As we all anticipate putting 2020 behind us and starting fresh in the new year, here are some year-end tax tips to consider that may help to lighten your tax bill.
In what seems like a lifetime ago, in February 2018 we outlined the benefits of inter-spousal loans in a feature website article. Our original article was timely because at the time the federal government had announced it was raising the rate at which a high-income spouse could lend funds to their lower-income spouse from 1% to 2%.
Canada Revenue Agency (CRA) My Account If you haven't already done so, we recommend taking the time to register for your CRA My Account. The account allows you to manage virtually all your tax affairs online. Benefits include tracking tax refunds, viewing or amending prior years' returns, checking benefit and credit payments, viewing available RRSP & TFSA contribution limits, setting up direct deposit, receiving online mail, and more. Start the process or access your account here. Registered Retirement Savings Plans (RRSPs) Yearly limits for RRSP contributions are equal to 18% of an individual’s earned income from the prior calendar year, [...]
As investors gather their tax information for the 2019 tax season, we thought it would be helpful to address two recurring questions that come up this time of year. “My investment returns were strong last year, but my accountant doesn’t seem so sure as I don’t have a lot of taxable investment income to report. How did I really do overall?” This common comment shines a light on the relationship between a portfolio’s investment return and what qualifies as taxable income. It is helpful to approach each concept separately to understand their connection. Your portfolio’s investment return represents the amount of money your [...]
As the year end approaches, Canadians who celebrated their 71st during the year are likely in discussion with their advisor or custodian about the mandatory conversion of their Registered Retirement Savings Plan (RRSP) to a Registered Retirement Income Fund (RRIF). The exercise can be an intimidating one for those whose talents and interests lie outside the financial arena, but the event is really quite straightforward.
With the arrival of 2019, we thought it would be useful to remind you of the contribution limits for the various registered accounts you may wish to fund. CRA My Account If you haven't already done so, take the time to register for your CRA My Account. The account allows you to track your tax refund, view or change your return, check your benefit and credit payments, view your RRSP & TFSA limits, set up direct deposit, receive online mail, and more. Start the process or access your account here. RRSPs Yearly limits for RRSP contributions are equal to 18% [...]
Considering the historically favourable tax-deferral strategy of retaining and investing corporate earnings vs paying dividends, accumulating assets in a company has long been the default retirement plan for many business owners. Recent changes to how passive corporate income is taxed has renewed interest in a favourable but lesser-known alternative to retained corporate earnings and RRSPs, namely, the Individual Pension Plan (IPP). Most of us are familiar with the common defined benefit pension plan. Based on a formula involving matching ratios, employee service with the company and income level, employees and their employer make regular contributions to the plan. In turn, [...]
As many of you are aware, the Canadian government announced new rules in February concerning the taxation of passive income in Canadian controlled private corporations (CCPCs). The Liberals’ original draft legislation proposed to target tax strategies that have been used by small businesses and professionals since the early 1970s so naturally the initial announcement in July 2017 drew widespread condemnation. The government’s concern with the accumulation of passive income-generating investments in private companies stems from the fact that CCPCs pay a blended federal and provincial small business tax rate of 13.5% (in Ontario) on active business income up to the [...]
Previously, we wrote about the risks of gifting your children a down payment in today’s housing market. Stifling mortgage payments, rising interest costs and house price corrections all need to be considered, particularly in hot Canadian real estate markets like Toronto and Vancouver where even modest housing price corrections can wipe-out generous gifts. Still, providing financial assistance to loved ones remains at the top of many parental wish lists, with down-payment support ranking about as highly as the desire to help with education costs. Options like these are also often preferred to cash gifts if there’s any doubt about an [...]
It’s a question clients ask us a lot: can we, or should we, gift our kids cash for a down payment on their first home? It’s a thorny issue that puts parents in a tricky spot. Most parents’ gut instinct, of course, is to do everything they can to help their children. But in this case, doing so could do more harm than good. We’ll give you three reasons why in a moment. It’s easy to see why more parents are giving their kids an assist in cracking the housing market, especially in big cities like Toronto, where the average residence [...]