Breaking News: Canada Carbon Rebate for Small Businesses Tax Free

Ottawa has confirmed that the CCR for Small Business 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.  Legislation will be introduced this fall.

Are singles who live alone without dependants treated fairly by the tax system? They are an economic unit on their own, assumed to have more disposable income because they don't support family members. Is this true or fair? Don't forget that the cost of living can be shared by couples and families, while singles have to bear the full weight of housing, food, transportation and other living expenses on their own. The last time I checked, the cost of a one bedroom apartment is not just half the cost of the two bedroom model! It is not often that we see a new deduction or credit for single taxpayers. Many initiatives are aimed at families, especially those with children, and no one can argue that this isn't important. However, it was interesting to note that when Nova Scotia presented its Financial Measures (2011) Act on April 15th of this year, there was a previously unannounced low income tax deduction aimed to assist a widowed person in the year of her spouse's death. Leveling the playing field for Canadian singles would not be difficult óa federal Singles Cost of Living Equity Credit, for example, might take up some of that slack. The province of Quebec has a tax credit for singles called the Amount for a Person Living Alone, and an additional credit for single parents.  Perhaps it is time for the tax system to recognize the cost of flying solo. More important, consider that many singles have unofficial roles caring for family members. They may provide support to parents, uncles, aunts, nieces and nephews that often is not recognized by the tax system. It is important that single taxpayers in these situations seek out professional financial and tax advice to maximize the few opportunities that will reduce the tax burden. Following are strategic planning tips to consider: Income: For singles, there is no income splitting with family members, but sharing with the communities as a philanthropist is recognized by the tax system. Transferring your accrued capital gains in publicly traded shares to your favorite charity will result in tax free gains, as well as a tax credit for the donation itself. So diversification of income sources is importantóincome from employment, self-employment, interest, dividends, capital gains, pensions all layered in varying amounts can often be timed to average down overall tax rates in your lifetime. Pension splitting with Public Plans: There is certainly a disadvantage to single taxpayers here as there is no income splitting with spouses when CPP/OAS benefits are paid. Strategies to counteract this imbalance include taking the CPP early so that you average out the tax on this income over a longer period; by the time OAS kicks in a smaller CPP benefit may also help singles avoid OAS clawbacks. The tradeoff is that the monthly CPP benefit is smaller, although it is received over a longer period of time. Private pensionsóRPP, RRSP, RRIF: Consider taking benefits out of them earlier, too, and over a longer period of time to average out the tax. Reinvest in non-registered accounts to make the strategy for tax free gains part of your charitable giving plan. Also remember the TFSA is a great way to earn tax free income. Other Capital: Saving for a home is very important in order to tap into tax exempt gains throughout your lifetime. Singles are nimbler (they don't have to ask anyone about moving!), so they can own sequential homes, potentially accumulating lots of tax free gains along the way. But be careful of adventure or concern in the nature of trade rules ñ CRA could consider you to be in the business of buying and selling real estate and challenge your principal residence exemption. Deductions: RRSP is key to tax savings and the building of a greater capital base, and childless singles should be able to save more, in theory. There may be an argument for building up capital outside the RRSP (with TFSA, homeownership, for example) in years when income is lower; as too much in the RRSP pot at the end of life will be heavily taxed. But if you are a higher earner, remember that one way to free up more capital is to make the RRSP contributions and invest the double-digit tax savings. Other tax deductions for singles include moving expenses, employment expenses, accounting expenses and union dues. Make sure you maximize them. Credits: Remember that in households where both spouses work, the tax filing profile looks similar to that of a single person. There is a basic personal amount, medical, charity claims and for seniors the pension income amount for qualifying pensions and the age amount. There is a disadvantage relating to the clawback of the age amount as singles don't qualify for pension income splitting; nor can they transfer over a lower earning spouse's age amount. Additional tax credits may be accessed by claiming the Canada Employment, Public Transit, Home Buyers, Tuition, and Student Loan Interest amounts. The Eligible Dependant, Caregiver and Infirm Dependant, and new Family Caregiver Tax Credit (if passed into law) provide equal recognition to singles who support and care for family members. Remember that medical expenses for other dependants can be used by the caregiver for the Medical Expense Tax Credit. The 2011 federal budget proposed to remove the $10,000 ceiling on expenses pertaining to other dependants. The income and living arrangements of your loved one are factored into the expense claim ñ so crunch those numbers! The Disability Tax Credit can be transferred to a supporting individual if unused by the dependant, but this is being challenged in some cases by CRA so document the nature of the support that you provide. More and more single Canadians are stepping up to the plate when it comes to caring for vulnerable loved ones. Make sure that single taxpayers in these situations know what tax relief is available to them. Professional help is available ñ make use of it every yearóand plan strategically for a lifetime of tax savings. ADDITIONAL EDUCATIONAL RESOURCES: Essential Tax Facts by Evelyn Jacks

