Mark Your Calendar: Critical Deadlines for May and June

Tax season never truly ends, it seems, as there are many more upcoming tax filing, investment planning and education milestones to discuss with your clients over the next six months. Check out our handy checklist below and then test yourself – what are the conversation openers you’ll use and with which clients? It’s your opportunity to shine with every member of the household:

As we discussed in our last issue of Breaking Tax and Investment News, with the end of the year now past us, it is worthwhile to review changes that have occurred during 2009 that may impact you or your clients at tax filing time.   Following are recent tax changes specific to those who are employed. It is important to review various tax provisions available to employees in this year of change, as the economic downturn has led to numerous job losses, especially in the automotive, media and manufacturing sectors. Apprenticeship completion and incentive grants. Employees who received these amounts must report them as income on Line 130 of the tax return. RPP Contribution Maximums. It is a time when companies are struggling to fund their employees' pension plans. However, if you are entitled to one, and you are assured your company will be able to fund your retirement, your role in planning is to consider all the ways to maximize recent contribution maximums, and "backfillingî any available contribution room based on past services provided. For money purchase plans, the annual contribution limit will be $22,000 in 2010; thereafter the amounts will be indexed. For defined benefit plans, the maximum pension benefit per year of service will be $2,333 in 2009 and $2,444 for 2010. After this, the maximum benefit will be calculated as 1/9 the money purchase limit. Don't forget, you may be able to make past service contributions as well. And if you are about to receive a pink slip and a severance package, consider maximizing your RRSP contribution. In some cases, legal fees for challenging the amount of severance offered will be deductible too. RRSP Contribution Maximums. You may contribute to your RRSP throughout the year and within the first 60 days of the new year in order to make a deduction to offset 2009 taxes. Maximum contributions are calculated as 18% of earned income to a maximum dollar contribution limit. This was set at $21,000 for tax year 2009, based on an earned income of $116,667 in 2008. The contribution deadline is March 1st, 2010.   Educational Resources:  Now is a good time to look at retirement income plans, family succession and estate plans in an attempt to better understand financial needs for a future which could certainly include tax increases on both income and capital.  To learn more consider the following Educational Resources available from The Knowledge Bureau: Tax Efficient Retirement Income Planning    Master Your Retirement       Master Your Taxes <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" />Tax Efficient Investment Income Planning                      Master Your Real Wealth      Master Your Investment in the Family Business  

<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" /> January: Jan. 2: Reduce your tax withholdings at source: file your TD1 form to claim tax credits and a T1213 form. Make your TFSA deposit. Jan. 16: Defer stock option benefits. Jan. 30: interest payment on inter-spousal loans. April: April 15: US tax filing date April 30: T1 individual tax filind deadline February: T4, T5 slips due Federal Budget review (dates vary) May: Will and estate planning review March: Federal Budget review for 2010 RRSP filing deadline Pension Adjustment Reversal deadlines March 15: instalment due T3 slips due June: T1 proprietorship filing deadline June 15: instalment Closer Connection Exception Statement for Aliens (IRS Form 8840) Discuss these milestones with your clients when doing your year end planning in order that these important deadlines are not missed.     Join us next week for more milestones to mark in your calendar for discussion purposes.   To learn more about preparing T1 tax returns, register for Introduction to Personal Tax Preparation Services or call 1.866.953.4769 today to make an appointment for your free professional development consultation.

By Evelyn Jacks The financial stimulus packages of prior years are doing their job: stimulating domestic demand, and helping Canadians recover their financial health. But is there a cost for this flood of money into the economy? Will it spell higher taxation levels in future federal and provincial budgets? Should more be done to encourage Canadians and their governmentsóboth federal and provincial - to act responsibly and with purpose towards our ongoing economic recovery? These are important questions in advance of the annual federal budget expected to come down this quarter. According to the Department of Finance's Annual Fiscal Report for 2008-2009, the share of revenues spent on public debt charges declined from 13.7 percent in 2007ñ08 to 13.3 percent in 2008ñ09. This is down from a peak of about 38 percent in 1990ñ91. The share of revenues devoted to public debt charges is now at its lowest level since the late 1970s. However, recent deficits have increased dramatically: For the first seven months of the 2009ñ10 fiscal year, the budgetary deficit was $31.9 billion, compared to a deficit of $0.1 billion reported in the same period of 2008ñ09. With a budgetary deficit of $31.9 billion and a requirement of $26.3 billion from non-budgetary transactions, the federal government had a total financial requirement of $58.3 billion in the April to October period of 2009ñ10, compared to a financial requirement of $33.8 billion in the same period of 2008ñ09. Currently the Department of Finance is requesting input from Canadians on the upcoming Federal Budget. It's an opportunity to express opinions and best thoughts on the financial future and provide feedback. You can make your suggestions through the following link to the Department of Finance website. Suggestions submitted by The Knowledge Bureau include the following changes to personal taxation provisions that may continue to increase after-tax income available to stimulate both savings and spending by certain demographic groups in Canada: Raise basic personal amounts so as not to tax non-discretionary income of single moms and young working families. Increase the TFSA savings rate to $10,000 per year; then encourage average Canadians to pay down non-deductible consumer debt. Provide a moratorium on taxation of the first $10,000 in RRSP/RRIF withdrawals to stimulate spending by boomers; Increase deductible attendant care/nursing home costs to $2,500 a month and make this a deduction from income of either the elderly or their supporting individuals; who are bearing an economic burden with health care advocacy; Increase tuition/education transfer to supporting individuals from $5,000 to $10,000 per year; Allow for general averaging on severance packages over 5 years to allow the best tax result. NEXT TIME: HOUSEHOLD FINANCE NUMBERS ARE LOOKING GOOD Mark Carney, Governor of the Bank of Canada recently spoke on Current Issues in Household Finances (December 16), and the news is mostly good. Tune in next week to anticipate what 2010 holds in store for purchasing power, savings rates, consumer spending and debt as well as taxation trends.

