for my company to correctly fill out a T2200, (they listed almost everything, except for my name, wrong on that form). Myself and three other co-workers are the only ones contracted to this particular site, and would probably be very easily overlooked in an audit of a very large company.

My question is: do those explanations of 'remoteness' and the SCDE actually disqualify me from obtaining "Remote Work Site" designation, and also what recourse do I have to challenge a non-cooperative accounting department?

Thanks!

Maya

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Re: Can"EH"dian Tax - You have questions, I have answers
« Reply #649 on: January 14, 2017, 06:39:30 PM »
Our big question to figure out is if we can claim our moving expenses. We quit our jobs and moved and found higher paying ones once here (3 months off between jobs). So we didn't move for jobs but our jobs improved because of the move if that makes any difference.

If you know what can you claim? Movers? Reasonable travel expenses? (We did a trip for 2.5 weeks and would be able to find some hotel receipts and credit card bills) house commissions? Without counting our trip we'd be close to $25k