Helping First Nations, Inuit and Metis with Tax Filing

The Canada Revenue Agency is trying to reach out to Canada’s First Nations, Inuit and Metis to encourage them to file their tax forms on time and could use your help to make sure these communities get all the tax benefits they are entitled to. But filing tax returns are not always easy, especially when there is income on and off the reserve.

Let The Knowledge Bureau's Breaking Tax and Investment News be your go-to resource for provincial budget information over the next few weeks.  The schedule of budget releases is as follows:   March 18, 2009 ñ Saskatchewan Budget - see synopsis in this week's BIN March 19, 2009 ñ Quebec Budget - see synopsis in this week's BIN March 25, 2009 ñ Manitoba Budget - see synopsis on this week's BIN March 26, 2009 ñ Ontario Budget March 26, 2009 ñ Newfoundland and Labrador Budget April 7, 2009 ñ Alberta Budget Stay current and up-to-date on provincial tax changes by reading Breaking Tax and Investment News every week.  

The 2009 NB budget was tabled March 17, 2009. Personal Brackets and Rates The budget introduced a plan to change from four provincial tax brackets to two by 2012 with rates of 9% for income below $37,893 and 12% for income above $37,873. For 2009 the provincial rates are reduced as shown in the following table: 2008 Bracket 2008 Rate 2009 Bracket 2009 Rate $0 to $34,835 10.12% $0 to $35,706 9.65% $34,836 to $69,672 15.48% $35,707 to $71,414 14.50% $69,673 to $113,273 16.80% $71,415 to $116,105 16.00% Over $113,273 17.95% Over $116,105 17.00% The phase-out rate for the low-income tax reduction is also reduced from 5% to 4% for 2009 and will be reduced to 3% for 2010 and subsequent years. NB Tuition Rebate The benefits available under the NB Tuition Rebate program will be doubled beginning in 2009. The annual limit will be increased from $2,000 to $4,000 and the lifetime limit will be increased from $10,000 to $20,000. Low-Income Seniors' Benefit The low-income seniors benefit will increase from $200 to $300 for 2009 and to $400 for 2010. NB Labour-Sponsored Venture Capital Tax Credit For shares purchased after March 17, 2009, the maximum qualifying investment will increase from $5,000 to $10,000 and the credit rate will be increased from 15% to 20% NB Small Business Investor Tax Credit For investments made after March 17, 2009, the annual maximum investment eligible for the credit will increase from $80,000 to $250,000. Corporate Tax Rates The general corporate income tax rate will be reduced from 13% to 12% effective July 1, 2009 and to 11% effective July 1, 2010, 10% effective July 1, 2011 and 8% effective July 1, 2012. The small business limit will be increased from $400,000 to $500,000, effective January 1, 2009.

With tax season upon us, it is time fora review of the joint, transferable and optional tax provisions that can be claimed on an inter-family basis. Remember, there are benefits to filing your tax returnfrom a family point of view; it willinfluence your wealth accumulation activities and inter-generational estateplanning. Tax Element Provision Can be claimed by Income Canada Pension Plan Benefit After age 60, either spouse, if an assignment of split benefits has been applied for. Taxable Dividends Can be transferred to high earning spouse if Spousal Amount is created or increased. Eligible pension income Up to 50% can be transferred to other spouse Deductions Safety Deposit Box Either spouse may claim ifit holds household investment documents Non-Refundable Tax Credits Basic Personal Amount Not transferable Age Amount, Pension Income Amount, Disability Amount, Tuition, Education and Textbook Amounts, Amount for Dependent Minor Transferable to higher earner if lower earner is not taxable. In the case of the Disability Amount and Tuition, Education and Textbook amounts this can include transfers from dependants other than spouse. Claims for Spouse or Equivalent, Infirm Adults, Caregiver, Donations Claimed by the supporting individual with higher taxable income in general. Adoption Expenses Can be claimed by either spouse or shared between them. Medical Expenses Usually claimed by spouse with lower net income for best benefit. Labour Sponsored Fund Tax Credit Can be claimed by either spouse if purchased within spousal RRSP. Amount for children born in 1991 or later Can be claimed by either spouse or shared between them Canada Employment Amount Not transferable Public Transit Amount Can be claimed by either spouse or shared between them Children's Fitness Amount Can be claimed by either spouse or shared between them For more tax saving ideas, order Evelyn Jacks' Essential Tax Facts 2009 Edition.

