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click here to access Norm's Tips and Traps 4Q 2019 saveutax.com


click here to access Norm's 3Q Tips and Traps

saveutax.com


 Please click here to see the SaveUTax.com 2018 Federal Budget Commentary


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Canadians are fortunate to have a publicly funded health care system, in which most major medical expenses are covered by provincial health care plans. Such plans are not, however, comprehensive, and there is consequently a large (and growing) number of medical and para-medical costs — including dental care, prescription drugs, physiotherapy, ambulance trips, and many others — which must be paid for on an out-of-pocket basis by the individual. In some cases, such costs are covered by private insurance, usually provided by an employer, but not everyone benefits from such coverage. Self-employed individuals, those working on contract, or those whose income comes from several part-time jobs do not usually have access to such private insurance coverage. Fortunately for those individuals, our tax system acts to help cushion the blow by providing a medical expense tax credit to help offset out-of-pocket medical and para-medical costs which must be incurred.


Working from home — and certainly work from home arrangements on the scale experienced over the past 19 months — would not be practically possible without the use of technology. And of all the available technology, cell phones and internet service are the two essentials without which work-from-home arrangements almost literally can’t function.


Throughout the pandemic, the federal government has provided businesses with a number of support programs, some of which operated to subsidize the wage and rental costs of those businesses. Some of those programs were scheduled to expire on November 20, 2021; however, in its most recent announcement made October 21, 2021, the federal government indicated that one program — the Canada Recovery Hiring Program (CRHP) — would be extended, possibly until July 2, 2022. In addition, two new programs will be implemented to address the needs of businesses in sectors particularly hard hit by the pandemic. The affected programs are as follows.


Since the Canada Recovery Benefit (CRB) replaced the Canada Emergency Response Benefit (CERB) just over a year ago, more than 2 million individual Canadians have applied for the CRB, a benefit which paid $900 (pre-tax) per week until July 17 of this year, and $600 (pre-tax) per week thereafter. For the most recent benefit period for which figures are available (September 12-25, 2021), 821,560 Canadians received the CRB. In total, just over $27 billion in CRB amounts have been issued by the federal government since October 2020.


Two quarterly newsletters have been added—one dealing with personal issues, and one dealing with corporate issues.


The ongoing pandemic has, as one of its many effects, created a boom in the home renovation industry, as Canadians find themselves needing to adapt their homes to more and more varied uses.


In most cases, the need to seek out and obtain legal services (and to pay for them) is associated with life’s more unwelcome occurrences and experiences — a divorce, a dispute over a family estate, or a job loss. About the only thing that mitigates the pain of paying legal fees (apart, hopefully, from a successful resolution of the problem that created the need for legal advice) would be the ability to claim a tax credit or deduction for the fees paid.


Since March of 2020, tens of millions of Canadians have received pandemic benefits. In some cases, those benefits have been received directly by individuals — typically, through the Canada Emergency Response Benefit (CERB) and, later, the Canada Recovery Benefit (CRB). In other cases, benefits have been provided to businesses, in some cases to assist them with rent payments or, in others, to subsidize employee wages.


Most Canadians know that the deadline for making contributions to one’s registered retirement savings plan (RRSP) comes 60 days after the end of the calendar year, around the end of February. There are, however, some circumstances in which an RRSP contribution must be (or should be) made by December 31, in order to achieve the desired tax result.


In this year’s Budget, the federal government announced the creation of a program — the First-time Home Buyers’ Incentive, or FTHBI, to provide assistance to individuals seeking to enter the housing market. Under that FTHBI, the Canada Mortgage and Housing Corporation (CMHC) (an agency of the federal government) will add a specified amount to the down payment made on a home purchase by a qualifying buyer, with the effect of reducing the amount of the monthly mortgage payment required of the new home owner.


Raising children is expensive and, in recognition of that fact, the federal government has, for more than half a century, provided financial assistance to parents to help with those costs. That assistance has ranged from monthly Family Allowance payments received by families during the 1960s to its current iteration, the Canada Child Benefit.


An increasing number of Canada’s baby boomers are moving into retirement with each passing year and, for most of those baby boomers, retirement looks a lot different than it did for their parents. First of all, as life expectancy continues to increase, baby boomers can expect to spend a greater proportion of their life in retirement than their parents did. Second, the financial picture for baby boomers is likely to be different. Many of their parents benefitted, in retirement, from an employer sponsored pension plan, which ensured a monthly payment of income for the remainder of their lives. Now, such pension plans and the dependable monthly income they provide are, especially for boomers who spent their working lives in the private sector, more the exception than the rule. Where, however, baby boomers have the “advantage” over their parents in retirement, it’s in the value of their homes. Increases in residential property values over the past quarter century in nearly every market in Canada have meant that for many Canadians who are retired or approaching retirement, their homes – or more specifically, the equity they have built up in those homes – represents their single most valuable asset.


Most taxpayers sit down to do their annual tax return, or wait to hear from their tax return preparer, with some degree of trepidation. In most cases taxpayers don’t know, until their return is completed, what the “bottom line” will be, and it’s usually a case of hoping for the best and fearing the worst.


