Claiming Medical Expenses: Free Healthcare?

Free Health Care? Did you know that Canadians spend on average more than $1,000 on medical expenses each year? It’s estimated that government programs, via our taxes, cover about 72% of medical expenses, which means that we pay for the rest. Your clients may be over-paying on their taxes because they don’t know about medical expense deductions. 

The Provincial Tax rates for the lowest two income tax bracketsófocusing on incomes under $72,000 will drop for tax year 2011, making BC one of the most tax competitive jurisdictions in Canada. Together with low marginal rates of taxes on dividends and corporate taxes, BC is emerging as a mini tax haven.  BC Personal Income Tax Rates 2011 Tax Year   Tax bracket Current rate New rate $0 to $36,146 5.06 % 4.30 % $36,146 to $72,293 7.70 % 6.525 % $72,293 to $83,001 10.50 % 10.50 % $83,001 to $100,787 12.29 % 12.29 % Over $100,788 14.70 % 14.70 %

For people who want to think strategically about the role of money in their life.   Click here to read the latest blog entry by Evelyn Jacks.

Businesses purchasing new computers and systems software from January 27, 2009 until midnight of January 31, 2011 can claim a 100% capital cost allowance with no half-year rule. These purchases are included in Class 52 of depreciable properties. Now is a good time for advisors and clients to be in contact to review asset acquisition strategies with business owners to benefit from preferred timelines for tax write-offs. Included in other common year end asset reviews are purchase of vehicles, buildings, furniture and fixtures. Purchases of any of these assets before year end will increase the opportunity for tax savings using capital cost allowances. Additional Educational Resources: Enrol in Tax Preparation for Proprietors

On October 19, 2010, CRA released the updated RC4022, "General Information for GST/HST Registrants, which provides information on several new developments on the GST/HST front. Advisors and their clients have been working through the introduction of the HST in BC, ON and Nova Scotia, on July 1, 2010. For the Province of Ontario the HST combines the retail sales rate (8%) with the G.S.T. (5%) for a combined HST of 13%. In British Columbia the retail sales tax (7%) harmonized with the GST (5%) for an HST of 12%. Nova Scotia increased its HST from 13% to 15% on July 1st combining a 10% provincial sales tax with the 5% GST. Of note in the news: Electronic filing of GST/HST returns will be mandatory for most registrants and this document outlines several options for this. As of April 12, 2010, four-digit access codes will be assigned by CRA for all GST/HST registrants for e-filing purposes. Penalties will apply if you are required to file electronically and you fail to do so. The "place of supplyî rules determine whether suppliers must charge GST/HST. New rules as of May 1, 2010, use the location of the consumer of the supply rather than the location of the supplier. For example, if a resident of Nova Scotia purchases and receives delivery of an item from Ontario he will pay 15% HST. A resident of British Columbia purchasing the same product would pay 12%. There are new rules for financial institutions and simplified reporting for network sellers (direct sales). CRA now offers an installment calculator for businesses that can be accessed under "My Business Accountî www.cra.gc.ca/mybusinessaccount To view RC4022 in its entirety you can visit: http://www.cra-arc.gc.ca/E/pub/gp/rc4022/README.html These changes will be discussed in detail at the Distinguished Advisor Workshops, one day CE workshops featuring November Year End Planning Strategies for business owners, coming to Winnipeg, Calgary, Vancouver, Toronto and Ottawa, November 3 to 9 . To register Click here

October 31, 2010 is an important date for Ontario and British Columbia businesses that have now converted from the Retail Sales Tax System to the HST system. It is the last date that these business can file with their respective Ministries of Finance for adjustments, refunds or rebates for RST adjustments that occurred after June 30, 2010. Under the transition provisions, Ontario and BC businesses are required to; file RST returns for any outstanding work that required RST remittances prior to July 1, 2010 even if an invoice has not yet been issued. Claim any rebates of RST due to refunds of sales after July 1st where RST was applied As of November 1, 2010 any claims for refunds or adjustments relating to RST must be made directly by the consumer to the respective Ministry. The Vendor no longer will have any authority to act on behalf of the Provincial Ministry. While vendors will no longer need to deal with the Ministries of Finance and Provincial sales tax issues, it is important to note that businesses must retain all records from July 1, 2007 through to June 30, 2014 for audit and verification purposes. This is an extension of the normal three year period to allow Provincial Ministries to audit past the statutory time frames. For complete details on vendor requirements and transitioning rules, please visit the respective Ministry of Finance websites for your province. Special thanks to Alan Rowell, DFA-Tax Services Specialist of The Accounting Place for this special report. Additional Educational Resources: DFA-Bookkeeping Services Specialist Designation Program; EverGreen Explanatory Notes.

The Bank of Canada released a Monetary Policy Report summary today, outlining its outlook for the Canadian economy based on data received to October 15, 2010. Of significance to the upside are higher commodity prices, a stronger-than anticipated recovery in the US and the possibility of greater-than-projected momentum in the Canadian household sectors. However, three downside risks offsetting those factors include Canada's international competitiveness, global growth prospects, and a greater-than-anticipated correction in the Canadian housing market. What does this mean to the financial services sector and their clients? According to Mark Carney, Governor of the Bank of Canada, Canadians can respond by managing debt and boosting productivity. The Bank in the meantime will try to keep inflation low and stable. And debit is high, according to several studies including Where the Money is Now by the CGA Association of Canada, released in May 2010: Key findings included: Household debt in Canada reached $1.41 trillion in December 2009. If spread evenly, each Canadian would hold $41,740 in outstanding debt in 2009, an amount 2.5 times greater than in 1989. While growth rates of mortgages (secured credit) somewhat slowed over 2008-2009, consumer credit (debt typically not supported by appreciable assets) accelerated during most of that period. That means specifically that Canadians were not borrowing more to build wealth. Cars, however, were popular items. At the end of 2009 75 cents was borrowed for each dollar spent on the purchase of new or used motor vehicles. Click here to read the Monitory Summary Report. Click here to read the CGA report. Strategies for advisors in working with their clients, from a year end planning point of view will be discussed in a peer-to-peer learning exchange when the Knowledge Bureau visits major centre across Canada November 3 to 9 with its Distinguished Advisor Workshops. RSVP by calling Shannon or Carol at 1-866-953-4769.