Congratulations to inTAXicating for finishing 2nd in the 2013 Canadian Blog Awards!

I recently received word that this blog, inTAXicating, finished 2nd in the Legal / Professional category of the Canadian Blog Awards.2013 Canadian Blog Awards

The Canadian Blog Awards is an annual event on the Canadian Blogosphere in which Canadian Bloggers and Blog Readers vote to decide which blog is the best – either overall or within a category.

This year (2013), the Canadian Blog Awards are being operated by Jonathan Kleiman, a Toronto Small Claims Court Lawyer and Toronto Business Lawyer.

The first Canadian Blog Awards were held in 2004, by Robert McClelland of MyBlahg.  He hosted the awards for 2005 and 2006 before handing them over to a coalition of bloggers and business owners keen on recognizing Canadian blogging talent.

Aside from being thrilled at the nomination, I am excited and content with the 2nd place finish because it means that not only is there plenty of room for improvement, but that people understand that in order to help themselves save taxes, or fix tax troubles, they need to read online to see what the experts are recommending.

With the CRA moving more and more online in everything they do, it only makes sense that you, the taxpayer, keeps up to speed as well, or at the very least, read and learn from people who were on the inside… For a long time… And who grew up in that space, trained the staff in that space and led staff in that space.

Thank you for voting for this blog and for dropping by for tips, suggestions and recommendations on how to best handle your tax questions or tax problems.

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Make sure to visit http://www.intaxicating.ca but what you really want to do, is contact us at info@intaxicating.ca or by phone at 416.833.1581 to have your questions answered or to have your tax problems solved.

#x-taxer

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Deductions, Deductions, Where Fore Art Thou Deductions?

For those of you who prefer to wait until the last-minute to do your taxes – remember the deadline is May 5th, 2014 this year only – you might be just now looking for items to deduct in order to reduce an amount owing, or just because you have to get that information and now you are wondering if they are deductible.

Or, maybe your tax return has been completed for you and now you are holding the draft of that return and before you sign it – which tells the CRA that you agree with the information in it, so you cannot say I didn’t know what was being filed! – and you want to make sure your accountant / tax preparer did their job and notified you of all the eligible deductions you are entitled to, then this post will be quite useful to you!

The big question: What you can deduct?

When preparing your tax return there are many deductions and tax credits you may be eligible to claim in order to reduce the amount of tax you must pay, if they apply to you.

Any eligible deductions are reported on lines 205 to 485 of your personal tax return.  More specifically, deductions from income and tax credits are reported on lines 205 to 485 and these lines are deducted from line 150 to give you your net income amount (line 236).

Here is a line index from the Canada Revenue Agency website listing the deduction and for more information you will need to follow the link and read the details.

Lines 244 – 260 are deducted from line 236 to give you your taxable income amount (line 260).

Lines 300 – 378 are non-refundable tax credits and reduce your federal tax. However, if the total of these credits is more than your federal tax, you will not get a refund for the difference. Remember to claim the corresponding provincial or territorial non-refundable tax credits to which you are entitled on your provincial or territorial Form 428.

Lines 405 – 485 are your federal and provincial or territorial taxes payable, your federal and provincial or territorial tax credits and your refund or balance owing amounts. The federal and provincial or territorial tax credits reduce your tax payable. If the total of these credits is more than your total tax, you could get a refund for the difference. Claim all available provincial or territorial tax credits on your provincial or territorial form which may be applicable to you.

Complete the provincial or territorial tax and credit forms for the province or territory where you resided on December 31, 2013.

Hope this help!

 

Happy deducting!

 

#inTAXicating

#tax

inTAXicating: Nominated for the 2013 Canadian Blog Awards

I just learned that inTAXicating has been nominated for the 2013 Canadian Blog Awards – under the law category.Canadian Blog Awards badge

If you would to see the other blogs nominated in the other categories or if you would like to vote for inTAXicating, you can follow the link here; http://cdnba.wordpress.com/

Voting ends February 22nd, 2014.

The Canadian Blog Awards are a great way to recognize Canadian blogging talent. By taking the time to read other Canadian blogs and through your voting you are supporting Canadian writers.

I checked out many of the other nominated blogs and voted in each and every category as a way to give back.

Thank you in advance and please keep reading, commenting and asking questions!  Also don’t forget to visit my webpage at http://www.intaxicating.ca for help with all your tax concerns.

Happy 2014! Here are 14 things you can do right now to reduce your tax burden, or increase tax credits, on your 2013 taxes.

Happy New Year!  May 2014 bring you wealth, happiness, prosperity and great health.  May it also bring you debt-free (should you need to be) and also allow you to be one step ahead of the taxing authorities.

