Answers Archive

Re: Tuition credit carryover?

Hello. Congratulations on finishing medical school! The federal tuition credits will not be affected. However, your provincial tuition credits will. They will carry forward, but the change is in their effectiveness. The BC tax rate is 5.06% for credits, in comparison to Alberta’s which is 10%. Unfortunately, the tax credits are now worth less. The … Continue reading

Re: Tax deductions for musicians?

Hi Taegen, yes, you are allowed to claim a deduction for the cost of any maintenance, rental or insurance on the instruments. Also, if you own the instruments, you are entitled to claim capital cost allowance on said instruments. Keep in mind that your total deductions cannot exceed your employment income as a musician.

Re: What province should I register under?

Hello, Unfortunately, you cannot “register” as a citizen of a province. Your income tax depends on where you home is on December 31. If Alberta is now your home and will continue to be for the rest of the year, then you will pay Alberta provincial income tax for 2014. Also, you should apply for … Continue reading

Re: Best way to save for my child’s education?

Hello Felipe, I would recommend that you open a Registered Education Savings Plan (RESP) to start saving for your children’s future education. Here are a few reasons why an RESP is beneficial for saving money: • It offers 100% guaranteed tax-free compounding inside the plan • There are no annual tax filings and it is … Continue reading

Re: Splitting income when purchasing a house

Hi, the best way to handle this situation would be for you to pay for most, if not all of the household expenses. This will free up your fiancée’s income for investments. If you want, you can even pay your fiancée’s income taxes for the investments. Since she will be making less than you, she … Continue reading

Re: How should a trust allocate income from an apartment building to family members?

Hi, here is how I would handle this situation. Since James is required to take his tuition credit into account before claiming the dividend tax credit, it would not be efficient to allocate dividend income to him. It would be more beneficial to give him non-dividend income to ensure credits are not lost. Non-dividend income … Continue reading

Re: I pay very little income tax – what should I do?

Hello Unless you expect your income to stay small, I would not suggest putting it in your RRSP. You want to put money into your RRSP when you’re income is higher than your lifetime average and take it out when it’s lower. At very low incomes, using an RRSP can hurt you in retirement. Withdrawals … Continue reading

Re: Trustee Fees

Hello, there are no list of rules that talks about deductibility of fees paid to the trustees. Generally speaking, trustee fees are deductible if the fees would normally be deductible in the calculation of the investment income. Trustee fees paid to the investment advisor are reported on schedule 8 of the trust return and are … Continue reading

Re: Use of Trust Property

Hello, the payment of the tuition is a taxable benefit because the trust is paying for what would otherwise be a personal cost of your children. The rental property is held to earn income and is not personal use property so the value of the free rent is a taxable benefit in the hands of … Continue reading

Re: Filing a T3 for my wife’s estate?

Hi, you will not need to file a T3 for the estate. You can simply pick up the assets from the estate directly. You then report any income you receive from the property on your own returns.

Re: Managing Multiple Trusts

Hi, because the trusts were created by the same settlor, they must share the $40,000 annual alternative minimum tax basic exemption. Since you sister’s trust has a substantial AMT add back, you can bring this up to your trustees. They will more than likely allocate the full $40,000 to this trust.

Re: Inheritance into GIC’s?

Hello. As I see it, there are three options that might fit you. If you still want accessibility with the money and a decent interest rate, you should look into the Investment Savings Account TD Canada Trust offers. It’s 1.25% guaranteed and does not lock you into a term like regular GICs. It also provides … Continue reading

Re: What can I claim against rental income?

Hello, You can deduct maintenance costs can against rental income. Be aware of the difference between maintenance and improvement: maintenance is replacing carpet with carpet, development is replacing carpet with hardwood and is not deductible. Mortgage interest, if you have a mortgage, is another large expense that landlords have. If you are renting what used … Continue reading

Re: What should I do with my husband’s corporate bonds?

Hello, instead of claiming the income from the bonds each year and having it be taxed at top marginal rates, you should get your trustees to retain the income and have it taxed in the trust at graduated rates. You can then ask for capital distribution that will provide you with any additional cash you … Continue reading

Re: Selling a house with a family trust

The trust can attribute the principle residence exemption for your brother from 2006 to 2009 because he lived there as his primary residence. Likewise, the trust can designate the principle residence exemption for 2009 and onwards for you, so long as the house was your primary residence. The total principle residence exemption for you and … Continue reading

Archives: Answers