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.

Start the tax year 2012 on the right financial footing: keep more of what you earn by carefully completing the TD1 Personal Tax Credits Return released last week by the Canada Revenue Agency (www.cra-arc.gc.ca/formspubs/frms/td1-eng.html). The TD1 determines the amount of personal income taxes that will be deducted from your employment income, or other income such as pension income, received after Jan. 1, 2012. There are federal and provincial/territorial TD1s. You should also review the tax credits portion of the TD1, particularly in light of the new $2,000 Family Caregiver Tax Credit, available starting in 2012. A new worksheet for computing the Age Amount, Caregiver Amount and Amount for Infirm Dependents accompanies the TD1 for these purposes. Of particular interest: ∑ Age Amount: The maximum credit is $6,720 in 2012 and this amount will be reduced when individual net income exceeds $33,884 in that tax year. ∑ Caregiver Amount and Amount for Infirm Dependent age 18 and older: A new calculation arises when a dependent is infirm, to account for the $2,000 increase. The CRA defines "infirmî as: A mental or physical infirmity such that the person is likely to be dependent on others for his or her personal needs and care for the long term, and needs a full-time attendant, as certified in a letter from a medical practitioner. Talk to your tax professional and your payroll administrator. It is up to you to complete your TD1 as soon as possible and give it to your employer. Additional Educational Resources: Introduction to Personal Tax Preparation Services and Esstential Tax Facts 2012  

An Individual Pension Plan (IPP) is a defined benefit Registered Pension Plan set up for as few as one employee, usually owners and/or managers of a business. It allows for deductible contributions and withdrawal mechanisms that can be structured to provide what has been perceived as an unfair advantage over other retirement savings plans.  For that reason, the March 22, 2011 budget, recently reintroduced on June 6, has made two significant changes to reduce these benefits, as explained below. The current rules for IPPs allow the commuted value of a pension to be transferred into an IPP. The result is often a large pension surplus that does not require withdrawals, and that provides a tax deferral that is not available to contributors to other retirement savings plans. The 2011 Federal Budget proposes, therefore,  to mandate minimum withdrawals from IPPS, similar to the rules for RRIFs. This will apply beginning in 2012. Contributions and transfers into any retirement plan will have an effect on RRSP contribution room. Cash contributions are deductible, while transfers from other registered plans are not. Currently, an employee who switches from RRSP savings to RPP savings later in his or her working career, and who is able to have past service recognized under an IPP, is able to fund a far greater amount of past service in an IPP than the reduction in RRSP contribution room and assets required under existing rules.   This ability to contribute to an IPP in respect of past service can provide a significant tax advantage. The 2011 budget proposes that contributions made to an IPP that relate to past years of employment will have to come from all existing RRSP assets and by reducing the RRSP contribution room, before new deductible contributions (i.e. cash) in relation to the past service may be made. This will certainly reduce the tax deduction for past service funding for business owners who have accumulated large RRSPs. This measure is in effect as of March 22, 2011. Watch for more discussion on IPPs and the proposed Pooled Registered Pension Plans later this summer! ADDITIONAL EDUCATIONAL RESOURCES:  Master Your Investment in the Family Business

Recent changes in section 60.02 of the Income Tax Act, will enable a rollover of an RRSP, RRIF or RPP or SPP (Saskatchewan Pension Plan) to the eligible beneficiary of an Registered Disability Savings Plan (RDSP). The beneficiary must be the child or grandchild of a deceased annuitant who was financially dependant on the deceased for support for reasons of mental or physical infirmity. Form RC4625 Rollover to a Registered Disability Savings Plan (RDSP) enables the transaction. The receiving RDSP issuer must keep this form and any relevant documentation as a record of the rollover transaction. A separate form must be completed for each rollover. Completing this form is the final step in the rollover process. Any rollover amounts are included in the RDSP lifetime contribution limit for the beneficiary. Unlike contributions to the RDSP, rollover proceeds will be reported as taxable income when paid out. Bill C-3 implemented two other important measures for RDSP beneficiaries. Beneficiaries with shortened life expectancies will be able to make withdrawals without triggering penalties under the 10-year repayment rule. An election must me made and certification by a physician is required. This measure is effective as of June 26, 2011. More information is available here. As well, applicants for the Disability Tax Credit (DTC) will be able to appeal a determination in all circumstances. A requirement for opening an RDSP is eligibility for the DTC. Before this law was enacted, the DTC could be denied if applicants had no taxable income, and there was no avenue for appeal. Because of this, some disabled residents were not able to open RDSP accounts. Contributions to RDSPs may be made by others such as parents, siblings and supporters of the disabled, so eligibility for the DTC by the beneficiary is of great importance. ADDITIONAL EDUCATIONAL RESOURCES: Tax Efficient Investment Income Planning  

