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.

PART 1: TUITION EDUCATION AND TEXT BOOK CREDITS In the next week or so, as the children head back to school, we should give some thought to how to claim all those tuition fees that are being paid out to various educational institutes. A review of the basic definitions for non-refundable credits and what qualifies for the tuition credit and education amounts is discussed below: DEFINITIONS IN BRIEF: Non-refundable tax credits available to post-secondary students and their supporting individuals include the following: Amounts for Tuition: Post-secondary students may claim the tuition amount under S.118.5 of the Income Tax Act. Amounts for Education Costs: A monthly education amount available under S.118.6 Amounts for Textbooks: A monthly credit for such costs is specified under S. 118.6(2.1). Transfers to Supporting Individuals: Students must claim the above amounts first on their return. If the student is not taxable, the claim for the tuition, textbook and education amounts may be transferred from a student to the supporting individual under S.118.81 or may be carried forward to future years for use by the student. TUITION FEES Students may claim the fees paid for courses taken in the tax year. To qualify, each tuition fee must be more than $100. Eligible fees include tuition fees: Fees paid for courses at a post-secondary school level paid to a university, college, or other educational institution in Canada, Fees paid to an educational institution in Canada certified by the Minister of Human Resources Development for courses (if the student was 16 or older in the year) to develop or improve skills in an occupation, Fees paid for courses at a post-secondary school level paid to a university, college, or other educational institution in the United States if the student lived in Canada near the border throughout the year and commuted to the school, and Fees paid if the student was in full-time attendance at a university outside Canada, for courses that were at least 13 consecutive weeks long, and that will lead to a degree. Eligible tuition fees include: admission fees, charges for the use of library or laboratory facilities, examination fees, application fees (but only if the student later enrolls in the institution), charges for a certificate, diploma, or degree, mandatory computer service fees, academic fees, the cost of any books that are included in the total fees for a correspondence course, and fees, such as athletic and health services fees, paid to a university, college, or other educational institution in addition to tuition for post-secondary courses, when such fees are required to be paid by all students. If not all students are required to pay them, then amounts eligible are limited to $250. Non-qualifying tuition fees include: Costs for secondary education at a private school or for private music, dance or other such lessons, do not qualify. students' association fees, medical care, transportation and parking, meals and lodging, goods of lasting value that you will keep, such as a computer, microscope, uniform, or an academic gown, and initiation or entrance fees to a professional organization Also, fees cannot be claimed if: they are paid or reimbursed by an employer, where the amount is not included in the employee's income, paid by a federal, provincial, or territorial job training program where the amount is not included in income, or the fees were paid (or are eligible to be paid) under a federal program to help athletes, where the payment or reimbursement has not been included in income. NOTE: KNOWLEDGE BUREAU SELF STUDY COURSES QUALIFY! Next time: Education Amounts COMING IN SEPTEMBER: OTHER FAMILY TAX PROVISIONS Public Transit Passes Children's Fitness Credit Medical Expenses

The CRA has issued a tax altert advising taxpayers that a letter has been circulating that is identified as coming from the CRA, when in reality it isn't.   The letter advises the taxpayer that there is insufficient information to process the individual's tax return, and requests personal information be provided on a form and sent back via fax or e-mail. The information requested includes bank account and passport information. The letter requesting this information is not from the CRA and the information should not be provided to the sender.   The CRA has notified the proper agencies of the fraudulent letter and advise all taxpayers to be vigilant about providing personal and confidential information to third parties.   Tax preparers will want to warn their clients about this scam so that private information isn't released to the wrong people. CRA has provided a copy of the letter that has been circulating, to view, click here.

Your clients have spoken ñ they want one highly qualified financial advisor who will help them build income and preserve wealth, throughout each phase of their life but especially as they transition to retirement. As the trusted advisor, you must ëget it' in terms of your client's needs and wishes before building a wealth management and retirement income plan. Then position yourself as the Quarterback of an inter-advisory team of specialists who assist you and your clients in making the appropriate decisions. Here's how Jim Ruta, Knowledge Bureau faculty member and speaker describes it: "Affluent clients expect excellence and the only way to deliver it is with an expert financial team. As you assemble this team, consider who your clients are, their attributes, and then pull in the required specialists that can solve their specific financial needs." Your most important role as the Quarterback will be to help your clients determine their priorities and then to call in the experts when their particular skills are required. Coordinate and manage the team. You are the relationship manager and are responsible for the quality of the relationship each member has with your client. It's critical to pick the ëright' individuals. Be at each meeting to ëtranslate' technical information into language understood by the client and to monitor team member performance. Don't leave anything to chance ñ after all, these are your clients! The inter-advisory team approach with you as the Quarterback is the most appropriate structure to provide competent "One Stop Shopping" for the 21st century client. You can either be part of that expert team or lead it or both Ö. the ultimate winner will be your clients who get much better advice, products and support. You'll provide exceptional value to the relationship, life will be simpler, more productive and you'll attract more business and referrals than ever before! The Knowledge Bureau can help you build the necessary skills to formulate and quarterback your inter-advisory team of experts. Transform your practice by registering in the fully accredited Retirement Income Specialist program, leading to the Master Financial Advisor designation. Recognizing your busy schedule, we will work with you to help you successfully complete the courses within timeframes that suit you.  

