Confirmed:  The CCR for Small Business is Tax Free

Ottawa has confirmed that the CCR for Small Business received by eligible Canadian-controlled private corporations (CCPCs) will be tax free for the 2019-20 to 2023-24 fuel charge years, as will the final payment for the 2024-2025 fuel charge year.  Draft legislation was released on June 30, 2025 with this announcement; and will be introduced for law making in Parliament this Fall.   Some of the more significant details are discussed below.

With the devastation wreaked upon the marketplace in October, Canadians may find that their overall income from investments or even employment and business activities may have taken a hit in the last quarter. Commission-based financial advisors in particular may find themselves in this boat this year. But there may be a bit of good news to offset the bad, at least from a tax point of view, if you are a quarterly instalment payer. Many people don't realize that instalments remitted to CRA (often by post-dated cheques) can be adjusted to actual income earned in the year. Others don't know that the CRA "billing method" of collecting quarterly instalments is only one of three methods of payment. The other two are optional: Current-Year Option. Under this option, the taxpayer's income tax liability for the current taxation year is estimated then one-quarter of the estimated amount over $3,000 is due on each of the four due dates: March 15, June 15, September 15 and December 15. (Farmers and fishers must only make one instalment payment, on December 31 on 2/3 of the estimated taxes owing.) Prior-Year Option. Under this option, the first two instalments are estimated at one-quarter of the taxes due in the second prior year (since the prior year's return is not available when these instalments are due) and the last two instalments are calculated at one-half of the excess of taxes due in the prior year over taxes due in the second prior year. If you know your income will drop this tax year over last, write a letter to CRA to recalculate your instalment payment base and return the last post-dated cheques. Note that, for 2008 and subsequent years, the instalment threshold for individuals is $3,000 ($1,800 for Quebec filers). You will not be required to make an instalment payment at all if the actual tax owing will not exceed $3,000 in 2008 ($1,800 in Quebec). Subscribe to EverGreen Explanatory Notes for more information. Or attend The Knowledge Bureau's November Year End Tax Planning Workshop coming to a city near you November 14 to 21.

It is the time of year that we must begin thinking about Year End Tax Planning, and one area that is often given little thought is the planning for charitable donations. In a vast majority of work places, the push is on to give to the United Way through either payroll deduction or a lump sum payment, so now is a good time to review what tax deductible gifts are and what the benefits are from a tax viewpoint: Tax deductible charitable gifts include the following: ¸ Money or other property ¸ Gifts of ecologically sensitive land (get Certificate for Donation of Ecologically Sensitive Land) ¸ Capital propertyócottages, securities, land, buildings, equipment at their FMV ¸ Listed personal property ¸ Inventory of a business ¸ Gift of certified cultural property to a designated institution or public authority under the Cultural Property Export and Import Act Federal and provincial credits can be claimed with official receipts: ¸ Claim eligible amount of gifts made in the year or you can carry forward for 5 years ¸ Claim carried forward gifts first; then current year gifts ¸ Gifts in kind: donation appraisal must be from knowledgeable appraisers and follow Uniform Standards of Professional Appraisal Practice. ¸ Gifts of less than $1,000 usually do not require appraisal ¸ File Schedule 9 with your Federal tax return Deductibility: ¸ 15% of the first $200; 29% thereafter plus provincial portion ¸ Up to 75% of net income can be given as charitable donations; 100% in year of death or immediately preceding year ¸ the individual's total Crown gifts ¸ the individual's total cultural gifts ¸ the individual's total ecological gifts Gifts can be made to: ¸ A registered charity ¸ Registered Canadian amateur athletic association ¸ Tax exempt housing corporation providing low-cost housing for seniors ¸ Government of Canada, province or territory, municipality ¸ The United Nation and its related agencies ¸ Prescribed university outside Canada ¸ Charitable organization outside Canada to which our government has made a donation in the tax year or previous tax year ¸ Gifts to US charities if you have US income Note: Gifts to Canada include monetary gifts made directly to the federal Debt Servicing and Reduction Account, sent to the Receiver General requesting this. A tax deductible receipt will be issued. Special Rules: Gifts of capital property: ¸ FMV at time of gift can trigger capital gains consequences ¸ Gifts of publicly traded shares should be initiated before December 21 and can be transferred on a tax free rollover basis to registered charities and private foundations (after March 19, 2007). ¸ Zero inclusion rates for purposes of capital gains and losses apply if you donate: Shares, debt obligations or rights listed on a designated stock exchange Shares of a mutual fund corporation Units of a mutual fund trust Interests in related segregated fund trusts Prescribed debt obligations Ecologically sensitive land ¸ Gifts can be made to a registered charity or after March 18, 2007 to certain private foundations. ¸ Gifts of depreciable property can trigger recapture or terminal loss ¸ Gifts of significant movable cultural property to Canadian heritage institutions or public authorities must be certified under the Canadian Cultural Property Export Review Board, which determines its FMV and provides you with a certificate for tax credit purposes (Form T871). In this case no capital gain is required to be recorded. ¸ Artists: to qualified donee, the gift is a disposition from ìinventoryî rather than capital property. The value is calculated as the cost amount or an amount not greater than the FMV and not less than the cost and any advantage received. ¸ Art or Antique dealers: objects donated are considered to be a disposition of inventory, not capital property and must be based on FMV at the time of donation. Non-qualifying gifts: ¸ Shares you control ¸ Obligation or securities issued by yourself So start planning now to meet your charitable donation goals and the receiving the best tax deduction based on your charitable giving. Attend the Knowledge Bureau's January 2009 Line by Line Tax Update and Debt Management Workshop in cities across Canada for more tax planning ideas and information on recent changes to the tax laws.

