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2015 Income tax rates
Canadian Tax Brackets 2015 | Income Tax Brackets
- 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
Are you making the most of your TFSA?
On January 1, 2015,
Canadian residents age 18 and over received a new year’s gift from the federal government: $5,500 in additional Tax‑Free Savings Account (TFSA) contribution room. Haven’t opened a TFSA yet? If you were a Canadian resident 18 or older when the program was launched in 2009 and have never contributed, you now have a cumulative total of $36,500 in contribution room. Couples where both are eligible would have $73,000 between them.
TFSAs can play an important role in many families’ financial planning. These flexible accounts, appropriate for many different saving goals, offer tax‑free investment growth and tax‑free withdrawals. If you withdraw, you can recontribute the same amount in the following calendar year. TFSAs also offer an opportunity for income splitting (either spouse or partner can contribute) and estate planning.
Yet many eligible Canadians don’t have a TFSA, many of those who do haven’t maximized their contributions, and TFSA assets are often in cash rather than in an appropriately diversified portfolio. In other words, many of us are not making the most of our TFSAs. Are you? If not, here are five tips to help you catch up.
1. Contribute your tax refund
If you’re expecting a tax refund this year, consider depositing this “found money” directly into your TFSA. If you get the average refund of around $1,600¹, your TFSA contribution could grow to $2,865 over 10 years at an annually compounded rate of return of 6%.
2. Make an in-kind contribution
You don’t necessarily have to find extra money in your budget or cash out investments to make a TFSA contribution. Instead, you can make an in-kind contribution of a qualified investment from a non-registered account. Your contribution amount will be the fair market value of your investment.
If you’re contributing an asset that has increased in value, however, caution is advised. The transfer may trigger a taxable capital gain, or a capital loss that could not be claimed.
3. Set up regular contributions
One of the most effective ways to maximize your TFSA contributions every year is to set up regular contributions. It’s often easier to plan to make weekly contributions of just over $105 or monthly contributions of just over $450 than annual contributions of $5,500 — and the money you contribute earlier in the year can benefit from more time growing tax‑free.
4. Maximize tax‑free growth
As with any other account, how you invest your TFSA funds can make a big difference to your savings down the road. Many Canadians are very conservative in their TFSAs, favouring high-interest savings accounts and guaranteed investment certificates. That may be appropriate if your goals for your TFSA money are short term. If you have more time before you plan to access your TFSA savings, investments with higher potential rates of return can help you take greater advantage of tax‑free growth.
5. Talk to your Financial Advisor
Whether you’re building a contingency fund, saving for short- to medium-term goals, or supplementing longer-term savings in a Registered Retirement Savings Plan (RRSP) or Registered Education Savings Plan (RESP), your TFSA is an excellent, flexible way to help you reach your goals. Talk to your CIBC Financial Advisor about how to make the most of your TFSA.
TFSA snapshot
Here is a quick look at what other Canadians were doing with their Tax‑Free Savings Accounts as of 2012.
| How many Canadians had a TFSA? | 9,596,830 |
| How many Canadians contributed? | 6,174,590 |
| How many Canadians maximized their contribution? | 2,254,030 |
| What was the average contribution? | $5,425.98 |
| What was the average unused contribution room? | $9,969.19 |
| What was the average fair market value? | $9,117.88 |
BUSINESS EXPENSES THAT CAN BE USED
BUSINESS EXPENSES THAT CAN BE USED
- Advertising
- Bad Debts
- Benefit Plan
- Business taxes, fees, licenses, dues, memberships and subscriptions
- Delivery and freight
- Insurance
- Interest
- Maintenance and repairs
- Management and administration fees
- Meals and entertainment (when entertaining a client)
- Motor vehicle expenses
- Office supplies & expenses
- Legal, accounting and other professional fees
- Property taxes
- Rent
- Salaries, wages and benefits
- Travel
- Telephone & utilities
If you do not have an office in another location, you can write off a portion of your home expenses. We will require the total square footage of your home and the square footage used for business purposes.
- Heat
- Electricity
- Insurance
- Maintenance
- Mortgage interest (can be obtained from your bank)
- Property taxes
Capital cost items:
These are items such as furniture and computers purchased to run your business; only a percentage of captial cost allowance is used each year as an expense to your company.
Vehicle Expenses:
If you are a limited or incorporated company and you drive your personal vehicle for business purposes, keep a log of all kilometers driven for business and a calculation can be done monthly or yearly to recapture the amount as an expense. Currently the Government allows .53 cents for the first 5000 kilometers and .47 cents for every kilometer after that; however, if you use your vehicle solely for business purposes (you have another vehicle for personal use), you are able to write the entire vehicle off.
REMINDERS
REMINDERS
1. RRSP deadline – March 1, 2015
2. Personal Taxes Due – April 30, 2015
3. Quarterly GST filers – due 30 days after quarter cut-off
4. Payroll – source deductions due the 15th of the following month deductions are withheld from employees
5. T2 Corporation Taxes – due no later than six months after your year-end
6. Make sure to take your odometer reading at year-end for taxes
Bookkeeping Rates & Fees
MONTHLY BOOKKEEPING RATES & FEES
BASIC PACKAGE $150.00 per month*
This package is great for the Consultant / Sole Proprietor working with a maximum of five clients in a year.
