Category Archives: Tax Time

2015 Income tax rates

Canadian Tax Brackets 2015 | Income Tax Bracketsimages 2

  • 15% on the first $44,701 of taxable income
  • 22% on the next $44,702 of taxable income (on the portion of taxable income between $44,702 and $89,401)
  • 26%on the next $89,402 of taxable income (on the portion of taxable income between $89,402 and $138,586)
  • 29% of taxable income over $138,586
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TFSA Contribution Information for 2013

The TFSA account contribution limit is going up from $5,000 a year ago to $5,500 for 2013.

Canadians will also see certain income tax and benefit amounts increase two per cent for inflation.

The federal tax bracket thresholds will all increase by two per cent, with the top bracket of 29 per cent not kicking in until taxable income of $135,054 for 2013, up from $132,406 for 2012.

Amounts for several non-refundable tax credits also increase, including the basic personal amount which will stand at $11,038, up from $10,822.

In Alberta, seniors and those who live with them will also be able to take full advantage of the Healthy Homes Renovation Tax Credit that allows people to claim up to $10,000 worth of eligible home improvements that was announced late in 2012.

“Unless someone had a renovation that they were planning to do, they weren’t going to squeeze that in,” Safar said of the measure which could save you up to $1,500.

RESP Contribution Limit | Maximum RESP Contribution | RESP Rules

RESP (Registered Education Savings Plan) Contribution Limit | Maximum RESP Contribution

RESP (Registered Education Savings Plan) Canada is a savings plan that is registered by the Government of Canada to allow savings for a child’s education to grows tax-free until the child is ready for his/her post-secondary education.The child named in an RESP is known as a beneficiary. Unlike RRSPs (Registered Retirement Savings Plans), the contribution for RESP Canada is not tax deductible.

RRSP Deadline 2015 for 2014 RRSP Contribution

RRSP Deadline 2015 for 2014 Tax Year: March 01, 2015

Your RRSP deadline for contributing to your RRSP for the 2014 tax year has to be before March 01, 2015.

You may contribute to your RRSP until December 31 of the year in which you reach age 71. The following limits and deadlines apply annually.

Maximum Annual RRSP Contribution Limits

Year Contribution limit
2011 $22,450
2012 $22,970
2013 $23,820
2014 $24,270
2015 $24,930

Your allowable RRSP contribution for the current year is the lower of:

  • 18% of your earned income from the previous year, or
  • The maximum annual contribution limit for the taxation year, or
  • The remaining limit after any company sponsored pension plan contributions.

Earned income includes salary or wages, alimony received, and rental income, among other income sources, but does not include items such as investment income.

Company Pension Plan or Deferred Profit Sharing Plan – As a member of a company–sponsored registered pension plan or deferred profit sharing plan, the amount that you can contribute to your RRSP must be reduced by the total value of the pension credits you earned for the year.

This amount is referred to as a pension adjustment (PA) and it is reported on the T4 slip (Statement of Remuneration Paid) that you receive from your employer.

Annual Contribution Deadline – To be eligible for an RRSP deduction in a specific taxation year, you can make contributions anytime during the year, or up to 60 days into the following year.

Income Tax Rates for the Year 2014

Federal personal income tax rates below for 2015

  • 15% on the first $44,701 of taxable income, +
  • 22% on the next $44,700 of taxable income (on the portion of taxable income over $44,701 up to $89,401), +
  • 26% on the next $49,185 of taxable income (on the portion of taxable income over $89,401 up to $138,586), +
  • 29% of taxable income over $138,586.

Provincial personal income tax rates below for 2014

Tax for all provinces (except Quebec) and territories is calculated the same way as federal tax.

Form 428 is used to calculate this provincial or territorial tax. Provincial or territorial specific non-refundable tax credits are also calculated on Form 428.

Alberta 10% of taxable income

CRA Requirements for Invoices

The CRA’s requirements for invoices depend on the total sale amount.

For sales Under $30, there are 3 pieces of information:
– The name of the business
– The invoice date
– The total amount paid

For sales Between $30 and $149.99, include the above 3 points, plus:
– The total amount of HST/GST charged on the sale
– If the sale has items taxed at different rates, you must show the break-down of the amount of tax at each rate
– The business number of the business issuing the invoice

For sales Over $150, all points above must be included, plus:
– A brief description of the goods or services
– Terms of payment

Common Tax Questions

Well…now that tax season has come and gone, I wanted to share with you some of the most common questions I have received over the past season…

Question 1) – I owe money and my spouse (partner) is getting a refund. Will the CRA just send the difference?

Answer – No, they will not net the amount. The personal tax returns reflect your personal status at December 31st of the prior year. Whether you indicated that you were married or living common-law, the CRA treats your returns individually.

Question 2) – I forgot to include some donation receipts in my 2010 return. Can I use them in my 2011 return?

Answer – Yes you can. You are allowed to claim those donations made in the previous four tax years that have not already been claimed.

Question 3) – I made more money than my spouse (partner). Why can’t I claim the child care expense? It would be more beneficial.