Short of Cash? Flip Investments Into RRSPs to Create More Cash strapped, but RRSP-eligible investors can use the tax system in a variety of ways to generate new money, and with tax season just around the corner it will pay to review RRSP contribution opportunities now for those reasons. Taxpayers can generate a tax deduction via an RRSP contribution without coming up with new capital simply by "flipping" assets held in interest-bearing vehicles from their maturing Canada Savings Bonds or other non-registered accounts into their RRSP. Be aware that a tax reporting event occurs before accumulations from non-registered accounts are transferred into registered accounts. That is, interest income earned up to the date of the transfer must be reported on the tax return. The same rule holds true whenever investments in non-registered accounts are transferred into any of the tax deferred vehicles mentioned above. Note that losses generated by such a flip cannot be claimed as they are considered to be superficial losses. Subscribe to EverGreen Explanatory Notes for more information. Or attend The Knowledge Bureau's November Year End Tax Planning Workshop coming to a city near you November 14 to 21. Next Time: Avoid Your December 15 Instalment to Generate Cash  

Time To Brush Up On Canada Deposit Insurance Corporation (CDIC) Protection Facts Given recent market volatility, taxpayers are concerned about the safety of their capital, and may wish to discuss what guarantees or insurance may be available to them for their money. The Canada Deposit Insurance Corporation provides some comfort, insuring deposits of their member companies which include most Canadian chartered banks, loan companies and trust companies, as well as associations governed by the Cooperative Credit Association Act. Up to $100,000 of amounts on deposit will be insured in case of failure of the member institution. However, deposits in credit unions and caisses populaires, Canadian branches of foreign banks and some Canadian chartered banks are not covered. Deposits with credit unions and caisses populaires may be covered by provincial deposit insurance programs. For a complete listing of institutions which are covered, see the CIDC web page. The following types of deposits are covered by member institutions of the CDIC, in Canadian dollars: savings accounts and chequing accounts GICs and other term deposits that mature in 5 years or less money orders, certified cheques, travellers' cheques and bank drafts accounts that hold realty taxes on mortgaged properties Accounts and products NOT insured by CDIC include: mutual funds and stocks GICs and other term deposits that mature in more than 5 years bonds Treasury bills any accounts or products in U.S. dollars or other foreign currency. any accounts or products held in banks or other institutions that are NOT CDIC members. This is information all advisors should discuss with their clients about interest-bearing investments, in conjunction with devising a tax efficient investment income plan. For more information on the new Knowledge Bureau Certificate Course entitled Tax Efficient Investment Income Planning available October 31.