With the changing of the calendar, many are already working on their new years’ resolutions, but you should also review the list below to see if there are any actions you can do now to reduce your 2013 taxes owing or to increase the amount of refund you will get this year, or in future years.  It’s never the wrong time to thing about tax savings – we do it all the time here at Intaxicating, and want to pass along some tips for you.

Here are 14 easy strategies you can still take advantage of which impact your 2013 taxation year;

 

1.  Make your installment payments as required, or if you have fallen behind, catch up with one lump sum payment right away.

The Canada Revenue Agency (CRA) charges interest on missed installment payments, but if you catch up in one fell swoop, then they begin to reduce the amount of interest they charge you.  Ssshhh.  It’s a secret.

 

2.  Make sure you file on time and pay in full while doing so.

So how does this impact the 2013 taxation year, you might be asking and why is it so high up the list?  It is because many Canadians are shocked with the amount of money they owe at year-end and it’s the worst time of the year to discuss ways to reduce taxes with your accountant or tax preparer because they are so unbelievably overwhelmed they cannot spare 2 minutes to talk to you, let alone review your return for possible deductions you failed to mention to them. You are not the accountant!  Nor the tax professional.  So take time now to speak to someone who knows about what you do for a living and see if there are areas where you may be entitled to a deduction or credit and then go get that supporting documentation.  Also use the time to run your year-end situation through a free tax program to see how much you owe and what it will take to reduce that, or make it go away completely.

If, however, you are stuck owing a balance to the CRA or MRQ, make sure to set aside the funds to pay it in full with the filing of your tax return.  Heck, you could even send in the money now if you have it, but do not wait until even a day later than the deadline or interest starts accumulating.  The CRA charges 10% interest compounding daily, so it can add up rather quickly.

 

3.  Contribute to your Registered Retirement Savings Plan (RRSP).  

The deadline to contribute to your RRSP for 2013 is March 3rd, 2014.  If you need to know how much you are eligible to contribute to your RRSP. check your 2012 CRA Notice of Assessment.  Or, check online using the CRA’s “My Account” service.  Your contribution limit for 2013 is going to be 18% of your 2012 earned income (to a maximum of $23,820) less your 2012 pension adjustment, if any, plus any RRSP room carried forward from prior years.

 

4.  Contribute to a Registered Education Savings Plan (RESP).  

The Canada Education Savings Grant (CESG) program was initiated by the federal government to assist families saving for their children’s post-secondary education.  As an added bonus, the government tops up your annual contribution by 20%, up to a maximum of $500 ($2,500 contributions x 20%) per beneficiary per calendar year, to a lifetime maximum of $7,200. 

 

5. If you turned 71-years-old, you must collapse your RRSP.

If you turned 71-years-old by December 31, 2013, you must collapse your RRSP by the end of the year. At that time, you have 3 choices to make; either pay tax on the fair market value of the plan’s assets, transfer your RRSP into a Registered Retirement Fund Income Fund (RRIF), or purchase an annuity with the proceeds.  No tax is paid at the time of the purchase of the annuity or at the time of conversion into a RRIF.  You may still be able to contribute to your spouse’s RRSP under certain conditions.

 

6.  Make your Home Buyers’ Plan repayment before it is included in your income for the year.

The Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your registered retirement savings plan (RRSP) to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year.   

Generally, you have to repay all withdrawals to your RRSPs within a period of no more than 15 years. You will have to repay an amount to your RRSPs each year until your HBP balance is zero. If you do not repay the amount to your RRSP, for 2012, it will have to be included in your income for that year.  The deadline is

March 3rd, 2014.

 

7.  Pay the interest on low-interest loans related to income-splitting.

If you have entered into an income-splitting arrangement with family members and have loaned funds to either a spouse or a child at the interest rate set (quarterly) by the CRA, make sure that the interest on these loans are paid before January 30, 2014, or the loans will be subject to the attribution rules which taxes the income earned by your spouse or child in your hands.

 

8.  Pay the interest on an employer-loan to avoid it becoming a taxable benefit.

If in 2012, you received a low-interest loan from your employer you will want to ensure that interest is paid on that loan before January 30, 2014 in order to avoid a deemed taxable employment benefit. This benefit will be calculated at the CRA’s prescribed rate for the period that the loan was outstanding (which increased from 1% to 2%, effective October 1, 2013) less any interest actually paid.  This is not to be confused with a loan taken out as a result of shares owned.

 

9.  Reduce your business income by paying your family members who work for you.

As a business owner, it is beneficial to pay your family members a wage consistent with a wage you would pay to a complete stranger in order to reducing the amount of income in your business.  Also ensure that you are remitting to the CRA the CPP, EI and tax amounts on these payments.  You will need to issue them a T4, and file a T4 summary with the CRA by February 28th, 2014.

 

10.  File any T4’s and the T4 summary before the CRA deadline of February 28th, 2014 in order to avoid any penalties and interest.

