May 2025 Poll

Does the Liberal promise expected soon to cut the lowest personal income tax rate by 1% to 14%,  go far enough to help Canadians impacted by high costs?

Two recent cases and a fact sheet from CRA on how it reviews returns Reviewing returns at the Canada Revenue Agency, underscore how expensive non-compliance can be, and in these turbulent times, trouble with the tax department is the last thing that frazzled investors need. The owners of Dominion Transmission Inc. have pleaded guilty in the Provincial Court of Manitoba to three charges of tax evasion for the years 2002 to 2004 and have been fined a total amount of $140,000. In this case the owner kept 2 sets of books, one for cash sales and one for non-cash sales, with the result that fines were levied on all three levels of taxationópersonal, corporate and GST. On the corporate side, the fines represented 100% of the taxes attempted to be evaded. On the personal side, a fine representing 132% of the evaded personal federal taxes for the years 2002 to 2004 on income that was not reported was levied. A third fine penalized under-reported GST. In the case of Spence v CRA, 2011 FC 426, we are reminded that it pays to double and triple check returns. The CRA is unrelenting when it comes to inaccurate returns, even if a third party makes the mistakes for you! ëThe Fairness Rules' give the CRA a wide discretion to waive or reduce some of the penalties involved in late filing or payment of taxes, but the penalties and interest charged must have resulted from circumstances beyond the taxpayer's control. Illness, accident, serious emotional or mental stress caused by a death in the family or natural disasters can trigger the fairness legislation. Unfortunately for Mr. Spence, he did not meet those criteria and so the court found in favor of CRA. This is a wake up call for all taxpayers and tax advisors- be careful because the moral is simply this: You are responsible for what's reported on your return Additional Educational Resources: EverGreen Explanatory Notes, currently updated for the most recent news in tax law, compliance and jurisprudence.  

  The Finance Department released legislative proposals for consultative purposes August 16 which include provisions of the March 22, 2011 federal budget, reintroduced on June 6, 2011. The proposals include the following: New non-refundable tax credits: The $2000 Family Caregiver Tax Credit The New Children's Arts Tax Credit which is in addition to the Fitness Tax Credit (Reviewing returns at the Canada Revenue Agency) The Volunteer Firefighters Tax Credit  The Removal of the $10,000 limit on eligible expenses under Medical Expense Tax Credit for dependent relatives. A series of changes for students who claim the Tuition, Education and Textbook Credits, and those who wish to allocate their RESPs amongst siblings without forfeiting CESGs. Changes are also introduced for a variety of retirement pension plans including RRSPs and IPPs, rules relating to corporations with interests in partnerships, the calculation of the "kiddie taxî and charitable donation compliance rules, including the "exclusivity of purpose and functionî test for registered Canadian amateur athletic associations, on which a consultation was launched on July 4, 2011. Changes for business include a variety of capital cost allowance provisions that accelerate write-offs for clean energy generation and conservation equipment, better align deduction sin the oil sands sector with the oil and gas sector, and provide for an expansion of the Mineral Exploration Tax Credit for one year to flow-through share agreements entered into before March 31, 2012. Additional Educational Resources: EverGreen Explanatory Notes, newly updated for these budget provisions and recent jurisprudence.  

There is much an astute financial advisor can do during a financial crisis. In fact, it's a great time for great advice. This is particularly powerful when tax and financial advisors work together to review the specific financial concerns their clients need to pay attention to in the short term, so that a strategy plan for disaster management can be put into place. This begins with family tax management. "Tax and financial advisors following a Real Wealth Management ô approach can replace the financial jitters by developing a concrete action plan to manage potential financial disaster,î says Evelyn Jacks, president of Knowledge Bureau, which has pioneered the approach, featured in its designation programs. "A good place to start with is a comprehensive look at current tax filing habits to do three things: tap into missed refunds through prior errors and omissions, minimize penalties and interest caused by late filing, and increase both cash flow and investment returns with a tax efficiency plan for both income and capital.î The following "baker's dozenî of do's and don'ts can start the process of tax management: Don't delay paying your balance due with CRA. The interest on the balance compounds daily at the prescribed annual rate of 5%. If you or your clients owe, best to clear it up. (It's not going to go away.) Do dig for errors on prior filed returns. Remind your clients that they can recover refunds on errors or omissions up to 10 years back (that's tax year 2001 until December 31). This is a good time to do so, to offset a current balance due, or, if in the clear with CRA, pay off credit card or other non-deductible debt. Do file your tax return. Clear that late return, as that interest clock will just keep ticking on the taxes due, the late filing penalties and the past interest accumulations. If you are a financial advisor, solicit the help of a tax advisor to speak to the collections department at CRA to arrange for your client to make payments over time, if the balance due is the reason for the filing avoidance. Tap into social benefits. Remind your clients that when income falls below certain ceiling levels, the family may begin receiving social benefits, such as Child Tax Benefits, for example. This won't happen until a tax return is filed, another reason to do so promptly. Don't overpay quarterly tax instalment payments. The next one is due September 15. Your clients probably have a pretty good idea of what their level of income will be by the end of 2011 and a formal estimation can help. If it will be less than 2010, the next two instalments may not be necessary. Work with a tax advisor on this. Don't cash in RRSP deposits, if possible. This will simply cause a tax problem next year. Look for other sources to fund immediate bills, including CRA's. Do an accrued gains balance review. Are there enough accrued gains in non-registered accounts, to offset loss selling today? Can you carry back unused losses, or do you expect to have capital gains in the future? Crystallizing losses during the current market volatility may not make sense otherwise. ADDITIONAL EDUCATIONAL RESOURCES: Financial Recovery in a Fragile World Available in December, 2011!