Answer – The lower income earner must always claim the child care expenses, with the following exceptions;

  • The      spouse (partner) was a student in attendance at a designated educational      institution or      secondary school, and enrolled in a full-time or part-time program.
  • The      spouse (partner) was certified by a medical doctor to be incapable of      caring for children. There are a number of criteria that pertain to this      and you should consult with the CRA to determine your qualification.
  • The      spouse (partner) was confined to a prison or similar institution      throughout a period of not less than two weeks in the year.
  • You were      living separate and apart from your spouse (partner) at the end of the      year and for a period of at least 90 days in the beginning of that year      because of a breakdown in the marriage or common-law partnership. Again      there are additional criteria and the specific situation should be      discussed with the CRA for eligibility.

Question 4) – For our family, do we each claim our medical expenses separately?

Answer – No, to get the most of the medical credit, it is better to combine the eligible family medical expenses and have the parent with the lower net income claim the total amount. The lower net income is determined by looking at line 236 (net income), on the personal tax returns. The medical amount eligible for the credit becomes effective when the amount exceeds 3% of your net income, or if the medical expenses exceed $2,052.

Question 5) – Since I owe so much tax, will I now have to make installments?

Answer – Possibly, if the net tax owing for 2012 is more than $3,000 and in either 2011 or 2010 you will be required to make installments. For more information on tax installments, click here. This installment guideline also pertains to HST for annual filers.

If you have unanswered questions concerning your Canadian 2011 tax return (or prior years), I would be happy to try and answer them for you, just connect with me here on the blog, or via the information on my Contact Us page.

Tax Tips from Revenue Canada

Tax Tip: Top 10 ways to reduce your tax bill

Did you know…There are a number of ways to reduce the amount of tax you owe and keep more money in your pocket at tax time. The Canada Revenue Agency (CRA) can help you learn more about the various credits and deductions that you may be entitled to and that can save you money when you file your 2011 income tax and benefit return.

Important facts

For individuals:

1. Plan ahead – Register for My Account, gather your receipts and NETFILE access code, and sign up for direct deposit before April 30. Submitting your income tax and benefit return before the tax-filing deadline means you can avoid having to pay late-filing penalties.

2. Families – Save those receipts! All the activities you have been paying for throughout the year (piano, karate, tutoring, hockey, and more) may save you money at tax time.

3. Tax-free savings account – A tax-free savings account (TFSA) is one great way to save money since you don’t pay tax on any income you earn from investments in your TFSA.

4. Registered retirement savings plan – Any income that you earn in a registered retirement savings plan (RRSP) is exempt from tax, as long as the funds stay in the plan. RRSPs help you save for your retirement and give you a break at tax time too.

5. Public transit tax credit – If you or someone in your family is a regular user of public transit, then you may be able to claim a non-refundable tax credit based on the cost of eligible transit passes.

6. Pension income splitting – If you receive income from a pension, you can split up to 50% of eligible pension income with your spouse or common-law partner to reduce the taxes that you pay.

7. Students – Are you still in school? Students can claim the tuition, education, and textbook amounts. Have you graduated recently? You may be eligible to claim the interest that you paid on your student loans.

8. Child care expenses – If you have children, you may be able to claim child care expenses that you or your spouse or common-law partner paid so that either of you could work, do research, or go to school.

9. Home buyer’s tax credit – If you’re a first-time home buyer you may be eligible to claim $5,000 on the purchase of your new home, which can save you up to $750.

For people who are self-employed:

10. Hiring an apprentice – Did your business employ an apprentice? A salary paid to an employee registered in a prescribed trade in the first two years of his or her apprenticeship contract qualifies for a non-refundable tax credit for the employer.

For the full post please visit the CRA web site.

Tax Free Savings Account

Starting January 1, 2009, Canadians who are 18 years or older can start contributing to a Tax Free Savings Account (TFSA). It is tax free because the interest that you gain on your savings is not subject to tax. You can make withdrawals at anytime for any purpose. Also any unused contribution from the previous year can be carried forward to the current year. The maximum contribution limit for 2012 is $5,000. The TFSA will not have any impact on your RRSP limit.

Tax Time is fast approaching

Personal tax returns are due to be filed by April 30th every year, we all know that, right? What you may not know is that, if you have self-employment income during the tax year (if you run your own small business for example), you AND your spouse don’t have to file your tax returns until June 15th. Pretty awesome, right? An extra month and a half to get your taxes in!

Here’s the funny part…. you don’t have to FILE your tax returns until June 15th, but if you have a balance owing for the tax year, you still have to PAY your taxes by April 30th.

Huh?

Seriously, yup…most people I know need to have their taxes prepared before they know whether they have a refund or a balance owing. It’s not something you can just rattle off on a calculator, and if you’re going to do your taxes before April 30th, you might as well file them too!

So before you go ahead and wait until June to file your tax return, you better make darn sure that you have a refund coming. Because if you don’t, you’ll be paying interest on the balance that you owe for every day after April 30th that you don’t pay.

The moral of my story?: Why wait? The sooner you get your taxes done, the better.

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