TaxTips.ca What's New

TD1 Forms - Multiple Jobs, Changing Circumstances

Every employee must provide a completed TD1 form to a new employer, and must update it when a change in circumstances will cause a change in personal tax deductions. The form will be completed differently when there are multiple employers, as deductions can only be claimed once. For deductions that are available but are not on the TD1, a Letter of Authority can be requested from CRA so that the employer can reduce the tax withholdings.

Attribution Rules re Gifts, Transfers or Loans to a Spouse or Related Minor Child

If income-producing property, or money to purchase income-producing property, is transferred or loaned to a spouse or related minor child, attribution rules will apply to tax the income in the hands of the transferor. This will not apply to business income from business assets transferred, and will not apply to loans which are considered "genuine" loans.

RRSP Home Buyer's Plan (HBP) and Cancellation

Up to $25,000 per person can be withdrawn from an RRSP in order to buy or build a qualifying home, without attracting withholding tax. If all conditions of the HBP are not subsequently fulfilled, cancellation can be requested and funds repaid within a time limit, in order to not be included in income in the year of the withdrawal.

Voluntary Disclosures Program

Taxpayers can voluntarily correct inaccurate, incomplete, or unreported information, and do so without penalties or prosecution, if a valid disclosure is made to Canada Revenue Agency (CRA). A voluntary disclosure can be made on a no-name disclosure basis.

Newfoundland and Labrador 2012 Budget

No tax changes were announced in the NL 2012 Budget.

Prince Edward Island 2012 Budget

Prince Edward Island plans to implement the HST, with a rate of 14%, effective April 1, 2013. A refundable volunteer firefighter tax credit is being introduced.

Ontario 2012 Budget Revision Adds 2% Surtax

The Ontario government announced that it would revise the budget to implement a 2% surtax on personal taxable income in excess of $500,000, as a concession to the NDP opposition party. See our table of the resulting rates.

Why Should You File a Tax Return?

Even if you don't owe any tax or have any taxable income, there are many reasons to file a return - applying for the GST/HST credit, establishing TFSA and RRSP contribution room, receiving refundable tax credits, to name a few.

Manitoba 2012 Budget

Manitoba's 2012 Budget reduces the enhanced dividend tax credit rate starting in 2012, and introduces retail sales taxes on certain personal services and some insurance products. Tobacco taxes and fuel taxes are increased.

How Much Money Do You Need To Retire?

The answer differs for each person, but we have some tools to help you figure it out. Our advice: Plan to live off your dividends.

Wills and Estates

It is important to have your will reviewed occasionally to ensure that it will fulfill your wishes under current provincial legislation. In some provinces, a will is automatically revoked upon the marriage of the testator (will writer), or after the testator has been in a marriage-like relationship continuously for 2 years.

Nova Scotia 2012 Budget

Increases in spouse, equivalent to spouse, and disability tax credit amounts for 2012. Affordable Living and Poverty Reduction credits to increase July 1, 2012, HST reductions in 2014 and 2015, doubling of New Home Buyers HST Rebate, corporate tax reduction, Equity Tax Credit and Labour-Sponsored Venture Capital Tax Credit extended.

BC First-Time New Home Buyers' Bonus

Application forms are now available for the BC First-Time New Home Buyers' Bonus, available for eligible new homes built or purchased on or after February 21, 2012 and before April 1, 2013. A refund of up to $10,000 is available. Application must be made to the Ministry of Finance - it is not done on the income tax return.

How to Lower Your Insurance Costs

One of the easiest ways to lower the cost of insurance on your house is to increase your deductible.

Futures Contracts

Futures contracts are not qualified investments for RRSPs, RRIFs or TFSAs. The gains or losses on futures contracts may be capital or income, depending on the circumstances.

Medical Expense Tax Credit (METC)

All provinces except Ontario and Québec use the Federal medical expense total to calculate the provincial medical expense tax credit, but the base amount is different from the Federal for most provinces. Québec has their own calculation. Ontario follows the Federal calculation but has limitations on amounts for attendant care, and higher limitations than the Federal for vehicles adapted for disabilities, and for moving expenses for a patient's move to more accessible dwelling.

Old Age Security (OAS) and Guaranteed Income Supplement (GIS)

The 2012 Federal Budget confirms that the age of eligibility for the OAS/GIS will be increased from 65 to 67, on a gradual basis, starting in 2023. Starting in 2013, voluntary deferral of the OAS will be allowed, resulting in a higher pension.

Federal 2012 Budget - March 29, 2012

Return to a balanced budget is planned for the 2015-2016 budget year. The penny will no longer be produced, but this will only affect cash transactions. Starting in June 2012, Canadian travellers can bring home a higher value of duty- and tax-free goods after travelling abroad. There are many other changes, including RDSPs, Employee Profit Sharing Plans, Retirement Compensation Arrangements, Accelerated Capital Cost Allowance, and much more.

