Posts Tagged ‘tax’

What to expect when the Canada Revenue Agency calls you

It is possible that the Canada Revenue Agency (CRA) will contact you by phone for legitimate tax reasons.

During such phone calls, the CRA officer must validate your identity and therefore will ask for certain personal information, including your date of birth, your address, and in the case of a business some account specific details.

The CRA will not:

The CRA may:

·         ask for information about your passport, health card, or driver’s licence

·                  validate your identity by asking for certain personal information, including your full name, date of birth, your address and, in the case of a business, details about your account

·         request personal information by email

·         notify you by email when new mail is available for you to view in CRA secure portals such as My Account, My Business Account or Represent a Client

·         email you a link requesting you fill in an online form with personal or financial details

·email you a link to a CRA webpage, form, or publication in response to your telephone enquiry

·         send you a link to your refund by email or text message

·send you a notice of assessment or re-assessment by mail or notify you by email when it is available to view in My Account, My Business Account, or Represent a Client

·         setup an in-person meeting in a public place to take a payment

·ask for financial information such as the name of your bank and its location

·         demand immediate payment by prepaid credit card

·request payment for a tax debt through any of the CRA’s payment options

·         threaten with immediate arrest or prison sentence

·take legal action to recover the money you owe if you refuse to pay your debt

 

Before giving money or personal information:

  • verify the caller’s authenticity
    • You can note the caller’s name, phone number, and office location and tell them that you want to first validate their identity.
    • You can then verify that the employee works for the CRA or that the CRA did contact you by calling the CRA at 1-800-959-8281 for individuals or 1-800-959-5525 for business.
  • verify your tax status and make sure your address and email are up to date
    • You can confirm this information with the CRA either online through the CRA secure portals, or by calling the CRA at 1-800-959-8281 for individuals or 1-800-959-5525 for business.

When in doubt, ask yourself

  1. Did I file my tax return on time? Have I received a notice of assessment or re-assessment indicating a tax balance due?
  2. Have I received previous written communication from the CRA by email notification or mail about the subject of the call? Does the CRA have my most recent contact information, like my email and address?
  3. Is the requester asking for information I would not provide in my tax return or that is not related to my debt with the CRA?
  4. Did I recently submit a request to make changes to my business number information?
  5. Why is the caller pressuring me to act immediately? Am I confident the caller is a CRA employee?

CRA phone interactions generally come after written communications, such as an email notification to check your online mail or a letter, and are made under special circumstances. For example:

  • If you have a tax debt, a collections officer may call you to discuss your case and request a payment. In this case, you may need to provide some information about your household financial situation.
  • If you have not filed your income tax and benefit return, a CRA officer may contact you by telephone to ask you for the missing returns.
  • If the CRA has questions about your tax and benefit records, or documents you have submitted, a CRA officer may contact you by phone for further discussion.

To report scams

To report deceptive telemarketing, contact the Canadian Anti-Fraud Centre online at www.antifraudcentre.ca or toll free at 1-888-495-8501. If you believe that you may be the victim of fraud or have given personal or financial information unwittingly, contact your local police service, financial institution, and credit reporting agencies.

 

 

Principle Residence Exemption

Did you sell your house in 2017?

Commencing with sales in the 2016 tax year, you must report basic information, such as the date of acquisition, the proceeds of disposition (the sale), and the address, on your income tax and benefit return when you sell your home to claim the full principal residence exemption.

You do not have to pay any tax on the capital gain when you sell your home provided it was your principal residence for all the years that you owned it and you did not use any part of it to earn income.

A property may qualify as your principal residence for any year that you or certain family members lived in the house, if none of you designated another property as a principal residence for that year.

File a tax return and claim the principal residence exemption for the capital gains.

Business Investment Loss – Denied

In a Tax Court of Canada case, a mother had guaranteed the business loans for her son’s corporation. Unfortunately, the corporation failed and subsequently the mother paid off the loans. The mother claimed business investment losses for the amounts repaid.

Her only motivation for the guarantee was to assist her son’s business. She did not charge a guarantee fee and thus there was no possibility of investment income.

The Tax Court disallowed the business investment losses for the mother because she did not make the loan guarantees to earn income. Solution – Charge an annual fee.

Nurse practitioners can now certify applications for the disability tax credit

Nurse practitioners can now certify applications for the disability tax credit

Nurse practitioners can now fill out and sign Form T2201, Disability Tax Credit Certificate making the application process  for the disability tax credit (DTC) easier and more accessible.

Through Budget 2017, the Government has made a change to recognize nurse practitioners as one of the medical practitioners who can certify Form T2201. With over 4,500 nurse practitioners across Canada who can certify patients for the DTC, this change is going to have a positive impact for Canadians living with a disability.