Given the current economic environment, it's a good time to monitor interest rates. The Bank of Canada recently released its 2012 schedule of eight dates for announcing decisions on its key policy interest rate and confirmed the announcement dates for the remainder of this year. The announcement dates from September 2011 through December 2012 are: Wednesday, 7 September 2011Tuesday, 25 October 2011Tuesday, 6 December 2011 Tuesday, 17 January 2012Thursday, 8 March 2012Tuesday, 17 April 2012Tuesday, 5 June 2012Tuesday, 17 July 2012Wednesday, 5 September 2012Tuesday, 23 October 2012Tuesday, 4 December 2012 The recent market volatility is sure to put interest rate increases in focus - stay tuned for updates from the Bank of Canada as the situation unfolds. ADDITIONAL EDUCATIONAL RESOURCES: The Smart Savvy Young Consumer  

Voter turnout numbers for the HST Referendum in British Columbia are expected to be announced this week, with the outcome disclosed at the end of August or early September. What are the issues in this debate? According to the Government of B.C., the province's households have seen an average annual increase in sales tax of $350 on most of their day-to-day expenditures as a result of the HST. However, families earning less than $10,000 annually have had a net gain as result of the B.C. HST Tax Credit. The province has increased the basic personal exemption for all British Columbians and will lower the HST rate from 12% to 10% by 2014 if the voters decide to keep it. There are pros and cons for businesses when it comes to the HST. It should be a simpler system than the old GST/Provincial tax regime. Lower prices on supplies should be the result of the new tax but that is not always the case. Enterprises dealing in high-end goods and services such as home renovations have reported that the higher sales tax can be a deterrent for sales. If the province retains the HST it will postpone the planned small business tax rate cut and increase the corporate tax rate from 10 to 12%. Alan Rowell, DFA-Tax Services Specialist from Stoney Creek, ON, where the HST is alive and well, weighs in with this comment: "On the surface this may appear to be six of one and half a dozen of the other; however, other issues do come into play in this referendum. With HST legislation, input tax credits received by suppliers will reduce operating and supply costs to businesses which should, by virtue of competition, result in cost savings being passed on to consumers.î Anticipated increased corporate taxes in conjunction with the proposed elimination of HSTand return of PST rates will increase the cost of operating a business. That's worrisome, says Mr. Rowell, as it could ultimately affect employment in B.C., given the current economic storm. For detailed information on the HST in British Columbia check out the provincial website: HST in BC. An opposing view can be found here. ADDITIONAL EDUCATIONAL RESOURCES: Make Sure It's Deductible

Starting in 2014, the U.S. Internal Revenue Service will require foreign financial institutions to identify all accounts held by Americans, and this means that many Canadian banks and brokers will need tobegin documenting customers withties to the U.S. The United States requires its citizens to report their worldwide income to the IRS every year no matter where they live, as their tax system is based on citizenship, not residence as it is here in Canada. Those who have filed in Canada will be in better shape than those who don't on both fronts: with CRA and the IRS, which gives credit for taxes paid in Canada. However, the IRS will penalize those who have not filed; and frankly, Canada will too, if money is owed. If you have not filed in Canada it's best to see a qualified tax practitioner now to make a voluntary disclosure and file under our Taxpayer Relief Provisionswhen applicable. If you are a U.S. citizen living in Canada you are required to file both U.S. and Canadian tax returns. The IRS Voluntary Offshore Disclosure Program offers reduced penalties for delinquent U.S. tax citizens when they file their outstanding tax returns from 2003-2010. This program expires on August 31st, so check now with a U.S. tax specialist for assistance in completing your U.S. tax filing obligations. ADDITIONAL EDUCATIONAL RESOURCES: Essential Tax Facts 2012