If you are short on remitting for any employees, take advantage of the January 15th remittance – the last one for 2013 – and also consider the Payment on Filing (POF) option to top up amounts with the filing of the T4 summary.  Keep in mind, if you use the POF option to catch up on a considerable amount of funds, the CRA will still charge you maximum penalties.  

 

11.  Pay back any personal operating costs on employer-provided cars.  

If your employer provides you with a company car, you already know that it is a taxable benefit and it will be included on your T4.  Did you know that the actual benefit is made up of two parts; The first part is a standby charge based on a percentage of the original cost or the monthly lease payments for the car, and the second part applies if your employer pays the automobile’s operating expenses.  In 2013, this benefit is equal to 27¢ per personal kilometre driven.  The standby charge and the operating benefit are reduced by the amounts you pay to your employer.  For a standby charge reduction, your payment must have been made during 2013.  For an operating benefit reduction, your payment must be made by February 14, 2014.

 

12.  Has the tax burden from previous years got you considering bankruptcy?  

You are not alone!  In Canada 55% of bankruptcies are CRA related.  Before you speak with a trustee, speak with your trusted tax professionals at Intaxicating Tax Services, who can tell you whether or not the debt is fully collectible, and if there are other options available to you which will not ruin your credit for 7 years.  Even if the CRA is breathing down your neck, they are not allowed to tell you to file for bankruptcy and they like to think they understand when someone is insolvent, but we have the expertise, and the network to help you out of debt or, if you decide to proceed with a bankruptcy, or proposal, get you the best deal possible. 

 

13.  Google your tax problem!

You might have heard that it can be dangerous to Google  that you have a tax problem, however nothing can be further from the truth.  The CRA has all their tax information online and there are a plethora of tax-related resources available to help you determine if you should go it alone or if additional help is needed.  Make sure when you are doing your research that the information you are reading matches with the CRA website, does not sound too good to be true or is written in such a way to scare you into thinking you need to pay for a service you may not.  Most reputable firms will offer a free consultation, or a nominal fee for an hour meeting followed up with a written report to help you decide what to do.  Don’t rush into something until you have all the facts.

 

14.  Don’t be afraid to ask for help!

Speak with your accountant / tax professional about any deductions that you may be entitled to such as the public transit tax credit or for working at home.  If your accountant has not already asked you about what you do in detail then it’s up to you to determine if you need to brush up on the tax act yourself, or find a new tax team to help you pay the least amount of tax possible, like the tax professionals at Intaxicating Tax Services.  If, on the other hand, you are having issues with collections, then we are the only place to go based on our hands-on experience on both sides of the negotiating table.

 

Happy 2014.

 

We are:

InTAXicating Tax Services

@intaxicating

info@intaxicating.ca

416.833.1581.

http://www.facebook.com/intaxicating

2013 in review: Intaxicating Blog

The WordPress.com stats helper monkeys prepared a 2013 annual report for this blog.

Here’s an excerpt:

The concert hall at the Sydney Opera House holds 2,700 people. This blog was viewed about 26,000 times in 2013. If it were a concert at Sydney Opera House, it would take about 10 sold-out performances for that many people to see it.

Click here to see the complete report.

Tax Freedom Day – For Canadian Corporations is Today, January 30th.

Unsure of year
Corporate Tax Rates Around the World.

Corporate Tax Freedom Day, or the day that corporations will have paid their taxes to all levels of government, is today, January 30th, 2013. But don’t feel left out, if you are not a shareholder of a Canadian Corporation, because Personal Tax Freedom Day is also on its way – not as quickly mind you because Corporations have the ability to make much more money, much quicker than the average employee and the Corporate tax rates are considerably smaller than personal income tax rates.

From the CRA;
  • 15% on the first $43,561 of taxable income, +
  • 22% on the next $43,562 of taxable income (on the portion of taxable income over $43,561 up to $87,123), +
  • 26% on the next $47,931 of taxable income (on the portion of taxable income over $87,123 up to $135,054), +
  • 29% of taxable income over $135,054.

Then there are the Provincial tax rates;