Individuals who want to apply for the DTC, but live in an area where nurse practitioners are the first point of contact, as for example, in Canada’s North, will benefit from this change.

What is the disability tax credit?

The disability tax credit is a non-refundable tax credit that helps persons with disabilities or their supporting family members reduce the amount of income tax they may have to pay.
Applying for the credit is a three step process:

  1. Fill out Part A of Form T2201, Disability Tax Credit Certificate
  2. Have your nurse practitioner fill out Part B
  3. Send form T2201 to the CRA

Being eligible for the DTC can open the door to other federal, provincial, or territorial programs designed to support those with disabilities or their families. These include the registered disability savings plan, the working income tax benefit disability supplement, and the child disability benefit.

Renting out a room to students? CRA wants to know

As students fan out across the country for another school year, homeowners are finding opportunity in renting out accommodations.

There’s nothing wrong with making a few bucks renting out a room, but the Canada Revenue Agency wants a piece of the action – and how you claim deductions could be costly in the long run.

The name of the game is to preserve your home’s principal residence status. If the CRA considers your home a principal residence, you don’t pay any tax on the amount it appreciates when it is sold. As an example; if you bought your house for $400,000 and sold it for $800,000, you don’t pay any tax on that $400,000 gain.

If your home does not meet the CRA’s principal residence requirement, you must pay tax on half of that $400,000.      

If you are drawing rental income from your home, there are three ways to ensure it remains your principal residence for tax purposes:

  1. The partial use of the residence for income-producing purposes is ancillary to the main use as a residence. In other words, there’s a fine line between renting out a room and renting out a house the owner happens to live in.
  2. There is no structural change to the property. You can put a coat of paint on the walls and make some modifications but you can’t build an addition, for example.
  3. You cannot claim capital cost allowance (CCA), or depreciation on the property.

Of course, the rental income must be claimed (form T776) and filed with your tax return, but there are several deductions available to lower your tax bill. They can include: a portion of mortgage interest, property taxes, insurance, repairs and maintenance, landscaping, utilities, advertising costs, office expenses, professional fees, management fees, salaries or wages, travel costs, and car expenses.

If you’re not sure if you are crossing the line between principal residence and income property, consult your tax professional.

By Dale Jackson 

Dale is Finance Journalist: writer and producer Business News Network, Globe and Mail, Yahoo! Finance.

 

 

Tax Information Newsletter for Businesses

Businesses – Tax information newsletter, Issue: 2016-03

1- Compliance letter campaign – Message to GST/HST registrants

In December 2016, the Canada Revenue Agency (CRA) will conduct a GST/HST compliance letter campaign pilot project. The CRA will send 250 letters in December followed by 250 in February, 2,500 in May, and 2,500 in August to GST/HST registrants. Those receiving a letter will be asked to review a previously-submitted GST/HST return with suspected errors and confirm whether the amounts they reported are correct or need to be changed.

The campaign supports the CRA’s increased emphasis on helping individuals and small businesses to better understand their tax obligations and encourages them to correct any errors in their past GST/HST returns. This increased understanding of tax obligations will also serve in promoting compliance going forward.

2- 2017 Indexation adjustment for personal income tax and benefit amounts are now available

Each year, certain personal income tax and benefit amounts are indexed to inflation using the Consumer Price Index data as reported by Statistics Canada. The chart provides the indexed amounts for four tax years.

3- Does your business have tax debt? Don’t panic. You have options.

Does your business owe taxes to the CRA? Ignoring your tax debt isn’t the best strategy. Avoiding payment could result in financial and legal consequences for you and your business. Instead of avoiding a payment, check out the video “Keeping Your Business on Track” to find a better option.

4- Businesses take notice: Your tax information just got clearer!

The CRA is redesigning the correspondence it sends to Canadians, including the Corporation, and Goods and services tax/ harmonized sales tax (GST/HST) notices of assessment (NOA) and notices of reassessment (NOR). The CRA has made changes to how the notices are structured, designed, formatted, and written, making the information easier to read and understand.

Do I need to file a tax return if I am new to Canada?

Are you new to Canada?


Did you know?

If you are a newcomer to Canada for all or part of a tax year, you may need to file an income tax and benefit return if you have to pay tax, want to claim a refund, or receive benefits.You become a resident of Canada for income tax purposes when you establish significant residential ties in Canada, for example, a home in Canada, a spouse or common-law partner and dependants who move to Canada to live with you, personal property, and social ties in Canada. You usually establish these ties on the date you arrive in Canada. For more information, go to Do you have to file a return?.