Ontario 2012 Budget

The province is taking measures to control costs, including pay freezes for MPPs and executives at hospitals and educational institutions. The Corporate Income Tax rate is being frozen at 2011 levels, and Business Education Tax reductions will be discontinued.

New Brunswick 2012 Budget

There were no increases announced to personal income taxes or HST. Rate increases were announced for Real Property Transfer Tax and Financial Corporation Capital Tax.

Office of Taxpayers' Ombudsman (OTO) Newsletter, Perspectives

The Office of the Taxpayers' Ombudsman released their first newsletter in March 2012, describing some of the complaints they have resolved.

Saskatchewan 2012 Budget

New tax credit for first-time home buyers, corporate income tax rebates for income from newly constructed multi-unit rental projects, and some other tax measures that were previously announced in the December throne speech.

Québec 2012 Budget

There were no new personal income tax measures in the Québec 2012 budget.

Tax Treatment of Warrants and Rights Received

The receipt of a warrant or right to acquire additional shares may or may not be considered a taxable distribution.

Provincial 2012 Budgets

The Yukon 2012 Budget was tabled on March 15th, and we now have the scheduled dates for 2012 budgets for most of the provinces.

Foreign Income, Expenses and Foreign Taxes

These must be reported in Canadian dollars. Our article explains how to convert the amounts to Canadian dollars. We also have an article detailing the non-business foreign tax credit.

For which province should you file a tax return?

This article deals with temporary relocations, or living in one province and working in another.

RRSP Home Buyer’s Plan

You might qualify to use the HBP to help buy or build a home, even if you own a rental home, as long as the rental home has not been your principal residence during the previous four years. If you qualify to make use of the HBP, you will probably also qualify for the First-Time Home Buyers’ Tax Credit.

North American Industry Classification System (NAICS)

CRA now requires the NAICS code for a corporation to be entered on the T2 tax return. Statistics Canada has a drill-down table which makes it easier to find the appropriate code.

BC's Return to PST

CRA has published a Notice with questions and answers on the elimination of the HST, and there is also a PST in BC website providing information on the return to the PST.

CRA My Business Account

Starting in April, you will be able to ask questions about your tax accounts online, and CRA will answer electronically, so you'll have the answer in writing. You can get answers to specific tax account-related questions for certain business accounts.

Ontario Home Energy Audits and HVAC Incentive

Home energy audits must be completed by March 31, 2012 to qualify for a rebate of up to $150. Receive up to $650 when replacing your old central heating and cooling systems with the saveONenergy HEATING and COOLING INCENTIVE.

Saskatchewan Initiatives Announced in Throne Speech

In December, the Throne Speech announced that SK would be implementing a First-Time Homebuyer's Tax Credit for 2012. This tax credit will also be available to people with disabilities looking to purchase a home that is more accessible. See the Throne Speech highlights for details of further initiatives.

Medical Expense Tax Credit For Other Eligible Dependants

Prior to 2011, there was a limit on the amount of medical expenses that could be claimed for other eligible dependants. The amount was $10,000 per person claiming the expenses, for most provinces and territories. This limit has been removed for 2011 for most provinces and territories, and is being removed for BC for 2012. Only Ontario and NWT still have a limit for 2012.

BC HST Elimination - Transitional Rules

The BC HST will be eliminated effective April 1, 2013, and BC will return to a GST plus PST system. The federal Department of Finance has published proposed transitional rules, which describe how and when the HST would cease to apply to transactions that straddle the BC HST end-date.

Nunavut 2012 Budget

The Nunavut 2012 Budget was tabled in the legislature on February 22, 2012. There were no income tax changes announced, but the tax on tobacco products will increase in an effort to reduce tobacco consumption.

BC 2012 Budget

The 2012 BC budget was tabled in the legislature on February 21, 2012. New tax measures include a Seniors' Home Renovation Tax Credit, Children's Fitness and Arts Tax Credits, and a New Home Buyers' Bonus.

Quebec Income Tax Calculator Available in French Version

La calculatrice de revenus du Quebec est maintenant disponible dans une version francaise, l'aide de Google Translate.

Employers - CRA Webinar on Changes to the CPP

The December 2011 webinar on the Changes to the Canada Pension Plan effective January 1, 2012 is now available on the CRA website as a videocast.

Alberta 2012 Budget

Alberta's 2012 budget was tabled in the Alberta Legislature on February 9, 2012. There were no personal income tax changes. Education property tax rates will be frozen at 2011 levels. The Scientific Research and Experimental Development (SRED) Tax Credit will be enhanced by eliminating the "grind" (no longer deducting the federal investment tax credit when calculating Alberta's credit).

