Koroll & Company Blog

Although individual Canadians file the same T1 Income Tax Return form each year, the rules governing the information to be provided on that return form and the tax consequences flowing from that information is in a constant state of change. And, it’s a safe bet that very few taxpayers read the annual Income Tax Guide carefully to find out what’s changed on this year’s return.

As a result, it’s easy for a situation to arise in which taxpayers to fail to report income received, or in which they miss out on newly available deductions or credits, both due to a lack of knowledge. And, it’s worth noting that while the Canada Revenue Agency (CRA) will almost certainly pick up on a taxpayer’s failure to report income as required, the CRA does not (and, in fact, cannot) provide the taxpayer with deductions or tax credits to which he or she is entitled, but has failed to claim on the return.

There were a significant number of tax changes which took effect during the 2016 tax year which affected individuals, and which are reflected on the 2016 return to be filed this spring. Some of the more important of those changes are outlined below.

The indexing factor for federal tax credits and brackets for 2017 is 1.4%. The following federal tax rates and brackets will be in effect for individuals for the 2017 tax year.

The end of the month is fast approaching, which means that your information returns are coming due.

If you are the proactive type, you have likely already filed you returns and mailed the documentation to the recipient, which means you are free and clear.

However, for those of you who have not filed your information returns, you want to be sure to by February 28th, 2017, otherwise, you could be in for some hefty fines. 

There’s little likelihood that the average Canadian taxpayer can fail to notice that it is, once again, registered retirement savings plan (RRSP) season, given the number of television, radio, and online RRSP-related advertisements and reminders which invariably appear at this time of year. This year taxpayers must, in order to deduct an RRSP contribution on their income tax return for 2016, make that contribution on or before Wednesday, March 1, 2017. The maximum allowable current year contribution which can be made by any individual taxpayer for 2016 is 18% of that taxpayer’s earned income for the 2015 year, to a statutory maximum of $25,370.

For most Canadians – certainly most Canadians who earn their income through employment – the payment of income tax throughout the year is an automatic and largely invisible process, requiring no particular action on the part of the employee. Federal and provincial income taxes, along with Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums, are deducted from each employee’s income and the amount deposited to an employee’s bank account is the net amount remaining after such taxes, contributions, and premiums are deducted and remitted on the employee’s behalf to the Canada Revenue Agency (CRA). While no one likes having to pay taxes, having those taxes paid “off the top” in such an automatic way is, relatively speaking, painless.

As everyone knows, the Canadian tax system is a complex one, and that complexity is reflected on the annual tax return filed by individual Canadian taxpayers.

The T1 Individual Income Tax Return itself is only four pages long, but the information on those four pages is supported by 13 supplementary federal schedules, dealing with everything from the calculation of capital gains to determining required Canada Pension Plan contributions by self-employed taxpayers.

If an employee has insurable employment, Employment Insurance premiums are deducted from their insurable earnings.

The Employment Insurance premium rate for 2017 is 1.63%. This percentage is taken from each paycheque.

Ontario corporations are expected to maintain specific records and books under the Ontario Business Corporations Act (OBCA). This includes articles and by-laws, shareholder agreements, meeting minutes and registers of directors and corporate securities. Excluded from these records, is a registry of real property ownerships held by the corporations.

While this record is often maintained informally by Ontario corporations, new laws are now making it mandatory.  

At the end of last year, new land registration requirements were set forth for Ontario corporations, under the OBCA.