INCLUDES:
- Sorting and filing of your receipts
- Data entry of all your income and expenses
- GST remittance as per required
BRONZE PACKAGE $250.00 per month*
This package is great for the Small business consisting of one person / partnership with a maximum of five employees and/or subcontractors.
INCLUDES:
- Sorting and filing of your receipts if required
- Reconciliation of one bank statement and one credit card statement
- GST remittance as per required
- Compile year-end financial statements
- Year-end Preparation for Accountant
- **Payroll (see services below)**
SILVER PACKAGE (most popular) $450.00 per month*
This package is great for the medium sized business with five or more employees. (approx. 8-10 hours)
INCLUDES:
- Sorting and filing of your receipts if required
- Reconciliation of one or more bank and credit card statements
- Posting all cash receipts pertaining to your business
- Reconciliation of payables and receivables
- GST Remittances as per required
- Compile year-end financial statements
- Year-end preparation for Accountant
- **Payroll (see services below)**
GOLD PACKAGE $750.00 per month*
(approx. 10+ hours per month)
This package is great for the larger sized businesses looking to out-source all bookkeeping needs including payables & receivables
INCLUDES:
- Sorting and filing of your receipts
- Reconciliation of all bank and credit card statements (no limit)
- Posting all cash receipts pertaining to your business
- Maintanance of payables and receivables (including paying vendors)
- Job Costing and/or Class Coding
- GST Remittances as per required
- Compile year-end financial statements
- Year-end preparation for Accountant
- **Payroll (see services below)**
**PAYROLL SERVICES INCLUDE**
- Run payroll (weekly, bi-weekly, semi-monthly, monthly)
- Email paystubs to your office
- Email Source Deductions to your office due the 15th of the following month
- Process t4’s and T4A’s at calendar year-end, mail to employees and submit to Government
- Process ROE’s as required
PAYROLL SERVICES & FEES (only)
- For 1st 10 employees $100.00 per month
- Each additional 10 employees $25.00 per month
- Setup Fee in Accounting Program (if required) $100.00 one time
ADDITIONAL PAYROLL SERVICES
- Printing computer generated payroll cheques $25.00 per month
- Direct Deposit $25.00 per month
OTHER SERVICES
- Personal Tax Returns (1-5 T-slips) $25.00 starting
- Personal Tax Returns (small side business) $50.00 starting
- Corporate Tax Returns (Basic Corp Business) $250.00 starting
- Courier Services; Pickup & Delivery $30.00 per month
- Commissioner for Oaths $25.00
- Annual or Incremental $48.00 hourly
- Quarterly Bookkeeping $250.00 (5 hours)
- Administrative Services (incl. sorting & filing) $25.00 per hour
- Setup Fee of your books (if required) $200.00 one time
*NOTE: PRICES MAY VARY DEPENDING ON VOLUME AND COMPLEXITY OF BOOKKEEPING.
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
Tracking your Mileage
Track Your Mileage
During the course of a year, many of us will use our own vehicle for business purposes. But what exactly makes up the total expense we can claim on our taxes?
You can claim the full amount of:
- Parking fees, and
- Supplementary business insurance on your vehicle
And you can claim the business use of:
- Licence and registration fees,
- Fuel and oil costs,
- Insurance,
- Maintenance costs,
- Interest on money borrowed to buy a vehicle, and
- Leasing costs
Now this is where it is very important to track your mileage. Since only the amounts of business use can be claimed for the second list, you need to know how many kilometers of your total number of kilometers in the year are for business use.
Luckily, there are easy ways of tracking this!
For those who are tech savvy, there are apps you can download to your mobile device that will use GPS and track the distance you travel. Milebug is an app that I use on my iPhone.
There are also log books you can keep in your vehicle to record your business mileage.
Links
Canada Revenue Agency http://www.cra-arc.gc.ca/menu-e.html
Intuit Canada (Quickbooks) http://quickbooks.intuit.com/product/accounting-software/small-business-financial-software.jsp?lid=site_header
Simply Accounting http://www.simplyaccounting.com/
Government of Canada http://canada.gc.ca/home.html
Canada Revenue Agency http://www.cra-arc.gc.ca/menu-e.html
Intuit Canada (Quickbooks) http://quickbooks.intuit.com/product/accounting-software/small-business-financial-software.jsp?lid=site_header
Simply Accounting http://www.simplyaccounting.com/
Government of Canada http://canada.gc.ca/home.html
Government Employment Standards http://employment.alberta.ca/cps/rde/xchg/hre/hs.xsl/1224.html
Alberta Finance Department http://www.finance.gov.ab.ca/index.html
Better Business Bureau http://calgary.bbb.org/WWWRoot/SitePage.aspx?site=154&id=bf480c10-b69a-4911-a348-b010d851af85
Bank of Canada http://www.bankofcanada.ca/
Canadian Department of Finance http://www.fin.gc.ca/
Need a domain www.godaddy.com
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.
ALL-PRO Bookkeeping - BITS n BITES 