Personal Tax Archives

I have a vacation property outside Canada and it is never rented out. The cost is greater than $100,000 CAD. Do I have file form T1135 with my personal tax return for this property?

No, as long as the property is solely used personally, it is not required to be reported on T1135.

Do I or my children need to be Permanent Residents of Canada for me to open an RESP account and contribute?

In order to open an RESP account, the subscriber and the beneficiaries (children) do not need to be Permanent Residents of Canada. However, the beneficiary is required to be a Canadian resident for tax purposes and have a valid SIN. For more information on residency status, please visit CRA page on Residency status If you … Continue reading

Do I have to report my income from hobby sales?

According to the Canada Revenue Agency (CRA), hobby income must be reported on your tax return if it generates a profit (revenue in excess of expenses). In the eyes of the CRA, this is a strong indication that the hobby is a venture with an expectation of profit. If, however, the hobby results in a … Continue reading

Can I deduct interest paid on loans?

You can deduct interest incurred to earn investment income (dividends and interest) from investments such as bonds and stocks. However, interest incurred on non-investment loans or investments that generate only capital gains are not deductible. It makes sense to pay off loans giving rise to non-deductible interest (i.e. mortgage on your principal residence) first and … Continue reading

Who can claim the Overseas Employment Tax Credit?

In order to claim the Overseas Employment Tax Credit, individuals are required to be a Canadian resident or deemed resident at any time in the year AND earn employment income from performing at least 90% of the work outside of Canada for more than six consecutive months with a specified employer. As well, the employment … Continue reading

What happens if I over contribute to my RRSP?

You have excess RRSP contributions if the total of: Your unused contributions from prior years, Your current year contributions, and $2000 is more than your RRSP deduction limit shown on your latest Notice of Assessment. You have to pay a tax of 1% per month on your excess contributions for every month that the contributions … Continue reading

I have very low or no income, do I need to file a tax return?

If you are older than 18 years of age, you should file a tax return in order to apply for and receive certain government payments such as GST and Ontario Sales Tax refunds, Canada Child Tax Benefit and Guaranteed Income Supplement for seniors. You can also accumulate RRSP contribution room based on your earned income, … Continue reading

Do I need to keep a logbook to claim motor vehicle expenses on my return? What should I include in the book?

Only motor vehicle expenses incurred during business use is eligible for deduction. The CRA considers travel between home and the principal place of business to be personal use. In order to substantiate your motor vehicle claims, you should keep a detailed logbook to track the business/personal use of the vehicle. The Income Tax Act does … Continue reading

What’s the tax advantage of using a Health Welfare Trust?

If you’re self-employed, and do not have dental or medical benefits, then a Health Welfare Trust (HWT) can save you a lot in taxes. Here’s how it works: Your corporation pays a specified amount (e.g. $5,000) to an Insurance Company that administers the HWT for your company Your corporation will receive a tax deduction for … Continue reading

How much can I deduct for past service contributions to a RPP while not a contributor prior to 1990?

Under the employee contribution rules for past service contributions while not a contributor on and after 1991 for service prior to 1990, a maximum of $3,500 may be deducted per year for contributions that were made for years of service prior to 1990. The overall limit is $3,500 times the number of years of pre-1990 … Continue reading

How can I split my company’s business profits with my children?

Question:

Do I have to include a car allowance that I receive from my employer in my income?

An automobile allowance paid by an employer to his employee is taxable to the employee, unless it is based on actual kilometers driven by the employee. For example, a flat monthly car allowance of $500 would be a taxable benefit to the employee, and should be included in the employee’s T4 slip. For an employer … Continue reading

I’m not sure I will be able to get my T4 slip on time to file my 2012 tax return, what can I do?

If you haven’t received a T4 slip from your employer make sure you request it from them as soon as possible. However, there are cases where you will not be able to get your T4 slip from your employer in time to file your personal tax return. In this case, if you know that you … Continue reading

Should I wait to pay my tax balances if I filed a taxpayer relief form?

Question: If I am late-filing a tax return due to an external factor and I did file a taxpayer relief form to explain the situation, should I pay my tax balances owing now or wait till the CRA to process my form? Answer:Well, you do have a choice to defer you payment. However, this will … Continue reading

Are all of my donations eligible for a tax credit (for individuals) or tax deduction (for corporations)?

No, only donations to registered charitable organizations (with the CRA) are eligible for a tax credit for individuals or for a tax deduction for corporations. Before you make a donation, ask the organization if they can provide you with an official donation slip for tax purposes.

Category: Personal Tax