Provincial/territorial tax rates (combined chart)
Provinces/territories Rate(s)
Newfoundland and Labrador 7.7% on the first $33,748 of taxable income, + 12.5% on the next $33,748, + 13.3% on the amount over $67,496
Prince Edward Island 9.8% on the first $31,984 of taxable income, + 13.8% on the next $31,985, + 16.7% on the amount over $63,969
Nova Scotia 8.79% on the first $29,590 of taxable income, + 14.95% on the next $29,590, + 16.67% on the next $33,820, + 17.5% on the next $57,000, + 21% on the amount over $150,000
New Brunswick 9.1% on the first $38,954 of taxable income, + 12.1% on the next $38,954, + 12.4% on the next $48,754, + 14.3% on the amount over $126,662
Quebec Go to Income tax rates (Revenu Québec Web site).
Ontario 5.05% on the first $39,723 of taxable income, + 9.15% on the next $39,725, + 11.16% on the next $429,552, + 13.16 % on the amount over $509,000
Manitoba 10.8% on the first $31,000 of taxable income, + 12.75% on the next $36,000, + 17.4% on the amount over $67,000
Saskatchewan 11% on the first $42,906 of taxable income, + 13% on the next $79,683, + 15% on the amount over $122,589
Alberta 10% of taxable income
British Columbia 5.06% on the first $37,568 of taxable income, + 7.7% on the next $37,570, + 10.5% on the next $11,130, + 12.29% on the next $18,486, + 14.7% on the amount over $104,754
Yukon 7.04% on the first $43,561 of taxable income, + 9.68% on the next $43,562, + 11.44% on the next $47,931, + 12.76% on the amount over $135,054
Northwest Territories 5.9% on the first $39,453 of taxable income, + 8.6% on the next $39,455, + 12.2% on the next $49,378, + 14.05% on the amount over $128,286
Nunavut 4% on the first $41,535 of taxable income, + 7% on the next $41,536, + 9% on the next $51,983, + 11.5% on the amount over $135,054
Canadian Corporate Tax rates for 2013 are;
The basic rate of Part I tax is 38% of taxable income, 28% after federal tax abatement.

For Canadian-controlled private corporations claiming the small business deduction, the net tax rate is 11%.

For the other corporations, the net tax rate is decreased as follows:

  • 19% effective January 1, 2009
  • 18% effective January 1, 2010
  • 16.5% effective January 1, 2011
  • 15% effective January 1, 2012

Provincial or territorial rates

Generally, provinces and territories have two rates of income tax – a lower rate and a higher rate.

Lower rate

The lower rate applies to the income eligible for the federal small business deduction. One component of the small business deduction is the business limit. Some provinces or territories choose to use the federal business limit. Others establish their own business limit.

Higher rate

The higher rate applies to all other income.

Provincial and territorial tax rates (except Quebec and Alberta)

The following table shows the income tax rates for provinces and territories (except Quebec and Alberta, which do not have corporation tax collection agreements with the CRA).

These rates are in effect on January 1, 2012, and may change during 2012.

Province or territory Lower rate Higher rate
Newfoundland and Labrador 4% 14%
Nova Scotia 4% 16%
Prince Edward Island 1% 16%
New Brunswick 4.5% 10%
Ontario 4.5% 11.5%
Manitoba nil 12%
Saskatchewan 2% 12%
British Columbia 2.5% 10%
Yukon 4% 15%
Northwest Territories 4% 11.5%
Nunavut 4% 12%

For more information, go to Dual tax rates.

Corporations also have to pay the CRA employer share of payroll source deductions for the year for employee pay and bonuses as well as any GST/HST if they are selling more than they are purchasing and also don’t forget the dividends Corporations pay out of earning to you, your friends, neighbours, parents and grandparents.

If you read some of the mainstream, err, left-leaning media tales of Corporate Tax Freedom Day you would think that we should be taxing these evil Corporations at 50% or more because all they do is pay out insane salaries and bonuses to their CEO’s and Board or Directors while giving little back to the community or the country.

For all that, I call bullshit, and not because I agree with insane salaries, bonuses, buyouts and golden handshakes – I hate them in sports and entertainment as well – but Corporations are free to operate in whichever town, city, province or country they choose to and a raise in Corporate tax rates increases the risk that corporations will back up their belongings and flee where rates are more favourable.

So while it’s great to call out Corporations for all their flaws, it would be nice once in a while if mainstream media reported on those cities and towns left with high unemployment and no jobs because a Corporation propping up their area closed up or left for a different location.

Now there are some legitimate arguments around how accountable Canadian Corporations should be and what they do with their reserves, especially in light of the recessionary times we currently live in, and by holding on to these reserves in case the economy worsens, Corporations are keeping a nest age they hope to not have to dip in to, but this “dead money” may never see the light of day when the economy picks back up and it gets swallowed up as profits or paid out as a bonus when it should be put to work right away to invest in Canada and create jobs.
Might there be other ways to increase government revenues so that the government will need to borrow less money to finance programs – driving up the debt and deficit – possibly. One suggestion by the head of the Canadian Labour Congress (CLC), Ken Georgetti, suggested that “the government should target tax credits to companies that invest in machinery and increase productivity.”

With Canadian Corporate taxes are already lower than (unconfirmed) elsewhere in the G7 nations, organizations like the CLC disregard the fact that business investment had increased by 6.2% since the official start of the recession, September 15th, 2008. If consumer confidence remains weak or if a Liberal government were to take power in Canada, look for the vultures to circle looking to pick through the remains of any and all Canadian Corporations which remain here after an increase in the Corporate Tax Rate.