Important facts

  • If you’re new to Canada, it’s important to understand your tax obligations and the credits and benefits available to you.
  • By filing an income tax and benefit return, you might be able to get credits and payments such as the goods and services tax/harmonized sales tax credit and Canada child tax benefit payments—even if you have no income to report or tax to pay.
  • Everything you need to know as a newcomer is available at www.cra.gc.ca/newcomers. For example, you can find information on getting your social insurance number, filing a tax return, tax treaties, as well as contact information if you need assistance.

Canada Revenue Agency (CRA) online services make filing easier and let you get your refund faster

The CRA’s online services are fast, easy, and secure. You can use them to file your income tax and benefit return, make a payment, track your refund, and more. Sign up for direct deposit too! Your refund and any benefit or credit payments owed to you will be deposited directly into your account, putting your money in your pocket faster. For more information, go to www.cra.gc.ca/getready.

Did you buy a home in 2013?

Did you know?

If you bought a home in 2013, the Canada Revenue Agency (CRA) has a tax credit and a plan that may help you save on this purchase.

First-time home buyers’ tax credit

If you are a first-time home buyer, you may be able to claim a non-refundable tax credit of up to $750 on the purchase of a qualifying home.

To qualify for the home buyer’s tax amount:

  • you or your spouse or common-law partner must have bought a qualifying home; and
  • you can’t have lived in another home owned by you or your spouse or common-law partner that year or in any of the four preceding years.

If you are buying a home and are eligible for the disability tax credit or if you are an individual buying a home for a related person who is eligible for the disability tax credit, you may also qualify for this credit even if you have already owned a home.

A qualifying home must be registered in your name, in your spouse’s or common-law partner’s name, or in both names, according to the applicable land registration system, and must be located in Canada. It includes existing homes such as single-family houses, semi-detached houses, townhouses, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes, or apartment buildings, and homes under construction.

Home Buyers’ Plan (HBP)

You may also be eligible to participate in the Home Buyers’ Plan, which allows you to withdraw funds from your registered retirement savings plan to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year, and you have up to 15 years to repay the amounts you withdraw.

For more tax information for homeowners, go to www.cra.gc.ca/myhome.

CRA online services make filing easier and let you get your refund faster

The CRA’s online services are fast, easy, and secure. You can use them to file your income tax and benefit return, make a payment, track your refund, and more. Sign up for direct deposit too! Your refund and any benefit or credit payments owed to you will be deposited directly into your account, putting your money in your pocket faster. For more information, go to www.cra.gc.ca/getready.

What is the red tape reduction measure?

The Harper Government kicks off 2014 with a renewed commitment to red tape reduction for businesses

January 28, 2014 – Ottawa – Canada Revenue Agency

The Honourable Kerry-Lynne D. Findlay, P.C., Q.C., M.P., Minister of National Revenue, with the Honourable Tony Clement, President of the Treasury Board, the Honourable Edward Fast, Minister for International Trade, the Honourable Maxime Bernier, Minister of State for Small Business and Tourism, and Ms. Laura Jones, Executive Vice-President of the Canadian Federation of Independent Business (CFIB), today highlighted the Government’s progress on red tape reduction. Minister Findlay expressed optimism for the relationship between businesses and the Canada Revenue Agency (CRA), which has been made stronger as a result of the red tape reduction measures the CRA has implemented to date.

As of January 6, 2014, businesses can file their T5013, Partnership Information Return, electronically through My Business Account and Represent a Client. In addition, the CRA’s Liaison Officer Initiative will provide in-person support and information to small and medium enterprises at key points as their business grows, to help them get it “right from the start.”

In the fall of 2014, the CRA will again conduct red tape reduction consultations with small businesses and their service providers in cities across the country, seeking their views on the CRA’s progress on reducing red tape and ensuring the Agency’s action plans remain relevant to the needs of small businesses.

In the past year, the Government of Canada implemented significant red tape reduction measures, from increasing its accountability to businesses, introducing time-saving measures, to enabling businesses to file and manage their information online.

Accomplishments in 2013:

  • Agent ID for the CRA’s business enquiries telephone service. Now, when a business owner calls the CRA, the agent who answers provides an ID number at the beginning of the call. The Agent ID number increases the CRA’s accountability for business calls, ensures a consistent experience for callers, and makes it easier for business owners to give feedback on CRA services.
  • A one-stop-shop webpage for business services. Businesses can now easily find information and service options relevant to their tax situation.
  • The My Business Account online enquiries service. Businesses or their representatives can ask the CRA tax-related questions about their accounts online and they will receive answers online and in writing.
  • A new online mail service for Canadian small businesses. Through Manage Online Mail, Canadian businesses can choose to receive their notices of assessment and reassessment electronically, and some letters for their corporate and GST/HST accounts.
  • A new CRA Red Tape Reduction Action Plan webpage. Businesses can see up-to-date information on the CRA’s red tape reduction progress.