Personal Finance 101: When mom told you to save for a rainy day, she was right, and this might be it. If you aren't positioned for six to eight months of "safety cash", now is the time to put that in place. Assess Your State: State of emergency or Stable condition? If you don't have a good handle on your financial condition, check it out now. Review your cash flow, personal balance sheet and budget and get on the right side of debt managementómore assets than liabilities. Cash is King: If you are sitting on excess cash be ready to do two things (a) pay down bad debtócredit cards, non-deductible debt next (mortgages). Then get ready to invest back into the market at "sale prices" when the time is right Get Your Investment Priorities Right: What comes first this year: your RRSP contribution? The new Tax Free Savings Account, Investments in RESPs? Non-registered accounts? Need Cash? Look in the right places: the tax system is a good place to start: unfiled tax returns, errors or omissions on prior returns leading to refunds. Don't cash in RRSPs if you can help itówill cause a tax problem. Be More Productive: You can get a second job or start a business working out of your homeóa good way to save money on gas and coffee breaksóbut either way cut back on work-related expenses. Avoid Overpaying Tax Instalments: Will your income be lower in 2008 than it was last year? Can you avoid making the December 15 instalment payment? Write CRA a letter to do so. Take Advantage of Tax Losses: Whether you panicked and locked in losses, or generated them as part of your year end planning strategies check out your cash flow advantages by carrying back losses to offset gains of the previous 3 hot years in the marketplace. Reconsider your charitable donations? You can often generate fast cash on your tax return by increasing donations before year end. Defer Income. Put off taking income 'til next year, to minimize tax and instalment payments for next year. Problem: seniors and RRIFs. Stop drawing if you have met your minimum withdrawal requirements Increase social benefit payments: Reducing your net income with an RRSP contribution, could decrease OAS Clawbacks, increase Child Tax Benefits. In both cases you'll have a monthly cash flow bonus. Buy assets? Interest rates are coming downósit tight and see whether there are opportunities to leverage into sale prices on homes, cars, commercial buildings. If you are in business that will increase your write-offs too. Manage the credit crunch with deductible interest: Know your options when you are in trouble: deducting interest on assets with diminishing value, CRA garnishees, foreclosures, repossessions. Get professional help Stress happensówrite off prescriptions. Getting extra therapeutic massages, taking more prescription drugs? Do you know what medical expenses to write off? Do you have your will up-to-date? Year end planning: reconsider education savings: disadvantage in RESPs? Switch to TFSAs for better flexibility? Evelyn Jacks, President, The Knowledge Bureau: knowledgebureau.com for free information about Breaking Tax and Investment News, self study courses on tax and personal finances, or books on personal finance. Call: 1-800-953-4769.

Taxes Just Keep Rising for Pre-Retiring Baby Boomers and their Heirs   By Evelyn Jacks The last federal budget (February 26, 2008) predicted that personal tax revenuesóby far the largest revenue line item for the governmentówill increase by $2 Billion in 2007-2008 and thereafter increase faster than personal income growth to $125,475 Billion in 2009-2010. It's time to revisit this trend in light of the current global economic crisis, as this party too, may end soon. The need for governments to rein in spending and expectations for revenue growth may be as necessary as it is for families. Why? Canada's primary taxpaying base is disappearingóthe baby boomersóare getting ready to retire, against the backdrop of financial uncertainty. Add to this a global economic crisis the likes of which has never been experienced before and you have the potential for unprecedented hard times for governments and the taxpayers who depend on redistributed tax dollarsósometimes too much. As a bear market descends firmly upon usófor what seems to be more than a short termósolid financial fundamentals are required to take us through to the next generation, a smaller taxpaying base, which may not have the same potential to fund the numerous needs our society demands of them. To have the opportunity to spend in the right places, when needed, requires budgeting with new precision and above all waste management. It also requires some creative thinking about going back to the same trough over and over again. Security comes in many formsóand people need to be safe from financial insecurity. Canadians and their governments need to master their finances, now in a time of relative wealth, to be ready for tomorrow. FACTS ON FINANCIAL LITERACY: A Canadian survey found that respondents considered choosing the right investments to be more stressful than going to the dentist. United States ó 50% of adults and 66% of high school students fail basic economics test. United Kingdom ó fewer than 40% of respondents confident about making financial decisions. Japan ó only 1% of consumer education professionals believe that consumers have adequate level of financial knowledge. Australia ó 37% of those with investments did not understand that investments can fluctuate in value Source OECD Study, 2005. Note The Knowledge Bureau is publishing a series of books on Mastering Your Personal Finances starting in November 2008.