Please note: information is current as of original publication date. Contact us to find out if there have been any changes.
Newsletter January 2015
Individuals
- The Old Age Security repayment threshold has increased from $70,952 to $71,592 for 2014.
- Withdrawals from a taxpayer’s RRSP do not fall within the definition of “pension income” under S118(7)(a)(ii). This definition requires that the payments be an annuity. RRSP withdrawals at the taxpayers discretion are not annuity payments and do not qualify for the federal pension credit.
- Income earned from a Trust is considered income from property for income tax purposes even though considered self-employment income for CPP purposes. This means it does not contribute to WITB eligibility, RRSP room, access to child care, or other benefits of earned income.
- The recently announced Family Tax Cut applicable to the 2014 taxation year provides a new non-refundable tax credit of up to $2,000 for eligible couples with minor children (under 18 at the end of the year.) based on a net reduction of federal tax that would be realized if up to $50,000 of an individual’s taxable income was transferred to the individual’s eligible spouse or common-law partner. This would take advantage of a spouse’s lower income tax bracket.
- The Child Tax Credit will be replaced in 2015 with an enhanced Universal Child Care Benefit. A revised TD1 should be filed with your employer to reflect this change for 2015.
- Foreign Income Verification measures were revised in the 2013-2014 Federal budget resulting in changes to the Form T1135 reporting. A resident of Canada must file this form applicable for the 2013 reporting year if you hold “specified foreign property” with a cumulative cost in excess of C$100,000 at any time in the year. This applies to individuals, corporations, trusts and partnerships. This form must be filed by the income tax return due date for the particular taxation year.
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Failure to file the T1135 can attract late filing penalties of $25 per day to a maximum of $2,500 per year.
Talk to your accountant for the definition of foreign property and exceptions. - Where a couple is no longer able to live together for reasons beyond their control, such as when one partner must move to a long term care facility, for GIS purposes they may apply to be “involuntarily separated”. This may increase the amount of GIS that they can receive.
- The US Treasury Department has increased the fee to renounce US citizenship to $2,350 from $450 effective September 12, 2014.
Additional Tax Considerations
- On May 29, 2014 Bill C-462 the Disability Tax Credit Promoters Restriction Act, received Royal Assent. This bill restricts the fees that can be charged or accepted by persons who, on behalf of a person with a disability, request a Disability Tax Credit. A maximum fee will be set by regulation.
- CRA is cracking down on condo sales. Since last April the project has led to 579 income tax audits which led to penalties on more than half of those. The purpose of the audits is to identify situations where the purchase and sale of condos by a taxpayer had a business nature and were thereby subject to full rate taxation.
- Effective February 14, 2014 taxpayers can set up a Pre-Authorized Debit with CRA. You can set up a PAD through CRA’s my account service and authorize them to withdraw a pre-determined payment on a specific date directly from your bank account.
Businesses
- Effective September 1, 2014, CRA will begin to impose civil penalties and criminal sanctions for participating in the use, possession, sale or development of Electronic Suppression of Sales (Zapper) software.
- The Small Business Job Credit has been introduced to eligible businesses that pay employer EI premiums equal to or less than $15,000 in 2015 and/or 2016. The credit will be automatically administered and is expected to be worth approximately 39 cents per $100 of insurable earnings.
- Replacement property rules are discussed in a recent Technical Interpretation. The property must be acquired to replace the former property. It must be acquired by the taxpayer or a related party for the same or similar use. Where the former property was used in business the replacement property must be used to earn income from the same or similar business by the taxpayer.
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CRA announced a delay to the effective date for filing the new Corporate Form Schedule 88. This schedule requires corporations to report income earning activities from webpages or websites. The new filing due date is for tax years after December 31, 2014.
Avoid the rush. Remember to book an appointment early for your personal tax preparation services. A personal tax checklist is available on our website for your convenience.