Against the back drop of positive economic news for Canada, which is expected to lead the world in improved economic activity according to the International Monetary Fund, the Manitoba government released its budget on April 12. Manitoba is Canada's fifth largest province, population wise, growing nicely to 1,243,653 people as of January 1, 2011, having enjoyed positive net in-migration over the past two years. Its deficit stands at $467 Million this year, and its cost of servicing its debt is 6 cents for every dollar raised. The net debt in the province is close to $15 Billion. Manitoba is a province which largest revenue line is transfer payments (29.5%); next highest source is income taxes at 23.5% of total revenues. Health care eats up 38.6% of its budget; education 25.4%. Its economy is expected to grow at a healthy 2.7% pace in 2011/2012, well in line with the Canadian national projections at 2.8%. It is a province that boasts the lowest unemployment rate in Canada and its employment grow is expected to continue to clip along at a rate of 1.5% in the next two years. Tax revenues will rise as a result of both economic growth and bracket creep by 3.5% to 4% annually while expenses will rise roughly at the rate of inflation by 2% per year until 2014/15. Amongst modest and targeted tax relief, and a projected return to budgetary balance by 2014/15, were changes for families, business and communities, as described below: A $250 per year increase in the Basic Personal, Spouse and Eligible Child Amounts over four years: From $8134 in 2010 to $8384 in 2011; then $8634, $8884 and $9134 in 2014. No indexing to the personal tax brackets in place in 2010 or change to tax rates. Manitobans will continue to pay a provincial tax rate of 10.8% on taxable income up to $31,000; 12.75% on incomes between $31,000 and $67,000 and 17.4% on incomes over that. This is not competitive at the top end with neighboring Saskatchewan, which features a 15.0% rate when incomes exceed $116,911. The Education Property Tax Credit has been increased: The Education Property Tax Credit will rise from $650 to $700 in 2011. This credit is not income-tested. The Seniors Education Tax Credit, on the other hand is. It is paid to seniors (age 65 and older) with net incomes under $25,000 and it will rise from $800 to $950 in 2011, to $1025 in 2012, and $1100 in 2013. The Farmland School Tax Rebate has been increased from 75% to 80% of school taxes paid on farmland. A New Children's Art and Culture Activity Tax Credit of up to $500 will be available in 2011 for those under 16; with an additional $100 available for disabled children up to the age of 18. This credit is in addition to the Manitoba Fitness Tax Credit currently available for children and young adults under the age of 25. Organizations such as 4-H Clubs, Cadets, Scouts, Girl Guides and supervised arts and cultural activities will qualify. The Primary Caregiver Tax Credit has increased from $1020 to $1275 for 2011. It can be claimed for up to three people being cared for in their own homes by a volunteer caregiver. It is not income tested. On the business side: The Manitoba Commercialization Support for Business initiative will receive $30 Million to support entrepreneurs with the commercialization of new ideas. The Mineral Exploration Tax Credit has been extended to flow through share agreements entered into prior to April, 2015. The Manufacturing Investment Tax Credit has been extended to December 31, 2014. This is a 10% corporate income tax credit on the capital cost of new and used manufacturing buildings, machinery and equipment. There is a new Capital Tax Exemption for Small Banks (paid up capital under $4 Billion) which will provide an exemption from the 3% capital tax. The Community Development Tax Credit has been extended to December 31, 2014. This provides a 30% tax credit on a maximum investment of $30,000. A New Cultural Industries Printing Tax Credit will provide a 15% refundable credit to Manitoba printers for the production of eligible books. The Book Publishing Tax Credit has been extended to 2014 and expanded to include non-refundable monetary advances and labour costs relating to the publishing of an electronic or digital version of an eligible book. The Co-op Education and Apprenticeship Tax Credits have been extended to 2014. A Sales Tax Exemption will be provided for municipal flood protection, specifically on sandbag filling services and flood protection materials. The 10% Odor Control Tax Credit will be extended to December 31, 2014. For Communities: A New Neighborhoods Alive Tax Credit will provide a maximum credit of $15,000 on a minimum $50,000 donation by corporations to charities that establish new social enterprises in Manitoba. Those charities must be owned and controlled in Manitoba. Donations made before 2020 will qualify. However, in kind services from the corporation will also be required. Tuition fees will be frozen to the rate of inflation. 1% of existing sales taxes will be allocated to infrastructure, in particular to renew provincial highways. Other items of importance:   A mobile health unit will be available for the north while more family doctors are promise by 2015, together with additions to personal care home staff.   Money will be allocated to clean up Lake Winnipeg and 66 new police officer will be added to fight crime Evelyn Jacks reporting from the Manitoba Budget Lockup.

