Tag: Personal tax

Why does the CRA review/pre-assess individual tax returns and what do they usually look for?

The CRA will request further documentation, as part of their review, of some credits/deductions claimed on your personal tax return. This usually only applies to those returns that have been filed electronically. Some of the credits/deductions that draw some scrutiny from the CRA are items like medical expenses, donations, moving expenses, eligible dependant credit, child … Continue reading Why does the CRA review/pre-assess individual tax returns and what do they usually look for?

Can I deduct the life insurance premiums I pay on my tax return?

Life insurance premiums are usually not deductible for tax purposes. However, some exceptions do exist such as if the beneficiary is a registered charity or if the insured is requested by the bank to buy life insurance as collateral for obtaining a loan. The good news from a tax perspective is that the death benefits … Continue reading Can I deduct the life insurance premiums I pay on my tax return?

What is pension income splitting?

Pension income splitting can be used to allocate up to 50% of eligible pension income to your spouse or common-law partner, effectively splitting income with the lower income spouse. Only eligible pension income qualifies for pension income splitting. Eligible pension income includes: Life annuity payments from a pension fund (i.e.: life income funds and locked-in … Continue reading What is pension income splitting?

Can I claim the transit pass costs incurred by my family members?

You can only claim the public transit amount for yourself, spouse or common-law partner, and your or your partner’s children who are below the age of nineteen. Ensure that you keep all passes as proof for your claim. According to the Canada Revenue Agency, the passes must contain all the following data: Name of the … Continue reading Can I claim the transit pass costs incurred by my family members?

Do I have to pay tax on the Universal Child Care Credit (UCCB) payments I receive?

Yes, you must report this income on your personal income tax return and pay income tax. Should you fail to do so, the Canada Revenue Agency will adjust your tax return based on on the Universal Child Care Credit (UCCB) payments that you received in the year. Failure to report will likely result in interest … Continue reading Do I have to pay tax on the Universal Child Care Credit (UCCB) payments I receive?

I have been assigned to a temporary assignment (few years) by my employer to work in a foreign country. Will this affect my Old Age Security eligibility?

Normally, your Old Age Security eligibility will depend on the number of years you physically lived in Canada after the age of 18. This means that your OAS eligibility will very much be affected by your temporary assignment. However, Canada has a Social Security Totalization Agreement with various countries around the world which states that … Continue reading I have been assigned to a temporary assignment (few years) by my employer to work in a foreign country. Will this affect my Old Age Security eligibility?

What types of tax credits are available to Canadian university students?

Canadian university students are able to claim several lucrative tax credits: The first tax credit that a student can claim is for tuition fees. In order to claim this credit the student must be taking courses costing $100 or more in a recognized educational institution. The second tax credit is the education amount. You are … Continue reading What types of tax credits are available to Canadian university students?

Can I receive a tax credit or deduction for fees paid to a private high school for my children?

Typically, parents are unable to claim a tuition credit or tax deduction for fees paid to a private high school. However, there are special circumstances where parents can claim tax credits for a portion of the fees paid to a private high school in respect of their children as indicated below: Parents can claim a … Continue reading Can I receive a tax credit or deduction for fees paid to a private high school for my children?

In addition to reporting my income, what other information would be useful to share with the CRA?

To avoid headaches in the future by way of reduced or withheld tax refunds, and extensive paperwork thereafter, you should inform the CRA if the following events happen (among others), with appropriate supporting documentation. Date of marital status change, either when you marry or, undergo a separation/divorce. Spousal and child support payments, as per court … Continue reading In addition to reporting my income, what other information would be useful to share with the CRA?

What are the tax implications for support payments received from a former spouse?

Child support payments made under a court order or written agreement after April 1997 are generally not taxable and hence do not have to be included in income by the recipient. It is also not deductible by the payer.In contrast, spousal support payments made under a court order or written agreement are usually taxable to … Continue reading What are the tax implications for support payments received from a former spouse?

What is a death benefit?

A death benefit is an amount paid to a deceased individual for his/her employment service. Taxes are generally not required to be paid on the first $10,000 of the benefit amount received. Any amount in excess of the $10,000 has to be reported for tax purposes. A letter must be attached with the return in … Continue reading What is a death benefit?

What are the different methods of calculating tax installments?

The tax instalments can be calculated in 3 ways. Please see below for the different methods as indicated by the CRA. No Calculation Option: Instalments payments are based on taxes owing in last year and 2nd last year. This alternative is best if taxes owing are fairly consistent from year to year. Prior-year option: Tax … Continue reading What are the different methods of calculating tax installments?

I moved from the UK to Canada for school. Can I deduct moving expenses?

According to the CRA, if the taxpayer changes residences and begins full-time attendance at a post-secondary institution (whether or not in Canada), eligible moving expenses (from old residence to new) may be deducted if the move results in you living at least 40 KMs closer to the institution. Also, at least one of the residences … Continue reading I moved from the UK to Canada for school. Can I deduct moving expenses?

I don’t have enough money to pay my income tax bill. What should I do?

The CRA waits 90 days after the Notice of Assessment after which they will begin the process of trying to collect the unpaid tax bill from you (generally, they will first attempt to contact you via phone). To avoid unpleasantness, you should contact the CRA at 1-888-863-8657 to arrange a payment schedule which works for … Continue reading I don’t have enough money to pay my income tax bill. What should I do?

I am trying to mail my return to the CRA. Will the CRA consider the date of receipt to be the date that I mail the return or the date that it arrives at the CRA centre?

The CRA will consider the date that the return is sent as the date of receipt. That means, as long as you send your personal tax return by April 30, the CRA will not impose late filing penalty. You should keep the mailing receipt as proof of the filing date.  

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