The Old Age Security program is the only aspect of Canada’s retirement income system which does not require a direct contribution from recipients of program benefits. Rather, the OAS program is funded through general tax revenues, and eligibility to receive OAS is based solely on Canadian residency. Anyone who is 65 years of age or older and has lived in Canada for at least 40 years after the age of 18 is eligible to receive the maximum benefit. For the first quarter of 2019 (January to March 2019), that maximum monthly benefit is $601.45. 


Two quarterly newsletters have been added—one dealing with personal issues, and one dealing with corporate issues.


The fact that debt levels of Canadian households have been increasing over the past decade and a half can’t really be called news anymore. In particular, the ratio of debt-to-household-income, which stood at 93% in 2005, has risen steadily since then and, as of the third quarter of 2018, reached (another) new record of 177.5%. In other words, the average Canadian household owed $1.78 for every dollar of disposable (after-tax) income. (The Statistics Canada publication reporting those findings can be found on the StatsCan website at https://www150.statcan.gc.ca/n1/daily-quotidien/181214/dq181214a-eng.htm.)


The Canada Pension Plan contribution rate for 2019 is increased to 5.1% of pensionable earnings for the year.


Dollar amounts on which individual non-refundable federal tax credits for 2019 are based, and the actual tax credit claimable, will be as follows.


The indexing factor for federal tax credits and brackets for 2018 is 2.2%. The following federal tax rates and brackets will be in effect for individuals for the 2019 tax year.


Each new tax year brings with it a listing of tax payment and filing deadlines, as well as some changes with respect to tax planning strategies. Some of the more significant dates and changes for individual taxpayers for 2019 are listed below.


The following tax changes are in effect January 1, 2019.


The holiday season is usually costly, but few Canadians are aware that those costs can include increased income tax liability resulting from holiday gifts and celebrations. It doesn’t seem entirely in the spirit of the season to have to consider possible tax consequences when attending holiday celebrations and receiving gifts; however, our tax system extends its reach into most areas of the lives of Canadians, and the holidays are no exception. Fortunately, the possible negative tax consequences are confined to a minority of fact situations and relationships, usually involving employers and employees, and are entirely avoidable with a little advance planning.


Two quarterly newsletters have been added—one dealing with personal issues, and one dealing with corporate issues.


Getting a post-secondary education – or professional training – isn’t inexpensive. Tuition costs can range from as little as $5,000 per year for undergraduate studies to as much as $40,000 in tuition for a year of professional education. And those costs don’t factor in necessary expenditures on textbooks and other ancillary costs, to say nothing of general living expenses, like rent, transportation and food.


Most Canadians deal with our tax system only once a year, when preparing the annual tax return. And, while that return – the T1 Individual Income Tax Return – may be only four pages long, the information on those four pages is supported by 13 supplementary federal schedules, dealing with everything from the calculation of the tax-free gain on the sale of a principal residence to the determination of required Canada Pension Plan contributions by self-employed taxpayers.


Anyone who has ever tried to reduce their overall personal or household debt knows that doing so, no matter how disciplined one’s approach, can seem like a one step forward, two steps back proposition. It sometimes seems that, just as measurable progress is achieved in one area (an extra payment is made on the mortgage), unexpected costs in another area (a significant car repair bill) push up the level of debt elsewhere (e.g., credit card debt).


As the days get shorter and the temperature drops, many Canadians start thinking about spending a few days or weeks (or even longer) of the upcoming winter somewhere warmer. For some, that means going south for the holidays, while for others a January or February escape from winter has more appeal. And some Canadians, generally “snowbird” seniors who have retired, will spend most of the winter in a warmer climate.


The daily commute to and from work is, generally, everybody’s least favourite part of the work day. In recent years that commute has gotten longer and longer as many Canadians, especially those working in large urban centers, have moved further and further away from their workplaces in search of affordable family housing.


Tax scams have been around, probably, for about as long as Canada has had a tax system. They also have a tendency to proliferate at certain times of the year — often during tax return filing and assessment season, when it wouldn’t necessarily strike taxpayers as unusual to receive a communication purporting to be from the Canada Revenue Agency (CRA), with a message regarding that person’s taxes — whether in relation to a tax refund or an amount of tax owing.


For all but a very fortunate few, buying a home means having to obtain financing for the portion of the purchase price not covered by a down payment. For most buyers, especially first-time buyers, that means taking out a conventional mortgage from a financial institution.


By the middle of May 2018, the Canada Revenue Agency (CRA) had processed just over 26 million individual income tax returns filed for the 2017 tax year. Just over 14 million of those returns resulted in a refund to the taxpayer, while about 5.5 million returns filed and processed required payment of a tax balance by the taxpayer. Finally, about 4.4 million returns were what are called “nil” returns — returns where no tax is owing and no refund claimed, but the taxpayer is filing in order to provide income information which will be used to determine his or her eligibility for tax credit payments (like the federal Canada Child Benefit or the HST credit )


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