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Tax Tips and Traps

2020 PERSONAL INCOME TAX RETURN CHECKLIST

SECTIONS:
A. Information – All Clients Must Provide
B. Additional Information – New Clients Must Provide
C. Questions to Answer
D. Other

2020 was an extraordinary year like no other. Due to the significant changes from the COVID-19 pandemic, there are numerous tax issues to be aware of this year. For example, many individuals received support in a variety of forms from various levels of government. Others may have changed how they carried on their employment duties or business operations, including working from home or using their vehicle for employment or business reasons. We have outlined the key issues in the checklist below. Please let us know if you have received other support or incurred other costs related to your income earning activities due to the COVID-19 pandemic.

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Canada Pension Plan, Emergency Wage and Rent Subsidy

  • In 2021, four special payments to recipients of the Canada Child Benefit, totaling up to $1,200 per child under age six, will be made.
  • The Canada Emergency Wage Subsidy has been extended to June 2021. Details are still pending for periods after March 2021.
  • CRA has required Coinsquare, a cryptocurrency trading platform, to provide the identity of every client (which is over 200,000 accounts) to help address perceived risks of non-compliance.
  • For the first 9 months in 2020, 6,045 individuals renounced their U.S. citizenship representing a significant increase as compared to only 1,811 for the same period in 2019. 2020 surpassed the highest previous year on record of 5,411 in 2016.
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Applications Now Open for Ontario’s Small Business Support Grant

Applications are now open for the Ontario Small Business Support Grant. As you may know, this program will help small businesses that that have been required to close or significantly restrict activities due to this lock down. The grants will be for a minimum of $10,000 to a maximum of $20,000. Businesses will be permitted to use this grant in any way that makes the most sense to them.

You can apply for this and other programs such as Property Tax and Energy Costs Rebates here: https://www.app.grants.gov.on.ca/msrf/#/

I am encouraged by the new Ontario Small Business Grant and hope that it will provide some meaningful support for our small businesses during this shutdown period.

Read more about the Ontario Small Business Support Grant here: https://news.ontario.ca/en/release/59968/applications-now-open-for-ontarios-small-business-support-grant

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YEAR-END TAX PLANNING

December 31, 2020 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.

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TAX TICKLERS… some quick points to consider

  • CRA has opined that U.S. Economic Impact payments received by residents of Canada are not taxable in Canada.
  • 1,252,830 Canada Emergency Wage Subsidy (CEWS) applications have been approved for a total value of $41.12 billion (as of October 4, 2020).
  • On October 9, 2020, the Government announced that the CEWS program will be extended to June 2021. Further, the maximum subsidy for period 8 (calculated using October’s revenues) of 65% would be maintained for the next two periods even though it was scheduled to decline.
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TAX TICKLERS… some quick points to consider

As of August 9, 2020, the Government has approved 813,570 Canada Emergency Wage Subsidies (CEWS), with a total value exceeding $26 billion.

To estimate your CEWS entitlement, consider using the CEWS 2.0 Estimator at WageSubsidyCalculator.ca, or CRA’s more complete calculator at https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html.

The Government has launched a webpage, https://www.canada.ca/en/services/business/maintaining-your-business.html, to help manage one’s business during COVID-19. It provides links to government financial supports and loans, reopening guidance and rules, employee issues, industry-specific assistance, tax issues, and a support phone line.

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TAX TICKLERS

This publication is a high-level summary of the most recent tax developments applicable to business owners, investors, and high net worth individuals. Enjoy!
TAX TICKLERS… some quick points to consider…

  • Canadian controlled private corporations accounted for 54% of all corporate tax paid.
  • The 1% of Canadians who earned income in the top federal tax bracket paid 26% of the total personal taxes.
  • Of the 27.8 million individual tax filers, 36% were non-taxable.
  • The home buyers’ plan maximum withdrawal increased from $25,000 to $35,000 for withdrawals made after March 19, 2019. Also, it is now available for use by those experiencing a recent breakdown in their marriage or common-law partnership.
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COVID-19 – FINANCIAL RELIEF FOR CANADIANS

Since the beginning of March, restrictions and measures related to COVID-19 have rapidly escalated. On March 18, 2020, the Government of Canada announced a series of measures designed to support the finances of individuals, businesses, charities, and non-profit organizations. Since then, on an almost daily basis, new possibilities have been introduced, and old ones have been adjusted. This document aims to provide a consolidated summary of support in their most current state of affairs, as of April 8, 2020.

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CANADA’S COVID-19 ECONOMIC RESPONSE PLAN – KEY POINTS FOR BUSINESSES AND INDIVIDUALS

Since the beginning of March, restrictions and measures related to COVID-19 have rapidly escalated. While the first stages focused on public health and safety, in very short order, businesses and personal finances began to be affected. It is clear that these challenges will become worse before they get better. In an effort to combat these effects, the Government of Canada released a series of financial measures in mid-March.

This document summarizes selected government comments up to March 18, 2020.

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2019 Tax Issue to consider

TAX TICKLERS… some quick points to consider…

TAX TICKLERS… some quick points to consider McMahon Professional Accountants CollingwoodThe amount of income an individual can earn without paying tax (basic personal amount) will begin increasing in 2020. In the first year, it will rise to $13,229 (from $12,069 in 2019), and will reach $15,000 in 2023. The benefit will begin to be phased out when an individual has earnings of approximately $150,000.
The purchase of a zero-emission vehicle, if associated with an income earning purpose (e.g. used in a business), may be eligible for a 100% immediate write-off as long as the federal government purchase incentive was not obtained.
TFSAs – As of 2017, the average number of contributions per individual was 14.49, the average fair market value of each account was $19,633, and the average unused space was $30,947.
There are 2.21 million corporations in Canada (according to 2016 statistics that were recently released). Total tax payable for 2016 was $72.21 Billion.

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