By Evelyn Jacks Happy New Year! The tax preparation and wealth planning process will take on new importance this quarter with tax season beginning again for over 24 million Canadian tax filers in the aftermath of an unprecedented financial stimulus into the global marketplace, over the past two years. It appears Canada is poised for a significant economic recovery in 2010, and with that comes some tax planning opportunities. The personal net worth of Canadians has rebounded above its ten-year average and Canadian savings rates are at an eight-year high, according to statistics from the Bank of Canada and the Department of Finance. In addition, millions of Canadians have responded to the economic stimulus provided by the Home Renovation Tax Credit. This provision might well result in significant bottlenecks in tax preparation services, as busy tax advisors prepare for the increased data entry required on new Schedule 12, which requires an itemization of home renovation receipts. Specifically then, investment and financial advisors and their clients will want to focus on a review of the following provisions, sooner rather than later, to maximize tax preferences and reduce waiting time for tax refunds and their related investment benefits: RRSP top-ups for 2009 tax year TFSA contributions for 2010 A 2010 income projection and quarterly instalment tax review for March 15, 2010 Completion of source deduction and reduction forms: TD1 and T1213 A review of personal amounts for 2010 to ensure receipting is properly started for the calendar year A review of remaining opportunities under the temporary Home Renovation Tax Credit, under which work must be completed by February 1, 2010, but materials can be acquired for later use by the same date. Additional Educational Resource: EverGreen Explanatory Notes: Your online gateway to the latest changes at the Department of Finance and CRA.

Tax filing season 2010 will bring with it some new tax provisions and numerous increases in personal tax deductions, as well as refundable and non-refundable tax credits. Reviewing new personal provisions is a great way to start the financial year, particularly as Canadians get ready to file their 2009 tax returns, top up their RRSP contributions and make TFSA deposits. To help advisors and their clients prepare to pay only the correct amount of tax on personal and business activities, Evelyn Jacks, Canada's most trust tax author has recently released her 45th and 46th books, Essential Tax Facts 2010 (Knowledge Bureau, Inc) and Make Sure It's Deductible (McGraw Hill) and the following checklist to discuss in preparation for tax season 2010. 2010 TAX SEASON READINESS CHECKLIST: WHAT'S NEW? Tax receipting for the new Home Renovation Tax Credit The New Home Buyers' Amount ($5000) The GST/HST New Housing Rebate Increased EI Benefits and Clawback Zones ($52,875) Wage Earner Protection Program Employment Perks. Employees will be treated to new tax free perks of employment in certain circumstances. New RPP Contribution Maximums New RRSP Contribution Maximums Deductibility of Losses in RRSP/RRIF values on final return Child Care Expense Limitation for Working Teenagers Moving Expenses review Increased claims for Trucker's Meal Expenses Changes to GST/HST Rebates on Employment Deductions ( 5/105 for GST and 13/113 for HST) Indexing changes to personal amounts including Basic Personal Amount and Age Amounts and many more.  Changes under the CANADA-US Tax Treaty GST and the Financial Services, including Trailer Commissions or Trailer Fees Additional Education Resources: Distinguished Advisor T1 Tax Update Tour. Join us for a concentrated, focused day on the personal tax filing issues of concern to taxpayers, investors and professional planners in major centres across Canada January 15 to 25.   EverGreen Challenge 2010 Self Study Course: Hands-on practical training designed especially for tax and financial advisors and their new and returning staff. Convenient self study course to enable in-office certificate studies before the busy tax season starts. Lower in-office group study rates available. Don't delay! Call 1-866-953-4769 to register now.

<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" />  We look forward to working with you in sharing knowledge on tax efficient retirement, investment and wealth management strategies in 2010.   All the best for a happy and healthy year!