Tag: Personal tax

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.  

Can I claim my dependent’s disability amount?

The disability tax credit (DTC) is offered in order to lessen the tax burden for individuals who are physically or mentally impaired. The DTC can be applied for by completing Form T2201, Disability Tax Credit Certificate. If a taxpayer does not claim all or part of the disability amount on his or her tax return … Continue reading Can I claim my dependent’s disability amount?

I am required to file a trust return for the year. When is the return due?

You have to file the T3 return and pay any balance owing no later than 90 days after the trust’s tax year-end. If you do not have all the tax slips required to complete the return by the due date, you should estimate the income. If, after you receive the slips, you find that the … Continue reading I am required to file a trust return for the year. When is the return due?

Is there ever a circumstance where the CRA can refuse to issue my refund?

Yes, one such circumstance where the CRA can refuse to issue your refund is when the taxable income for a tax year is reported after 3 years of the reporting period. For example, if the tax return for the 2008 year is filed on September 2013, the CRA can refuse to issue that refund because … Continue reading Is there ever a circumstance where the CRA can refuse to issue my refund?

As a GST/HST registrant, when am I required to start collecting HST on sales?

You are required to collect HST when your taxable sales (over the last 4 quarters) exceeds the $30,000 threshold. As a voluntary registrant, you need to collect HST on sales starting on the earlier of: the effective registration date listed on your GST/HST account application, the day of the supply (sale) that made go over … Continue reading As a GST/HST registrant, when am I required to start collecting HST on sales?

I have a family trust owning assets and I’ve heard of something called the 21 Year rule. What does that mean?

After 21 years of the family trust’s formation, the trust is deemed to have disposed of and reacquired certain types of property at their fair market value. This can give rise to a capital gain since most property increases in value over time. The 21 year rule for Trusts and its impact on you, should … Continue reading I have a family trust owning assets and I’ve heard of something called the 21 Year rule. What does that mean?

How far back can the CRA audit an individual or business?

The CRA reserves the right to audit your prior year tax filings going back six years. Hence, you should keep receipts and documentation supporting your claims up to six years.  

What are the consequences of issuing tax slips late?

If you fail to file tax slips by the due date you will be subject to late filing penalty based on the number of slips you file late. For 1-50 slips, the penalty is $10 per day up to a maximum of $1,000. For more information check out this section on the CRA website. However, … Continue reading What are the consequences of issuing tax slips late?

Can you explain how I can withdraw the over-contributed RRSP amounts from the financial institution?

If you over contribute in your RRSP (even beyond the $2,000 allowed) you run the risk of being penalized 1% of the over contribution per month. So when you realize you do not want to leave it in the RRSP and be penalized, you try and withdraw it from the financial institution. However, the institution … Continue reading Can you explain how I can withdraw the over-contributed RRSP amounts from the financial institution?

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