For high-net-worth families at the helm of family-owned enterprises, retirement planning is a multifaceted challenge…
As we move through governments and changes in the economy, legislator continually change the tax rules. At Shajani LLP Chartered Professional Accountants, we keep up with these changes. There are a number of changes to the 2020 personal tax filing that you should be aware of. Here is a summary of a few of these.
The sale of your principle residence must now be reported on your personal tax return, along with any principle residence designation. If you have sold your principal residence, changed the use of your principal residence to a rental property or had it deemed disposed of during the year, this must be reported on your personal tax filings to maintain the tax free status of the property. Late filing penalties apply at $100 per month to a maximum of $8,000.
Property in BC
In 2018 BC has introduced a speculation and vacancy tax (SVT), designed to tax foreign and domestic speculators, satellite families who live in BC, and homeowners of vacant property in designated centres. In 2018 the SVT is 0.5% of the impacted property’s assessed value. From 2019 onwards the rate is as follows:
- 2% for foreign investors and satellite families; and
- 5% for BC and other Canadian citizens or permanent residents who are not members of a satellite family.
A satellite family is an individual or spousal unit where the majority of their total worldwide income for the year is not reported on a Canadian tax return.
Property owners are required to register online and file a declaration to claim an exemption or pay the SVT.
Definition of “taxi business”
The definition of “taxi business” has been amended to require providers of ride-sharing services to register for GST/HST and charge this in the same manner as taxi operators. This income should be accounted for in your tax filings.
CRA reminded those involved in the sharing economy (such as Airbnb) to ensure they comply with relevant income tax and GST reporting requirements.
Taxable Benefits and Allowances
CRA clarified that most employee discounts are non-taxable benefits as long as the employee pays at minimum the employer’s cost.
Medical Includes Animal Support
The medical expense credit has been extended to recognize expenses incurred in respect of an animal specially trained to perform tasks for a patient with sever mental impairment.
Tuition Tax Credit
The tuition tax credit has been extended to fees paid for occupational skills courses at post-secondary institutions and taking into account such courses in determining whether an individual is a qualifying student under the Income Tax Act.
News Services Credit
As an incentive to subscribe to Canadian news services, there is a 15% personal tax credit for qualifying subscribers of eligible digital news services.
Canada Caregiver Amount
This credit is available to anyone who cares for an infirm family member. This includes supporting your spouse with a physical or mental impairment.
Tax on spit income (TOSI) will be felt at the individual levels. Dividends received from Canadian Controlled Private Corporations amongst family members need to be tested to see if they are subject to the new TOSI rules. This punitive rule could see those dividends taxes at the highest marginal tax rates.
Passive Income Rules
New passive income rules may affect access to your Canadian Controlled Private Corporation’s small business deduction. If your corporation is affected and pays the higher corporate tax rate, ensure you receive the consequential adjustment to the dividend gross-up factor and dividend tax credit to lower your personal tax burden.
Flow Through Shares
The mineral exploration tax credit has been extended for one year. This includes deductions for investments in flow-through shares.
The following deduction and tax credits are no longer available:
- Education and textbook credits
- Public transit credit
- Deduction for eligible home relocation loans
- Children’s arts and tax credits
- Tax exemptions of allowances for members of legislative assemblies and municipal officers
The tax filing process also provides an occasion to strategize for tax planning opportunities in 2019. Shajani LLP Chartered Professional Accountants have a team of Calgary Accountants, Edmonton Accountants and Red Deer Accountants ready to assist you in your personal tax filings and tax planning strategy.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2021 Shajani LLP.
Shajani LLP is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning services.