As we are in the midst of the income tax return season, I would like to remind you that we do offer income tax preparation services (yes, we do prepare Quebec tax returns too), as well as book keeping services. Please contact me directly to schedule an appointment.

Important items to keep in mind for the 2014 tax year:

• Income Tax Return Deadline: April 30th 2015 for most taxpayers. If you or your spouse carried on a business in 2014, you have until June 15th 2015 to file your return. However, your balance, if any, still has to be paid no later than April 30th 2015 to avoid interest and penalty.
• Business Use-Of-Home Expenses: if you meet the requirement for the business use of a work space in your home, you can deduct your business portions of your home-related expenses such as heat, hydro, insurance, property tax, maintenance, mortgage interest (or rent). Be extra careful when it comes to deducting Capital Cost Allowance on the business use part of your home. It might come back and bite you later.
• Motor Vehicle Expenses: if your vehicle is for both personal and business use, make sure to keep a record of the total kilometers you drive to earn income and deduct only the business portion of your vehicle-related expenses. However, you can deduct the full amount of parking fees related to your business activities and supplementary business insurance for your vehicle. And remember to claim the Capital Cost Allowance as well.
• Children’s Fitness Tax Credit: increased to $1,000 per child. Did you keep those receipts? Make sure to claim them.
• Non-Refundable Tax Credit: up to $2,000 per eligible couple. This is a new tax credit that was introduced last year.

You should have received most, if not all, of your receipts and T-slips by now. I suggest that you start a brand-new folder of those and keep them all together, if you have not yet done so. This will be much easier when the time comes for filing your income tax returns.

Remember to always “Dream It. Plan It. Live It.”
I am here to help you on your journey. Do not hesitate to reach out if I can be of any immediate assistance.

I trust that you had a wonderful start for 2015.

As we are in the midst of the RRSP season and the beginning of the income tax return season, I would like to remind you that we do offer income tax preparation services, as well as book keeping services. Please contact me directly to schedule an appointment.

A few important items to keep in mind for the 2014 tax year:

• RRSP Contribution Deadline: March 2^nd 2015 for 2014 tax year. Yes, it is just around the corner. Why wait until the deadline? Do it as early as you possibly can.
• RRSP Maximum Contribution Limit: increased to $24,270 for 2014 tax year, or 18% of your earned income, whichever is lower. Plus any unused contribution room from previous years.
• Children’s Fitness Tax Credit: increased to $1,000 per child. Did you keep those receipts? Make sure to claim them.
• Non-Refundable Tax Credit: up to $2,000 per eligible couple. This is a new tax credit that was introduced last year.
• Income Tax Return Deadline: April 30^th 2015 for most taxpayers. If you or your spouse carried on a business in 2014, you have until June 15^th 2015 to file your return. However, your balance, if any, still has to be paid no later than April 30^th 2015 to avoid interest and penalty.
  • If you are expecting a refund, file your return now and get back your money as soon as possible.
  • If you are expected to pay, complete your return before April 30^th so you know what to expect and pay your balance by the due date.

Most companies and institutions have started sending out the receipts and T-slips. May I suggest you start a brand-new folder of those and keep them all in there as they arrived. This will be much easier when the time comes for filing your income tax returns.

Remember to always “Dream It. Plan It. Live It.”
I am here to help you on your journey. Do not hesitate to reach out if I can be of any immediate assistance.

Last week, on October 30^th 2014, the federal government announced a new so-called tax break.

The unveiled plan lets Harper use his “promise made, promise kept” mantra. However, is the plan itself good policy or good politics? What’s in it for YOU, the taxpayers?

Here are the 3 main points of the announcement:

• Income Splitting: Couples with children under 18 can share up to $50,000 of income, up to the maximum of $2,000 in non-refundable federal tax credit, effective for 2014 tax year.

• Universal Child Care Benefit (UCCB): Families with children under 18 will gain an extra $60 per month per child, effective for 2015 tax year.
• Child Care Expense Deduction: Families with children under 18 or infirmed children over 16 will have an extra deduction room of $1,000 per year per child in child care expense, effective for 2015 tax year.

Thoughts:

• Non-refundable tax credits are not equal to the actual cash value, so do not think of this as having an extra $2,000 in your pocket.

• For families with very low taxable incomes, no credit is available to transfer. This also does not work for families with two similar taxable incomes.
• The UCCB benefit is fully taxable. The existing child tax credit will be eliminated. Hence this $60 extra is looking more like $23 after taxes. Well, it is still better than nothing, I guess.
• Make sure to check with a tax professional to see how to claim (and indeed if you can claim) the benefit in the case where couples are separated or divorced and share custody of their children. You may even have to visit a family lawyer again to work this out with your child’s other parent.

 Final notes:

This plan is not as great as it appears to be and is not for everybody. The main beneficiaries will be middle class families with young children and uneven taxable incomes, which only account for a small segment of Canadians.

Personally, I would like to see a real broader tax cut that would benefit all taxpayers. I also would like to see plans to encourage entrepreneurship, cut government spending, balance the budget, and reduce debt, just to name a few.

For families who will benefit from this new tax cut, make sure you spend your new-found money wisely. May I suggest contributing towards your children’s education savings fund.

For those who got left out, make sure you claim all of your eligible tax credits when filling your income tax returns. You might want to consider various tax strategies that can be used to reduce your tax payable such as contributing to an RRSP, keeping fully-taxable investments inside a TFSA, or splitting pension benefits. Is your situation different from last tax year? If so, take a look at the tax guide to see if there is anything that might apply to you. When unsure, ask a professional to review it.

This note is written as a general source of information only. Should you have any questions, or wish to discuss your specific circumstances, please feel free to contact us directly at info@RetireRightCanada.ca.

The Canada Revenue Agency (CRA) today announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporations.

Income tax

• The interest rate charged on overdue taxes, Canada Pension Plan contributions, and employment insurance premiums will be 5%.
• The interest rate to be paid on corporate taxpayer overpayments will be 1%.
• The interest rate to be paid on non-corporate taxpayer overpayments will be 3%.
• The interest rate used to calculate taxable benefits for employees and shareholders from interest free and low-interest loans will be 1%.
• The interest rate for corporate taxpayers’ pertinent loans or indebtedness will be 4.94%.

These rates are in effect from October 1, 2014 to December 31, 2014.