This year's tax filing deadline compels most ó but not all ó of Canada's many tax filers to arrange their affairs and reconcile last year's taxes by midnight on May 2, 2011. However, there are many procrastinators, and and many personal tax returns are late filed.  This year May 2nd may be busier than usual as we get out to vote, so plan to file well in advance of the deadline! FIling a tax return, even when you have no income, allows you to receive federal benefits such as  the GST/HST credit and the Child Tax Benefit, along with provincial payments from programs administered by CRA.  Filing on time means that you will not have to pay late-filing penalties, even if your tax return is reassessed and you are found to owe money.  Failure to file on time may cause you to delay or miss important planning opportunities. For example, tax form T1032 Joint Election to Split Pension Income must be filed by your tax filing due date (which for most people is April 30).  Adjustments to the the T1032 is only allowed for the prior 3 years, so this is the last chance to request or change this election for 2007! This is a very lucrative income splitting opportunity for those receiving qualifying pension income and it would be a shame to miss or delay the extra tax refunds due to tardy tax filing habit. Those advisors in the tax and financial services industry should be sure to call all clients who have not yet filed a return by April 30 to maximize availability of this type of provision and of course avoid late filing penalties.  June 15th is also an important date as proprietorship tax returns are due and the 2nd quarterly instalment payments are also required.  Even with this deadline you should have a good idea of what you owe for 2010 by May 2nd, so pay up by then as the interest clock will start ticking on May 3rd!  CRA should continue to be on the radar screen even after this year's tax filing deadlines have passed. Please be sure to diarize milestones that maximize your rights under the Income Tax Act: KNOWLEDGE BUREAU CHECKLIST: INCOME TAX DEADLINE MAXIMIZER WITHIN THE TAX FILING YEAR 2011   April 15th May 2 U.S. Tax Filing Due Date Tax Filing Deadline for 2011: Personal Tax Returns May 1 Interest accrues daily on overdue taxes owing June 15 CRA owes interest to tax filers on late processed refunds (in fact, the agency has an obligation to process refunds within 30 days of receipt of the return after April 30).    Tax Filing Deadline: Proprietorship Returns - T2125 Quarterly Instalment Due Date Closer Connection Exception Statement for Aliens (IRS Form 8840) June 30 Tax-Free Savings Account Returns due July 1 New Benefit Year: Child Tax Benefit, GST Credit, Old Age Security (file 2009 tax return to determine benefit levels) August 31 Working Income Tax Benefit Advance Payment Application for 2010 September 15 Quarterly Instalment Payment Due December 15 Quarterly Instalment Payment Due December 31 Annual Instalment Due for Farmers, Fishers 2012   January 30 Requirement to pay interest on inter-spousal loans February 29 T4, T5 Slip Completion and Distribution RRSP deadline! March 15 Quarterly Tax Instalment due March 31 T3 Slip Completion and Distribution Pension Adjustment Reversal Deadline Interest Penalty Due on RRSP Excess Contributions (T1-OVP Form)