The first increase to the Nova Scotia Child Benefit in a decade will boost payments by 22% per child per month as of July 1, 2011. The NSCB is a non-taxable benefit paid to parents of children younger than age 18. It is fully funded by the province and combined with the Canada Child Tax Benefit into a single monthly payment. Other improvements include the Income Assistance Program personal allowance which will rise by $15.00 per month. The Affordable Living Tax Credit and Poverty Reduction Credit will now be indexed to inflation. An additional 250 child care subsidies will allow more families to afford childcare, and foster care rates will increase by 10%. Income Assistance clients who work can keep more of their wages now. Before July 1st, only 30% of earnings could be kept before clawback of assistance payments. Now the first $150.00 earned is retained before the 30% clawback kicks in. Disabled recipients of income assistance can now keep $300.00 of earnings before assistance payments decrease. Nova Scotia continues to support its most vulnerable citizens despite the economic challenges faced by individuals, businesses and governments everywhere.   ADDITIONAL EDUCATIONAL RESOURCES: Debt and Cash Flow Management Pre-order now!    

Despite a fragile global economy, low income seniors in Canada will get a boost. Bill C-3 passed on June 26, 2011, and a top-up provision that applies to the Guaranteed Income Supplement will provide additional benefits, worth up to $600 per year, for some single seniors. There is $840 per year available to couples, and altogether more than 680,000 seniors may benefit from this increase. The new OAS monthly benefit payment rates for the third quarter have just been announced, and the GIS top-up is included in the new figures:   Maximum OAS: $533.70 Maximum GIS (includes top-up): $723.65 for singles and spouses* of those who are not in receipt of OAS, $479.84 for spouses of OAS or Allowance recipients Maximum Allowance: $1013.54  Maximum Allowance for the Survivor: $1134.70 *spouses include common-law partners    Will you or your parents qualify for the GIS top-up?? The measure works like this: The income test for GIS purposes excludes OAS, GIS and up to $3500 of employment earnings.  Single seniors with less than $2000 in GIS tested income will receive an extra $600 per year added to their GIS payment. This top-up will gradually reduce and disappear once this income level reaches $4400. Couples who take in less than $4000 in GIS tested income will receive an additional $850 annually. The top-up for couples declines until income reaches $7360, $8800 if the spouse does not receive OAS payments. Make sure that you or your parents file tax returns each year, on time, to continue to qualify for the Guaranteed Income Supplement and, when eligible, the new top-up! ADDITIONAL EDUCATIONAL RESOURCES: Financial Recovery in a Fragile World Available in December, 2011

A computer "glitchî has materialized at Canada Revenue Agency with the processing of T1 returns of deceased taxpayers. In short, assessments are being processed without taking ITA S. 111(2) into consideration regarding capital losses and capital loss carry forwards. In years other than the year of death, capital losses may only be deducted against capital gains in the year, the prior three years, or subsequent years. In the year of death, S.111 (2) allows capital losses from the current year and capital losses carried forward from previous years to be applied to reduce any type of income. There are two methods permitted. For Method A, the capital losses must be used in this order: Capital losses applied to reduce capital gains in the year of death Remaining capital losses applied against capital gains in the 3 years prior to death Reduce any remaining unapplied losses by the amount of capital gains deductions claimed in prior years Apply any remaining loss against other income in the year of death or immediately preceding year. For Method B: First deduct capital gains deductions claimed in prior years. The remaining capital losses may be used to reduce income in the year of death and/or the immediately preceding year. The assessments are currently being processed to carry-forward capital losses for use in future years of the deceased taxpayer. Tax and Financial Advisors should review their client files and notify any clients that may fall into this category to review the NOA and any changes applied prior to remitting additional tax to CRA. Many thanks to Alan Rowell - DFA, Tax Services Specialist, for bringing this to our attention!   ADDITIONAL EDUCATIONAL RESOURCES: Death of a Taxpayer