Quick facts

  • In the fall of 2012, the CRA held its own consultations with businesses. The results of the 2012 consultations are available in the report Focusing on Small Business Priorities: Canada Revenue Agency Consultations on Cutting Red Tape.
  • To participate in the upcoming consultations, please visit the CRA’s Red Tape Reduction webpage regularly, and stay connected by subscribing to our mailing lists and joining the conversation on Twitter.
  • From April 2013 to November 2013, the CRA responded to almost 4,300 enquiries online through the My Business Account enquiries service, a 25% increase over the same period last year.
  • Using the CRA’s business number (BN) as the common identifier for federal, provincial, and municipal interactions with businesses is part of the effort to reduce red tape for small businesses. So far, six provinces and one city have adopted the BN. More municipalities and governments are expected to adopt the BN to facilitate registration and eliminate duplicate accounts and errors.

Quotes

“I would like to thank the CFIB for their input on CRA red tape measures implemented in the past year, specifically on the Agent ID and My Business Account online enquiries. With the help of business communities, our Government has made significant progress on making compliance easier and decreasing regulatory burdens so businesses can be competitive and innovative within their sectors. This will in turn create jobs and underscore Canada’s reputation as one of the best places in the world to do business. Since most businesses in Canada have less than 100 employees, it’s very important to meet their needs and continue to encourage their feedback and ideas. The CRA’s promise is to consult businesses every two years, and this year, we hope to reach further than we have ever before.”

– The Honourable Kerry-Lynne D. Findlay, Minister of National Revenue

Is Canada’s economy improving?

Canada’s gently improving economy

A number of recent numbers from Statistics Canada testify to gently improving economic conditions.

• In November, wholesale sales  rose 0.7% to $49.6 billion, continuing a gradual upward trend begun in early 2009, deep in the recession. Five of the seven subsectors made gains with the computer and communications equipment and supplies industry leading with a 6.3% increase. The motor vehicle and parts subsector, up 1.5%, recorded its second consecutive increase.

Retail sales also edged upward in November to $39.4 billion, adding 0.2%, the fifth consecutive monthly gain. Higher sales at motor vehicle and parts dealers as well as electronics and appliance stores more than offset declines at most store types, says StatsCan.

Manufacturing sales,  likewise, increased in November, up 1.7% to $49.9 billion. As with wholesale sales, manufacturing sales have pursued a gradual upward trajectory since early 2009. Sales rose in 12 of 21 industries, says StatsCan, with the transportation equipment industry — up 3.8% to $8.7 billion in the month — leading the charge and accounting for more than a third of the total increase. Within that industry group, motor vehicle industry sales increased 4.1% and aerospace product and parts industry gained 6.5%.

In the primary metal industry, sales rose 5.9% to $4 billion, the highest gain since July 2011.

• Also on a positive note, the number of people receiving regular Employment Insurance  (EI) benefits in November decreased by 4,500 or 0.8% to 528,000, says StatsCan. From a peak close to 850,000 in mid-2009, the number of EI recipients has consistently edged its way downward.

• Investment in non-residential building construction was $12.0 billion in the fourth quarter, a 1.0% gain from the previous quarter. This was the third consecutive quarterly increase and was led by higher spending for commercial and industrial buildings.

• Canadian existing home sales continued to weaken in December, plunging 17.4% year over year, reports the Canadian Real Estate Association. The silver lining in that dark cloud is a mere 1.6% slippage in housing prices year over year.

“The Canadian housing market continues to cool,” wrote Bank of Montreal senior economist Benjamin Reitzes in a recent report. “While some will focus on the deep dive in sales from a year ago, it looks as though prices are providing a better read on the health of the sector, as homeowners are in no rush to sell. Prices are easing gently, consistent with a soft landing through much of the country.”

TD Bank Group economist Francis Fong, likewise, ends his recent report on an upbeat note. Although he doesn’t see a lot of growth in the first half of this year, the second half is a different story. “By the second half of [the] year, we do anticipate an acceleration of economic growth,” he wrote, “particularly in the United States. With Canadian manufacturers and exporters still tightly linked to the fortunes of the U.S. economy, this should translate into a stronger pace of manufacturing sales growth.”

This article was written by Evelyn Jacks. Evelyn Jacks is president of Knowledge Bureau and has authored several of its tax courses and books.

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