Moments ago, the Prime Minister provided an update on the federal government’s response to the COVID-19 outbreak.
Prime Minister Trudeau informed Canadians that he and President Trump have decided to temporarily restrict all non-essential travel over the border. Travelers will no longer be able to cross for recreation and tourism. However, essential travel will continue to ensure supply chains are protected, and that people who must travel for other urgent reasons will not be impacted.
The Prime Minister also announced $82 billion in additional support measures. This includes $27 billion in direct support to workers and businesses, and $55 billion to meet liquidity needs of businesses and households to stabilize the economy through tax deferrals.
For people and business:
For those who’ve filed taxes and have money owed, they will have until August 2020 to pay.
Additional mesures for businesses:
Tax season is fast approaching. Do you have your ducks in a row? To be more specific, do you have records of stock investments – or re-investments that you made years ago? Many Canadian investors have the same problem: they’ve lost trading records and now can’t figure out their adjusted cost base (ACB), which makes it very hard to accurately calculate capital gains for tax purposes. However, it is not a good idea to “guesstiimate” it because the Canadian Revenue Agency requires you to justify it, and, if you can’t, they may reassess your return and could charge you interest or penalties.
You are required to maintain records to establish your tax liability. If you no longer have them, a good starting point is to get information from the financial institutions with whom you invested. For example, discount brokers make transaction records available for free on their websites. But, beware. Their records may only go back a few years. For older records, you may end up paying a research fee ranging from $40 to $200, one discount broker stated. If you have the original stock purchase records, but can’t document later dividend re-investments, Weinstein advises, you can establish the ACB as equal to the value of your original purchase. Weinstein recommends that this approach is better than claiming an ACB of zero. Another option is to gather the data you have and create a spreadsheet to figure out the how the money was reinvested when your shares were in a specific plan. The best option is to keep transaction records so you won’t be stressed out next tax season, Heinzl advises.
“As tempting as it might be to “fudge the numbers” and come up with a guesstimate of the ACB, this is not recommended.“
If you need to pay for childcare in order to work or go to school, you can deduct what you pay for child care provided you meet certain conditions. Deductions can range from $5,000-11,000 per child and must be claimed by the parent with the lower income earned in the past year and is limited to two thirds of the lower-income spouse’s “earned income.”
Key Takeaways:
“If you spend money on child care to enable you to work, carry on a business, or to attend school, you may be able to get a tax deduction on your return for the cost of child-care expenses.”
If you are unsure about how certain tax with holdings may work for your work situation, asking the CRA directly may not be your best option. A recent case involving a truck driver who was told incorrectly that he did not have to pay and HST taxes by a CRA agent. When the case went to court, the judge decided against the driver. Although the courts do not allow relief from taxes owed in cases like this, tax payers can seek to have any penalties and interest waved in these situations.
“While it may be shocking and perhaps even unfair to taxpayers that the CRA can provide incorrect tax advice to taxpayers and then reassess them later for having acted on said advice to their detriment, the tax court’s reasons for refusing to grant relief in this case is obvious. The CRA gets tax law wrong all too often.”
Read more: http://www.canadian-accountant.com/content/practice/why-taxpayers-cannot-rely-on-advice-from-the-cra
Many people have been able to finally get through the phone lines to Canada’s Revenue Agency, however, the wait times are very lengthy. Once they get the chance to speak to an agent, many callers do not even get the correct information they need and so means they likely have to go through the long wait again to make another call and get things straightened out. Another system created to help still needs major upgrades and workers who are more informed and experienced to handle calls quickly and effectively.
“While more are getting through to an agent, the wait time are longer.”
Take the time to hire a reputable tax pro and review their work carefully to help ease your worries this tax season. Be careful to select the most qualified tax professional for your own particular situation. Unfortunately, there are some advertised providers who may be out to scam you. Some ways to find the best provider for you is to ask friends and relatives who they recommend, search professional directories and look at national CPA organizations. It is a good idea to be thorough and interview a number of people before you make your final decision.
Key Takeaways:
“C.P.A.s and accountants tend to focus on particular niches or specialties, such as small-business owners, high-net-worth individuals, or clients who work in certain industries. If you have specific needs — maybe you own a small business or rental property, or you hold foreign investments — you should work with someone who specializes in working with clients like you.”
For many, the thought of a tax audit is quite stressful, and when an audit does happen it’s often because the tax agency had questions about a return that needed answers. Deductions, such as for expenses for jobs or changing residences, are a key source of these types of questions; though they’re not the only reason for an audit. Issues with donations listed on a return, as well as educational credits or business deductions can often lead to questions. To be more assured about your return, make certain what you claim on it is fully and clearly supported by the tax regulations.
“The fact is, employees are not allowed many deductions, so it shouldn’t be surprising that the taxman focuses time here.”
Canadian tax filers will see the newly redesigned tax form for the 2019 tax year. The Personal Income Tax form, the T1, has been revised significantly by the Canada Revenue Agency. Instructions and questions have been altered to use more straightforward wording and language, pages have been added to accommodate the worksheet used for figuring your federal tax, and the overall form has been brought up to modern standards. The filing deadline for 2019 tax returns is April 30, 2020, so be sure to take a look at the new T1 before you complete and file it.
“As the Canada Revenue Agency put it, “Your income tax package has a new look.” No kidding! Some of the changes include the use of plain language, where possible, an increased font size and more white space.”
Capital gains sales carry tax implications, and the calculation be tricky if you’ve used your home as both a primary residence and a rental property. The catch to exclude the time it was your home from your capital gains calculation is that there’s paperwork involved. Typically, you need to document the original cost, as well as the current sale price, of the house. The difference between these would be the capital gains if the asset, the house, has appreciated. Since it was also your primary residence, you can deduct this and this will help you determine if, or how much of the house sale can be excluded from capital gains tax.
Key Takeaways:
“The tricky part of this exercise is determining the 2016 Fair Market Value (FMV) of your house. You could look at what similar houses were selling for in your neighbourhood, or look at the yearly assessed value for property taxes.”
While taxes are due by April 30th, every year some of the regulations that apply to taxes change, and this year is no exception. Be aware of the deadline for RRSP filing has been bumped to March 2nd; missing it means missing out on using it for your 2019 return. Early filers can begin submitting returns on the February 24th, if you have all your documents. And be sure you’ve reviewed new deductions that are available, such as the Climate Action Incentive available to those filing in Alberta.
“As usual, April 30 is the date most Canadians need to keep in mind. For the majority of tax filers, this is the deadline to both pay any tax due and file returns.”
Read more: https://globalnews.ca/news/6403709/canada-2020-tax-deadline/