Tax filing deadlines compel most ó but not all ó of Canada's almost 24 million tax filers to arrange their affairs and reconcile last year's taxes by April 30. However, there are many late filers. Failure to file will also cost you potentially large sums when you miss important planning opportunities. For example, tax form T1032 Joint Election to Split Pension Income must be filed by your tax filing due date (which for most people is April 30). This is a very lucrative income splitting opportunity for those receiving qualifying pension income and it would be a shame to miss the extra tax refunds due to tardy tax filing habit. Those advisors in the tax and financial services industry should be sure to call all clients who have not yet filed a return by April 30 to maximize availability of this type of provision and of course avoid late filing penalties. CRA should continue to be on the radar screen, however, even after next month's April 30 tax filing deadline. Please be sure to diarize milestones that maximize your rights under the Income Tax Act: KNOWLEDGE BUREAU CHECKLIST: INCOME TAX DEADLINE MAXIMIZER WITHIN THE TAX FILING YEAR ENDING APRIL 30 March 31 T3 Slip Completion and Distribution Interest Penalty Due on RRSP Excess Contributions April 30 Tax Filing Deadline: Personal Tax Returns May 1 Interest accrues daily on overdue taxes owing June 15 CRA owes interest to tax filers on late processed refunds (in fact, the agency has an obligation to process refunds within 45 days of receipt of the return after April 30) Tax Filing Deadline: Proprietorship Returns Quarterly Instalment Payment Due July 1 New Benefit Year: Child Tax Benefit, GST Credit, Old Age Security (file 2008 tax return to determine benefit levels) August 31 Working Income Tax Benefit Advance Payment Application for 2009 September 15 Quarterly Instalment Payment Due December 15 Quarterly Instalment Payment Due December 31 Annual Instalment Due for Farmers, Fishers January 16 Request to Defer Tax on $100,000 of Securities Options January 30 Requirement to pay interest on inter-spousal loans February 28 T4 Slip Completion and Distribution March 15 Quarterly Tax Instalment due   For more information on tax planning provisions and compliance requirements subscribe to The Knowledge Bureau's online tax reference for taxpayers, financial advisors and their clients: EverGreen Explanatory Notes.  

On March 12, 2009, Bill C-10 received Royal Assent, passing some key tax measures for Canadians for both households and businesses alike.  Tax relief in the form of increased basic personal and age amounts and expanded EI benefits form part of the stimulus package provided for in Budget 2009.  Some items of interest that were passed into law under Bill C-10 are as follows: In November 2008 the Government proposed that the minimum RRIF required withdrawal be reduced by 25% for the 2008 tax year. With Royal Assent for the bill being received, re-contribution of RRIF withdrawals that are made up until April 11, 2009 are deemed to be made in the year ended December 31, 2008.  For example, if an individual was required to make a $20,000 withdrawal under the current rules then that minimum amount would be reduced to $15,000 under the new rules.  A $5,000 re-contribution to the RRIF account could be made by the taxpayer with respect to the 2008 tax year.   Basic personal amount and age amount for 2009 are increased to $10,320 and $6,408 respectively. Increase in the upper limits of the two lowest tax brackets from $38,823 to $40,726 and from $77,664 to $81,452 respectively. The home renovation tax credit (HRTC) is available for the cost of renovations in excess of $1,000 to a maximum of $10,000 from January 28, 2009 to January 31, 2010. Home buyers' tax credit (HBTC) is a new non-refundable tax credit available for first-time home buyers who purchase a qualifying home after January 27, 2009. Home buyers' plan now allows for RRSP withdrawals in the amount of $25,000 (up from $20,000). The Government of Canada has also launched a new website so that the details of Canada's Economic Action Plan can be tracked and, in turn, public officials can be held accountable for action on the economy. ActionPlan.gc.ca contains specifics about Canada's Economic Action Plan and with reports of action such as infrastructure investment and support available to those impacted by the current economic conditions.  The action plan contains various elements including help to stimulate spending and housing construction and support businesses and communities.      

Several important forms of interest to employers have recently been released to incorporate the provisions of the January 27, 2009 Federal Budget: A. CALCULATING AUTO BENEFITS   The CRA released Form RC18E which is used to calculate employee's automobile benefits for 2008.  An employee may use a company vehicle for purposes other than business, and the personal use of the vehicle is considered a taxable benefit to the employee. This form will help determine the total automobile taxable benefit amount, and may be used to calculate the withholding deductions required for 2009. Please link to the form here.   B. NEW PAYROLL DEDUCTION TABLES RELEASED FOR APRIL 1, 2009   Payroll deduction tables for each province have been released by CRA to incorporate the increased basic personal amounts, spouse or common-law partner amount and amounts for eligible dependents. The updated tables also introduce the increases to personal income tax thresholds announced in the budget. The new payroll deduction tables should be used beginning with the first payroll in April 2009.   It is important to note that the basic personal amounts and thresholds used in the newly released payroll deduction tables reflect the amounts announced in Budget 2009 when the deductions are commenced on April 1, 2009.  The amounts used are grossed up to incorporate the annual amounts over a nine month period (April - December) and are not reflective of the new personal amounts or thresholds.   C. New Personal Tax Credits Worksheet   As mentioned above, changes were made to personal amounts as a result of the Federal Budget issued on January 27, 2009.  Form TD1 has been revised for April 1, 2009 and will introduce changes to the tax withheld for the nine months from April to December 2009 as if the changes were in place for the entire year.  Form TD1-WS provides calculations for employees to calculate claim amounts for the age amount, caregiver amount and amount for infirm dependants to input on Form TD1.   Employers should have employees use the updated Form TD1, Personal Tax Credits Return (09-04) for pay received after April 1, 2009.