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Archives for Tax Tips and Traps

2023 Personal Income Tax Return Checklist

A. Information – All Clients Must Provide

Please check all boxes that apply and provide supporting information.

  1. All information slips, such as: T3, T4, T4A, T4A(OAS), T4A(P), T4E, T4PS, T4RIF, T4RSP, T5, T10, T2200, T2202, T101, T1163, T1164, TL11A, B, C and D, T5003, T5007, T5008, T5013, T5018 (subcontractors) and corresponding provincial slips.
  2. Details of income or receipts for which no T-slips have been received, such as:
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NEW AND EXPANDED TRUST REPORTING: It’s Here!

New rules aimed at providing more transparency on beneficial ownership of assets now require that more trusts (and estates) file tax returns. These changes will catch many individuals and businesses that may not be aware of their trust-like relationships, exposing them to potential penalties and other consequences for non-compliance. The rules become effective in 2023, with a filing deadline of April 2, 2024.

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New Trust Reporting: Unexpected Exposure

Tax Tidbits

Some quick points to consider…

  • The 2024 RRSP contribution limit is $31,560, requiring earned income in 2023 of at least $175,333. The 2025 limit will be $32,490 (requiring earned income in 2024 of at least $180,500).
  • The annual TFSA contribution limit for 2024 is $7,000.
  • The annual interest rate charged by CRA on late tax and installment payments has increased to 10% for the first quarter of 2024. Additional penalties may apply on underpaid installment payments.
  • Over 6,100 audits on COVID-19 wage subsidies have been completed or are in progress. In terms of dollar figures, $8.9 billion in claims have been audited, and $7.5 billion in claims are currently being audited. Of the audited claims, $458 million of claims have been denied.
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YEAR-END TAX PLANNING

December 31, 2023 is fast approaching… see below for a list of tax planning considerations. Please contact us for further details or to discuss whether these may apply to your tax situation.

SOME 2023 YEAR-END TAX PLANNING TIPS INCLUDE:

  • Certain expenditures made by individuals by December 31, 2023 will be eligible for 2023 tax deductions or credits, including digital news subscriptions, moving expenses, labour mobility tax credit expenditures, multigenerational home renovation expenditures (NEW), child care expenses, charitable donations, political contributions, registered journalism organization contributions, medical expenses, alimony, eligible employment expenses, union, professional or like dues, carrying charges and interest expense. Ensure you keep all receipts that may relate to these expenses.
  • A senior whose 2023 net income exceeds $86,912 will lose all, or part, of their old age security Senior citizens will also begin to lose their age credit if their net income exceeds $42,335. Consider limiting income over these amounts, if possible. Another option would be to defer receiving old age security receipts (for up to 60 months) if it would otherwise be eroded due to high-income levels.
  • If you own a business or rental property, consider making a capital asset purchase by the end of the year. Many capital assets purchased and made available for use in 2023 will be eligible for a 100% CCA write-off under the immediate expensing rules.
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CEBA Repayment Deadline Extended: Some Issues

Some quick points to consider…

  • CRA has produced various basic tax education and literacy tools, such as seven learning modules with videos and quizzes.
  • As of January 1, 2024, where more than five information returns of a particular type (such as T4s, T5s, T3s, T4As, NR4s and T5018s) are filed on paper (as opposed to electrically) for a particular filer, a penalty of $125/form will apply. Businesses filing five or fewer forms can still do so on paper without penalty.
  • Renovations to create a safe play and therapy area for a child with a mental impairment could be eligible for the home accessibility tax credit.
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CPP Enhancements: Higher Contributions and Higher Benefits

In 2019, the government commenced a two-part enhancement to the Canada Pension Plan (CPP), with full implementation to be completed in 2025. Phase 1 occurred from 2019-2023; phase 2 will occur from 2024-2025. Overall, the changes will require larger contributions but also will provide larger benefits.

Pre-CPP enhancement

CPP contributions for employees and employers under the pre-enhancement CPP model (referred to as base contributions) were calculated as 4.95% of the employee’s pensionable earnings to a maximum of the year’s maximum pensionable earnings (YMPE; for 2023, $66,600), less the $3,500 basic exemption.

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Underused Housing Tax

The new Underused Housing Tax (UHT) imposes a 1% annual tax on the value of residential real estate considered to be vacant or underused that is owned on December 31 of each year. The government indicated that the tax would target property owned by non-Canadians; however, the scope of filing requirements extends to many Canadian entities and individuals, including private corporations, and trustees of a trust. The first filings and taxes are due on April 30, 2023.[1]

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2022 Personal Income Tax Return Checklist

A. Information – All Clients Must Provide

Please check all boxes that apply and provide supporting information.

  • COVID-19 related information – All income, support and benefits received under COVID-19 relief programs. Some of these benefits are taxable, while others are not. Official tax slips may have been issued for some, but not all. For support where no slip is available, details surrounding the amount and types of payment are required. Please provide details on all federal, provincial/territorial and other support received. Please also provide any details on any repayments of these benefits.
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Tax Tidbits

Some quick points to consider…

· For 2023, the maximum amount that may be deducted for non-taxable allowances paid to an employee using a personal vehicle for business purposes has increased by 7₵ to 68₵/km for the first 5,000 kms driven and to 62₵ for each additional km. For Yukon, the Northwest Territories and Nunavut, the tax-exempt allowance will continue to be 4₵/km higher.

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YEAR-END TAX PLANNING

December 31, 2022 is fast approaching… see below for a list of tax planning considerations. Please contact us for further details or to discuss whether these may apply to your tax situation.

SOME 2022 YEAR-END TAX PLANNING TIPS INCLUDE:

1) Certain expenditures made by individuals by December 31, 2022 will be eligible for 2022 tax deductions or credits, including digital news subscriptions, moving expenses, labour mobility tax credit expenditures (NEW), child care expenses, charitable donations, political contributions, registered journalism organization contributions, medical expenses, alimony, eligible employment expenses, union, professional or like dues, carrying charges, air quality improvement expenditures (NEW) and interest expense. Ensure you keep all receipts that may relate to these expenses.
2) Certain expenditures for surrogate mothers and fertility treatments are proposed to be eligible for the medical expense tax credit as of January 1, 2022.

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