Disposing of or acquiring Canadian property

Ready-to-buy-a-homeAre you a non-resident home owner?  Purchasing a home from a non-resident?

We are all well aware of how hot the real estate market is on the Sunshine Coast and Vancouver at the moment.  There are many people taking advantage of this fact and selling their homes.  However, if you are a non-resident who owns a home in Canada, or you are purchasing a home from a non-resident, there are important things you need to know! See the link below for more information:
Disposing of or acquiring certain Canadian property

If either of these scenarios apply to you, it is always best to contact a tax advisor to aid you in your transaction to ensure the necessary steps are taken to avoid any unpleasant surprises in the future.

Do you owe income tax? Here’s how to make paying as easy as 1, 2, 3!

Canada Revenue Agency source: http://www.cra-arc.gc.ca/nwsrm/txtps/2016/tfsk15-eng.html

Did you know?

Most Canadian income tax and benefit returns for 2015 are due on April 30, 2016. However, as this date is a Saturday, the Canada Revenue Agency (CRA) will consider your return as filed on time and your payment to be made on time if the CRA receives your submission or it is postmarked by midnight on May 2, 2016.

Self-employed individuals and their spouses or common-law partners have until June 15, 2016, to file their income tax and benefit return, but any balance owing is still due no later than May 2, 2016.

If you received income that has no tax withheld or does not have enough tax withheld for more than one year, you may have to pay tax by instalments. We will issue you a reminder if we think that you may have to pay by instalments. Failing to pay in full and on time will result in interest charges, and could lead to legal actions by the CRA.

Payment Methods

More and more Canadians are paying their taxes online. When you pay online, you can make your payment anytime, from anywhere! Last year, we received over six million payments from individual filers online.

There are several secure ways to make a payment to the CRA.

Online payment options

  • Online banking:
    1. Sign in to your financial institution's online banking service.
    2. Under 'add a payee', look for CRA (revenue)-(2015)-tax owing, CRA (revenue)-past tax owed, CRA (revenue)-tax instalment or a similar payee and select the one that applies to you.
    3. Be sure to enter your account number (either your social insurance number or business number) carefully to avoid a lost or misapplied payment.
  • Debit card: Use My Payment, the CRA’s online payment service. It allows individuals and businesses to make payments using Interac® Online.
     
  • Credit card: The CRA offers the option of paying taxes using a credit card through a third-party service provider that offers additional payment methods. Third-party providers charge a fee for their service. The CRA may charge you penalties and interest if your payment is late; the CRA receives your payment on the date the service provider sends the funds to the CRA—contact the service provider to find out about processing delays. The only provider that currently offers the credit card option is listed below for your convenience.
     
    • Plastiq (T2 Corporation and T1 Individual)
       
  • Pre-authorized debit: Pre-authorized debit lets you set up a payment to be made from your bank account to the CRA on a pre-set date. You can pay an overdue amount or make instalment payments. You can set up a pre-authorized debit agreement at your convenience using the CRA's My Account service. For more information, go to Pre-authorized debit.

For other payment methods, go to www.cra.gc.ca/payments.

Payment arrangements

If you cannot pay your balance owing by the tax-filing season deadline, you can make a payment arrangement in one of the followings ways:

  • make a pre-authorized debit payment agreement using My Account;
  • call the CRA's TeleArrangement telephone service at 1-866-256-1147; or
  • call the CRA's debt management call centre at 1-888-863-8657 to speak to an agent.

The CRA’s online services make filing and managing your taxes easier

The CRA's online services are fast, easy, and secure. You can use them to help file your income tax and benefit return, make a payment, track the status of your return, register for online mail, apply for child benefits, and more. Access the CRA’s full suite of self-service options—register for My Account at today, and start managing your tax matters online!

Review of Canadian Federal Budget 2016

 
Canada Budget 2016
 
The newly elected Liberal government released their first budget on March 22, 2016 projecting $110 billion in accumulated deficits over the next 5 years. We’ve highlighted some select tax changes proposed that will impact a larger proportion of our clients. Please note the list is not a complete list of budget proposals, hence you are encouraged to read the full budget to determine what other measures may impact your specific situation.