Quebec Weighs in on Retirement Savings The Quebec provincial budget was tabled in March with a retirement savings plan announced similar to the federal government's proposed Pooled Registered Pension Plan (PRPP). The Voluntary Retirement Savings Plan (VRSP) shares many of the goals of the PRPP and is based its framework. It is designed to provide an opportunity for Quebeckers who don't have access to a pension plan to participate in a low cost savings vehicle that is easy to access and administer. The focus in Quebec is very much on reducing management costs to participants through oversight and economies of scale, in order to maximize investment returns. Bothe the VRSP and PRPP are still in the planning stages. However, it is interesting to note key differences so far between the two initiatives: VRSPS will be available to every citizen age 18 or over, whether they are employees, self-employed or savers. PRPPs are intended for employees and the self-employed. The proposed framework indicates that employers may choose to offer PRPPs, although it may be mandatory in certain jurisdictions. VRSPs will have to be offered by employers to employees who are not covered by a pension plan. Both types of plans allow employees to opt out, if desired, and both build in portability among plans. Contributions will be deductible for both PRPPs and VRSPs, and employer contributions are not mandatory. It will be interesting to watch these plans develop, especially when it comes to mandatory participation by employers and how that may differ among provinces. The PRPP and VRSP have the potential to significantly change the retirement savings landscape for consumers and those who provide financial products and advice. ADDITIONAL EDUCATIONAL RESOURCES: DFA-Tax Services Specialistô  

April 6, 2011 saw another province table a "hold the lineî budget. Prince Edward Island announced no income tax changes this year as it works to eliminate its deficit by 2013-14. Increased tax on tobacco and liquor will add to provincial coffers, while centralization of government services and other cost-cutting measures are in place to reduce expenditures. Per cigarette, the tax rises to $25.4 cents from 22.45 cents. The tax on gasoline is unchanged. The estimated deficit for 2011-2012 is $42.99 million, down from $53.7 million in the previous fiscal year. Modest increases to pre-school and kindergarten education and a 3% increase to post-secondary institution grants were announced. Funding for physician and ambulance services and primary health care initiatives will help to address healthcare issues, while senior care and housing projects focus on an aging population. Municipalities, public transit and community organizations will benefit from moderately enhanced support in this budget.

CRA has updated RC192 Information for Students ñ Educational Institutions Outside Canada. Students should seek professional advice in advance of leaving for foreign studies so they are aware of their Canadian tax filing requirements. Determining whether the sojourn is a temporary absence or if the student is severing ties with Canada is the first thing to establish. A temporary absence would make you a factual resident of Canada while a permanent move would make you a non-resident. A factual resident has to file a tax return every year to report worldwide income, using the tax package from your most recent province of residence. Even with no income it is important to record tuition, education and textbook amounts and apply for tax credits. Form CPT20 will allow CPP contributions when there is employment income outside Canada, and this income also counts for RRSP contribution room. Tax treaties avoid double taxation, so depending where you end up your residency and income treatment may be affected. CRA provides a link to tax treaties where your tax advisor can research terms and conditions for current agreements. Some countries, like the U.S., have special rules for students. Students who are away temporarily will have to file in Canada and usually also in the country where they are residing. Your advisor should research the tax filing requirements of the host country. Foreign tax credits can offset foreign tax paid, and there are federal (Form T2209) and provincial (form T2036) credits available. Make sure that you are made aware of the rules for reporting as some types of income that is tax-exempt in Canada, such as scholarships, may be taxable in another country. The complete details for reporting income and claiming deductions, credits and benefits is available through RC192, which provides links to other publications and web pages. This publication will be familiar to tax professionals who work with student pursuing educational opportunities outside of Canada. Note that the recent federal budget proposed reducing the duration of eligible courses from 13 to 3 consecutive full-time weeks for the purpose of claiming Tuition, Education and Textbook credit and accessing Educational Assistance Payments from RESPs.   EverGreen digs deeper ...