Taxable benefits are so important to the payroll cycle that CRA has written a separate payroll guide to explain them. Every payroll clerk should have this guide at hand to determine income reporting and statutory deduction withholding requirements on an ongoing basis. In all cases, where a taxable benefit arises the value of the benefit to be included in income is reduced by any payment the employee makes to the employer with respect to the benefit. There are four basic facts about taxable benefits to remember in processing a payroll: 1. Add their Value to Gross Pay. The taxable benefit must be added to the employee's cash compensation each pay period and normal statutory deductions must be withheld from the total amount. Remember that the value of the taxable benefit is reduced by any payment the employee made to compensate the employer for providing the benefit. 2. Annualized Tax Withholding is Possible. Where a non-cash benefit is very large so that withholding of income tax will cause undue hardship, the value of the benefit and the related withholdings can be spread over the remainder of the year. 3. CPP Deductions Required. If the benefit or allowance is taxable, it will also be pensionable. Therefore Canada Pension Plan (CPP) contributions will be required to withheld, as will income tax. 4. EI Deductions May Be Required. If the taxable benefit is paid in cash and relates to insurable employment, it is insurable. Employment Insurance (EI) premiums will therefore be required. However, if the employment is not insurable under the Employment Insurance Act, taxable benefits paid in cash are not insurable and are not subject to EI premiums. Finally, if the taxable benefit is a non-cash benefit, it is not insurable. In that case, the benefit does not attract EI premiums. The T4130 Guide available in EverGreen contains a chart which clearly identifies, in alphabetical order, the various types of taxable benefits and their source remittance. This table is also reproduced electronically on the CRA web site. Excerpted from Advanced Payroll for Professionals, one of the courses that comprise the Certified Bookkeeping Specialist program.

Remittance of Source Deductions Up until recent changes in the Federal Budget, if a payroll source deduction remittance was late, the remitter was subject to a penalty equal to 10% of the amount required to be remitted, or 20% if the failure to remit was made knowingly. The penalty applied even if the remittance was only one day late. In addition, interest was charged on both the penalty and remittance until the outstanding amount was paid. Due to changes under Subsection 227(9) of the Income Tax Act, a graduated penalty regime has been implemented that replaces the 10% penalty, adjusting the penalty from 3% to 10% depending on how late the remittance is made. Effective for remittances due on or after February 26, 2008 the graduated penalty amounts will be applied as follows: 1 ñ 3 days late ñ 3% penalty 4 ñ 5 days late ñ 5% penalty 6 ñ 7 days late ñ 7% penalty More than 7 days late ñ 10% penalty Tax remittances related to non-residents under Part XIII of the Income Tax Act are also subject to the graduated penalty rules effective for remittances due on or after February 26, 2008. Mandatory Remittances to Financial Institutions Threshold 2 remitters, those with associated corporations and multiple payroll accounts with average monthly withholding amounts in excess of $50,000, were subject to a 10% penalty if the remittances weren't made directly at a designated financial institution. After February 26, 2008, if a remittance is received by the CRA at least one full day before the due date, the remitter will be considered to be in compliance with the requirements. Where the remittance is received late, the graduated penalties structure above will be applied.

Would it surprise you to know that Canada has the largest baby boom generation in the world and that people of this generation are either already in retirement or are galloping towards it over the next 10 years? Nearly 1 in 3 Canadians is now a baby boomer (age 41 ñ 60) and 1 in every 7 is now a senior. This demographic offers you huge opportunities in your practice ñ to retain current clients and attract new ones. Prepare now to meet the boomer's retirement needs! The most recent Canadian Census tells us that: The growth of the elderly population will accelerate in 2011 when the first of the baby boomers reach 65. Seniors will outnumber children within 10 years. The life expectancy of Canadians is now 82.5 years for women and 77.7 years for men, resulting in more reaching age 65 and living longer after. The average age of Canada's seniors is also rising. The proportion of the very elderly (age 80 and above) increased by 25% between 2001 and 2006 and has surpassed the 1 million mark. What is the definition of retirement today? According to Statistics Canada, retirement used to refer to someone who is: aged 55 and older is not in the labour force receives at least 50% of their income from retirement-like sources This definition is no longer relevant. Retirement for boomers can really be best described as "transitional" as many  start to think about career and lifestyle changes. Some may begin to transition by cutting back on the number of days they work, others may leave one career to pursue another, start a small business or do volunteer work. As boomers move into retirement, they are looking for several things ñ tax efficient retirement income planning, solutions on how to transition to financial independence and one trusted advisor to work with an interadvisory team to deliver a fully integrated plan. Resources for Distinguished Advisors in Retirement Income Planning for Boomers: Position yourself as that trusted advisor by ensuring you have the knowledge and the tools for engagement and the sophisticated processes you will need to take your practice into the future. The Knowledge Bureau can help. Enroll in the Retirement Income Specialist program leading to the Master Financial Advisor designation. This program is available by self study for individuals or study groups. Join us at the Distinguished Advisor Conference November 2 ñ 5 where you will explore the leading practice management issues with leaders and colleagues and think strategically about your business. The Theme? Transitioning: The Path to Reciprocity ... the two triggers to help you capture the trust of retiring boomers. Register today!