  • Guaranteed Income Supplement (GIS) / Old Age Security (OAS) – increases the GIS benefit by up to $947 annually for low-income single seniors. Single seniors with annual income (other than Old Age Security and Guaranteed Income Supplement benefits) of about $4,600 or less will receive the full increase of $947. Restores the OAS eligibility age to 65 from 67.
  • Canada Child Benefit (CTB) – Effective July, 2016, the CTB will replace the existing Universal Child Care Benefit and the Canada Child Tax Benefit. It will provide a tax-free maximum benefit of $6,400 per child under the age of 6, and $5,400 per child aged 6 through 17. The benefit will be phased out at various rates depending on your family income and the number of children you have. An additional amount of $2,730 will be available for children with severe disabilities.
  • “Family” Income Splitting Credit – Eliminated effective tax year 2016.
  • Northern Residents Deduction – Effective tax year 2016, the existing deductions have been increased.
  • Labour-Sponsored Venture Capital Corporations Tax Credit – Effective tax year 2016, the Federal tax credit which was previously slated to be eliminated, has been restored to 15% for share purchases of prescribed provincially registered LSVCC’s.
  • Teacher and Early Childhood Educator School Supply Tax Credit – Effective tax year 2016, allows employee’s who are eligible educators to claim a 15% refundable tax credit based on an amount of up to $1,000 in expenditures made by the employee for eligible supplies.
  • Mineral Exploration Tax Credit for Flow-Through Share Investors – Extends the tax credit to flow-through share agreements entered into on or before March 31, 2017.
  • Education and Textbook Tax Credits – Effective tax year 2017, the existing tax credits will be eliminated. Unclaimed tax credits carrying forward into 2017 will still be eligible for claims in 2017 and beyond.
  • Children’s Fitness and Arts Tax Credits – Effective tax year 2016, the maximum eligible amounts will be reduced from $1,000 to $500 for the children’s fitness tax credit and from $500 to $250 for the children’s arts tax credit. For tax year 2017 both credits will be eliminated.
  • Personal Service Corporation – Effective January 1, 2016, the federal tax rate for personal service corporations will be increased from 28% to 33%.
  • Taxation of “Switch Funds” – Effective for fund “switches” after September 2016, these will now be considered taxable sales as opposed to tax-deferred sale.
  • Small Business Tax Rate – Effective January 1, 2017, freeze the small business tax rate at 10.5%, whereas it was previously scheduled to drop to 9% by 2019. Concurrent with this change, to preserve integration between corporate and personal tax rates, the personal dividend tax gross up factor and dividend tax credit will also be frozen at 2016 rates.
  • Multiplication of the $500K Small Business Deduction – Partnerships – Certain partners of partnerships have structured their affairs in a manner that allows them to access the full $500K small business deduction where they would otherwise only have had access to a minimal small business deduction. This benefit will be eliminated through changes in legislation effective March 22, 2016.
  • Multiplication of the $500K Small Business Deduction – Corporation – Multiplication of the small business deduction can also be accomplished through use of a corporate structure. This benefit will also be eliminated through changes in legislation effective March 22, 2016. More specifically, a corporation’s active business income from providing services (directly or indirectly, in any manner whatever) to a private corporation will be ineligible for the small business deduction where, at any time during the year, the corporation, one of its shareholders or a person who does not deal at arm’s length with such a shareholder has a direct or indirect interest in the private corporation. This rule will not apply if all or substantially all of its active business income is earned from providing services to arm’s length persons other than the private corporation, or where the private corporation “assigns” part of its unused small business limit to the corporation.
  • Life Insurance Proceeds and Capital Dividend Account – Effective for deaths after March 22, 2016, the Income Tax Act will be amended to ensure that capital dividend account rules for private corporations, and the adjusted cost base rules for partnership interests, apply as intended.
  • Transfers of Life Insurance Policies – For policies transferred after March 22, 2016, the proceeds of disposition of any life insurance policies will include the fair market value of any consideration received by the transferor. For transfers made prior to March 22, 2016, the amount added to the capital dividend account will be limited.
  • Eligible Capital Property (ECP) – A new CCA class would replace the existing ECE rules. Expenditures that are currently added to the cumulative eligible capital pool (CEC) at 75% would be included in the new CCA class at 100%. The new class would have a 5% annual declining balance depreciation rate. The existing CCA rules regarding recapture, capital gains, half-year, etc would apply to the new class. The transitional rules are rather complex, however there are some rules for small businesses to simplify the transition but these are also too complex for purposes of this summary.
  • Previously announced tax measures – Confirms the Governments intention to proceed with tax measures related to:
    • Conversion of capital gains into tax-deductible inter-corporate dividends (section 55)
    • The repeated failure to report income penalty
    • The sharing of taxpayer information within the CRA to facilitate the collection of certain non-tax debts
    • The GST joint venture election
It also confirms the Governments intention to NOT proceed with exemption from capital gains tax for certain dispositions of private corporation shares or real estate where cash proceeds from the disposition are donated to a registered charity within 30 days.

IRS Announces Key Milestone in FATCA

Foreign Tax Account Compliance Act – and how it could affect you! 

If you are one of those Canadian residents that is also a US citizen, but you haven’t been compliant with your US filing and reporting requirements, you may want to consider taking advantage of the Offshore Voluntary Disclosure Program before it ends.  Since 2009, the IRS has had special rules in place allowing Canadians in this situation to comply with their US filing and reporting requirements without penalty.  Originally slated to end in 2012, the IRS has left this program open, but could announce its closure at any time.  With FATCA in place, financial institutions will have to report to the IRS all clients who are US citizens and hold certain financial accounts.  This means that the IRS will soon be aware of individuals who haven’t been compliant in their filings.  This could mean tens of thousands of dollars in penalties for non-compliance.  If you think this may be a situation that could affect you, talk to your financial advisor.

2015 Federal Budget

The 2015 Federal Budget2015 Canadian Federal Budget has been released.

For complete details please see: http://www.budget.gc.ca/

For a review of the budget, please see: http://www.bcbusiness.ca/finance/2015-federal-budget-gets-an-a-from-cfib

The Canadian Federation of Independent Business (CFIB) liked Tuesday's budget, which will reduce the tax burden on small businesses. The small business corporate tax will fall from 11 to 9 per cent over the next four years, and the lifetime capital gains exemption for farmers and fishers will immediately increase to $1 million, both of which were on the CFIB’s wish list.