By May 23, 2016, the Canada Revenue Agency (CRA) had processed just under 26 million individual income tax returns filed for the 2015 tax year. Of those returns, 56% resulted in a refund to the taxpayer, 18% required payment of a tax balance by the taxpayer and just over 20% were “nil” returns – returns where no tax is owing and no refund claimed, but the taxpayer is filing in order to provide income information which will be used to determine his or her eligibility for tax credit payments (such as the Canada Child Tax Benefit or the HST credit ).
The new Liberal government has proposed a few minor changes to personal income taxes for 2016 and beyond.
The election of a new government in Ottawa is often accompanied by changes to the way income is taxed. The last federal election was no exception. The changes announced in the March 2016 budget that will impact many taxpayers are as follows:
The last thing you want, when you incorporate your business, is for Canada Revenue Agency (CRA) to label you a personal services business (PSB). As stated in the Income Tax Act, and paraphrased in the Corporation Income Tax Guide, a PSB is defined as “a business that a corporation carries on to provide services to another entity, that an officer or employee of that entity would usually perform.”
In other words, if CRA determines an incorporated individual working as a contractor is really just an employee of the company they are working for, they would be deemed a personal services business. This designation comes at a great cost to the individual.
In recent years, there has been a great deal of public discussion about the availability and viability of federal income support programs for retirees. It’s not news that Canada’s population is aging, and the demands placed on government-sponsored retirement income programs will increase as greater numbers of Canadians reach the age at which they will be entitled to receive monthly benefit payments from those programs.
There are, essentially, three federal retirement income programs which are generally available to Canadians: the Canada Pension Plan (CPP), the Old Age Security (OAS) Program, and the Guaranteed Income Supplement (GIS) and Allowance.
By now, most Canadian taxpayers, except the self-employed and their spouses who are not required to file until June 15, will have filed their 2015 income tax returns. Once the Canada Revenue Agency (CRA) has processed these returns, taxpayers across Canada will begin to receive Notices of Assessment for 2015. In most cases, the issued Notice of Assessment will simply confirm the information which the taxpayer provided on their return, perhaps with some minor mathimatical corrections.
However, not infrequently, the Notice of Assessment will indicate that the CRA has disallowed or changed the amount of certain deductions or credits, or has included income amounts that were not declared by the taxpayer on his or her return. When that happens, it’s time for the taxpayer to decide whether to dispute the CRA’s assessment of their tax situation.
Springtime and early summer is moving season in Canada. The real estate market is traditionally at its strongest in the spring, and spring house sales are followed by real estate closings and moves in the following late spring and early summer months. All of this means that a great number of Canadians will be buying or selling houses this spring and summer and, inevitably, moving. Moving is a stressful and often expensive undertaking, even when the move is a desired one — buying a coveted (and increasingly difficult to obtain) first home, perhaps, or taking a step up the property ladder to a second, larger home. There is not much that can diminish the stress of moving, but the financial hit can be offset somewhat by a tax deduction which may be claimed for many of those moving-related costs.
Canada’s tax system is a self-assessing and self-reporting one, in which taxpayers are expected (and required) to provide the tax authorities with an annual summary of their income and any deductions and tax credits claimable, along with payment of any tax amount owed. Although no one really likes doing their taxes, or paying those taxes, the vast majority of Canadians nonetheless do file their returns on time, and pay up. For a significant minority, however, completing and filing the return is something that just doesn’t get done. Sometimes the cause is just procrastination, while in other cases, a taxpayer is worried that there will be a large balance owing and he or she avoids completing and filing the return for that reason.
For several decades, Canadian families have received financial assistance from the federal government to help offset the cost of raising children, through a range of benefits and allowance programs. Those programs have taken a variety of forms, from direct payments to parents to credits provided on the annual tax return. Some amounts provided under some such programs were taxable, while others were not. The one constant throughout those decades is that such programs are in a continual state of change and revision, resulting in a sometimes confusing patchwork of entitlements.