Non-Pensionable Earnings and Underpaid CPP Contributions

There are some types of employment payments and other payments from which CPP or QPP contributions do not have to be deducted. Also, if a person has more than one employer in the year and earns total employment income which is less than the maximum pensionable earnings, this will have the result that the basic exemption used to withhold CPP or QPP contributions is more than $3,500, resulting in an underpayment of contributions. There is no obligation to remit the underpaid amount, but a person can elect to do so, or to pay Canada Pension Plan contributions on certain types of income from which no CPP contributions have been deducted.

Caregiver Amount

If you have a parent or grandparent over the age of 65 living with you, even if they are not your dependent you could be eligible for the caregiver amount of $4,282, if their net income is less than $18,906 in 2011. This can also be claimed for dependent relatives over the age of 17 who are living with you, if they are dependent on you due to mental or physical impairment. Each province and territory also has a caregiver tax credit.

Basic Canadian Income Tax Calculator

Our new basic Canadian income tax calculator is very simple - just input your income from capital gains, eligible and non-eligible Canadian dividends, and other income. The results include taxes payable, and marginal tax rates for the 4 different types of income, for every province and territory, as well as a table of taxes payable for 2008 to 2012 for each province and territory. The only tax credits deducted from taxes are the basic personal amount and dividend tax credits. Use the e-mail link at the bottom of the calculator to tell us how you like it.

Working Income Tax Benefit (WITB) 2012

We have published the table of WITB factors for 2012. The WITB is a federal refundable tax credit which is available for low-income individuals or families with working income over $3,000 for most provinces and territories. The Québec 2011 WITB table has some factors revised by small amounts. The previous factors were estimated based on the QC indexation factor for 2011. The 2011 factors for other provinces and territories have been adjusted for rounding differences from the previous estimates.

Ontario Trillium Benefit

The Ontario Trillium Benefit is applied for by completing form ON-BEN as part of the 2011 personal income tax return, as well as by applying for the GST/HST credit on page 1 of the personal income tax return. This benefit is a combination of the Ontario Sales Tax Credit (OSTC), Energy and Property Tax Credit (OEPTC), and Northern Ontario Energy Credit (NOEC), and will be paid on a monthly basis starting July 2012.

Investment Return History

We've updated our investment return history to show results to December 31, 2011, and have added a column for results for 1 year.

Guaranteed Income Supplement (GIS)

The Federal Guaranteed Income Supplement (GIS) is a tax-free benefit available to low-income seniors living in Canada, who are receiving (or are eligible to receive) the Old Age Security Pension (OAS). An application must be filed to receive this supplement - it is not done automatically when you file a tax return. If you are already receiving the GIS, if there is a reduction in your pension or employment income, you should contact Service Canada, as they may calculate your GIS benefit by estimating your pension and employment income for the current year, instead of using last year's pension and employment income.

Shareholder Loans

A loan by a corporation to one of its shareholders, or to a person or partnership who does not deal at arm's length with the shareholder, may result in a deemed taxable benefit for the amount of the loan, or may result in a deemed interest benefit. Care must be taken in the timing of salary or dividend payments to clear shareholder loans. If the amount of the loan is significant, it could put a small business in a position where it is not a qualified small business corporation, and thus not eligible for the $750,000 lifetime capital gains exemption for the shareholder, on disposal of the shares.

2012 TFSA Contribution Limits

The annual limit for contributing to a TFSA is indexed for inflation. However, the indexed amount is rounded to the nearest $500, and will remain at $5,000 for 2012. At the current rate of inflation, the limit will increase to $5,500 in 2013.

2012 Automobile Taxable Benefits

The prescribed rates used to calculate the operating cost benefit related to the personal use by employees of employer-owned vehicles is increasing by 2 cents to $0.26 per km for 2012. The rate for taxpayers employed principally in selling or leasing automobiles will also increase by 2 cents, to $0.23 per km.

2012 Tax-Free Automobile Allowances

The limits on the deduction of tax-free allowances paid by employers to their employees to reimburse the costs of using their personal vehicle for business purposes have each been increased by 1 cent for 2012. The limit for the first 5,000 kms driven is $0.53 per km, and additional kms have a limit of $0.47 per km. The limits for Yukon, Northwest Territories and Nunavut are $0.57 for the first 5,000 kms, and $0.51 for each additional km.

2012 Passenger Vehicle Expense Limits

The expense limits for passenger vehicles acquired or leased in 2012 remain the same as the 2011 limits. The ceiling on the capital cost remains at $30,000. The leasing cost deduction limit remains at $800 per month, and the limit on the allowable interest deduction remains at $300 per month.

2012 Corporate Income Tax Rates

The table of 2012 corporate income tax rates for Canada, provinces and territories is now available.