5 Income Tax Tips from the Trenches

It is the time of year when many accountants and tax preparers live, breathe, eat and sleep taxes (leaving very little time to write about them!).  And while much of it is routine, there are numerous issues that arise, the treatment for which is not immediately apparent and can actually be quite interesting (perhaps more so to a tax nerd), some of which are compiled below:

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Highlights of Changes to Federal and Quebec Personal Tax Rates, Credits and Amounts for 2013.

Every year Revenue Canada and Quebec increase the thresholds for tax and benefit amounts to reflect annual inflation rates which is based on the consumer price index data compiled by Statistics Canada. The information is communicated via a neatly organized table on their website, to which links are provided below, for those of you who can’t get enough financial data.  For everyone else I have highlighted some of the more interesting changes
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How to Change Your Personal Tax Return After It Has Been Filed

Despite your best efforts (and/or your accountants’), occasional errors or omissions relating to your personal tax return are unavoidable.  It is possible that you forgot to include a tax slip, overstated your expenses or was unaware of a specific tax credit.  Luckily there is fairly simple mechanism that allows you to change your tax return, which can be done online or by filling out a form and mailing it in.
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What Happens When You Contribute Excess Amounts to your RRSP

Being able to contribute to an RRSP is one of the great tax saving strategies available to all Individual Canadian Taxpayers who generate “earned income” which is essentially income earned from employment (salaries) or self employment,  (Passive income like dividends and interest is ineligible for consideration when calculating how much you can contribute to an RRSP).  There are .unfortunately limits to how much you can contribute and Revenue Canada (CRA) actually imposes penalties on overcontributions to your RRSP.
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Tax Advice for Last Minute Filers and Procrastinators

If you have filed your tax return, you are entitled to thumb your nose at those of us who are still trying to get it together.  Given that the deadline to file your tax return is imminent, you should probably drop what you are doing right now and make it happen.  For the majority of taxpayers, the stress of having to file your taxes far outweighs the actual complexity of completing the tax return itself, particularly when software is available for even the most “numbers challenged” individuals.  And for those who really don’t want to do it themselves, there are tax preparation offices everywhere that are just a google search away. 
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How to Handle a Tax Assessment

Tax assessments are often difficult to understand (surprisingly the explanations can be insufficient and/or confusing). If you had an accountant file your tax return, it is a good idea to consult them upon receipt of an assessment. If you filed it yourself, and do not understand the assessment, you should call the government agency. They are usually eager to help, if not always illuminating. If you still do not understand it, it is probably best to then contact an accountant.

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9 Tax Facts about Charitable Donations for Individuals and Small Business Owners

Every good act is charity. A man's true wealth hereafter is the good that he does in this world to his fellows. - Moliere

Unfortunately, the Canada Revenue Agency (CRA) has specific criteria for what qualifies as a charitable donation and not all good acts qualify for a tax benefit. Growing a moustache (although not without its costs) or supporting your charity case brother-in-law, are generally not considered to be a charitable donations according to the tax code. Luckily there are a multitude of charitable organizations that do qualify the donors to receive a tax credit for their donations.  Some details about the tax credit are discussed below:

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Understanding Payroll Deductions: Personal Income Tax Rates, CPP/QPP, EI and Basic Exemption

The automation of the tax preparation and filing process has been a boon to individuals and tax preparers alike.   Gone are the days of struggling to find the right box on the return, adding everything up 5 times and still getting different results, and hoping that the CRA can read your chicken scrawl.  Present day tax software not only guides you through every step of the process, it also helps to optimize your allocations thereby reducing your taxes payable.  There is however at least one downside to automation: Since we are more removed from the actual calculations, our understanding of our tax situation is somewhat diminished.  We have an idea of what we expect to pay, which we can see every week on our paycheques (or for self employed individuals, the breathtaking moment when we see the final result on our tax return), but often we are not really sure how these amounts are derived.  Below is a discussion of the  tax rates, deductions and maximums to improve our comprehension of this somewhat complex topic:

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