Tax News

Tax News Updates

Legislative changes are an ongoing process and it is very important to be aware of any news or changes which might affect your financial well being.

Changes in the economy have a large influence on the taxes we pay, the tax credits and income tax deductions we get and on our spending habits. Government budgets create new opportunities to save on taxes.

Tax News for the 2010 tax year

New changes this year present tax planning opportunities for single parents, students, self-employed individuals, seniors, and investors. The benefits of lower provincial taxes by Ontarians will be felt primarily by lower income earners.

Lower Ontario Tax rates.

The tax rate at the lowest tax threshold has been reduced to 5.05%, from 6.05% and the surtax threshold levels have changed. Lower levels also apply to the donations and gifts tax credit

Universal Child care benefits (UCCB)

A single parent now has the option of including the UCCB amounts in her/his income or as income for the dependent. By declaring the UCCB as dependent income, the individual's net income and taxable income will decrease, resulting in a lower tax bill. It is a good idea to set up a separate bank account, in the dependent’s name, to receive the payments.

Special relief for tax deferral elections on securities options

This includes employee stock option programs and allows the employee to defer paying taxes on securities which they didn’t exercise.

Scholarship program

A scholarship exemption is awarded for post secondary programs which deal mainly with research and which lead to a degree or diploma.

Employment Insurance premiums for the self-employed

For the first time self employed individuals have the opportunity to contribute to the employment insurance program. The taxpayer must indicate their willingness to join the program and must earn more than a minimum amount to be eligible

Medical Expenses

Beginning this year medical expenses for cosmetic surgery will be restricted to only those that are required for medical or reconstructive purposes. This applies to all procedures and related expenses incurred after March 4, 2010

Investment tax credit

Eligibility for the mineral exploration tax credit has been extended to flow through shares agreements entered into before April 1, 2011

Ontario Property and Sales Tax Credit

This credit has been replaced by two separate credits: the Ontario Sales tax credit which is issued in four installments and the new Ontario Energy and Property Tax Credit. A new Form ON-BEN, which includes the Application for the 2011 Ontario Senior Home owner Property tax Grant, the 2011 Ontario Energy and Property Tax credit and the Northern Ontario Energy Credit, must be submitted with your tax return

New Ontario Children’s Activity Tax Credits

are based on fees that relate to the cost of enrolling in qualifying extracurricular programs. This is a refundable tax credit.

Tax News for 2009 season

For the 2009 tax season, the tax news is generally positive and should lead to more savings for the average tax payer. Some of the more positive developments in the news are....

Personal and spousal amounts will increase for the 2009 tax year

Home Buyer's Plan. Allowable amounts have been increased to $25,000 from $20,000 dollars for RRSP withdrawals used to purchase a home, by first time buyers.

This is the first full year for the TFSA. In order to qualify to contribute, a tax return must be filed. Uncontributed amounts from last year can be made this year, in addition to this year's contribution.

Also in the news, new initiatives will allow self employed people and sole proprietors to be eligible for Employment Insurance starting in 2010. If the agreement is entered into before April 30,2010 a person could be eligible to apply as early as January,2011. After April it will be on a calendar basis.

**There are a few more caveats of which one should be aware, before making this move, but overall this could prove to be very useful for the small business owner or self-employed person.

The Home Renovation Tax Credit is proposed to end in February 2010. Although there is some tax news suggesting that it will be extended, it is prudent to get as much as possible done and paid for, by the deadline.

The tax news for small business owners brings an increased small business deduction.

Tax News for 2008 season

For 2008 both individuals and small businesses should experience some savings in their income taxes. Some of the measures came into effect during the year, while others will be phased in over several years.

In January, 2009 Canadian eligible residents will be able to open a tax free savings account (TFSA) which will allow funds to accumulate tax free and also allow tax free withdrawals. The contributions to a TFSA are not tax deductible

TFSA

Most personal amounts will see small increases for the 2008 tax year. The CPI for 2008 is 1.9%.

The basic personal amounts spousal or partner amount and the eligible dependent amount will remain at $9600.

The basic amounts along with government incomes like the CPP and the Old age amounts are currently indexed

Personal Tax Rates

Federal Rates for 2008

15% for $37,885 or less
22% on next $37,884 up to $75,769
26% on next $47,415 up to $123,184
29% income in excess of $123,184

Increase in Personal amounts

Personal amounts,tax brackets and income which reduces personal amounts for certain dependents are indexed to the Consumer Price Index. The Consumer Price Index is influenced by our spending. Any increases in personal amounts will fluctuate with these changing rates.

Canada Employment Credit

Effective July 1, 2006 Canadians will get a tax credit of up to $500.00 on employment income. This will double to $1000 as of January 1 2007

Universal Child Care Benefit

The Universal Child care Benefit (UCCB) is a new taxable benefit paid monthly to help eligible families provide child care for children less than 6 years of age. The UCCB will pay families $100.00 each month for each child under six years of age. The payment will be paid separately from the Child tax credit and will not affect federal income-tested benefits.

Child Fitness tax credit

Families will receive a child fitness tax credit for up to $500.00 in eligible fees for physical fitness programs for each child under age 16

The maximum annual Child Disability Benefit has been increased from $2044 to $2300. Middle and high income families caring for children who are eligible for the disability tax credit are also eligible.

In addition, the maximum amount of the refundable medical expense supplement has been increased from $767 to $1000.00

Canada Child Tax credits

Charitable donations

Publicly listed securities which are donated to public charities are exempt from the capital gains tax, effective immediately. Also exempted are donations of ecologically sensitive land under the Ecogift program.

For tax news on Strategic Philanthropy and how it can help you to maximize your tax credits. Just click here.

Tax News and Charitable Donations

Life income funds (LIF)

For federally-regulated LIFs:

All individuals facing financial hardship (low income , high disability or medical-related costs) will be able to unlock up to $22,450.

Individuals 55 or over with LIF holdings of up to $22,450 will be able to wind up their accounts with the option to convert to a tax-deferred savings vehicle.

Individuals 55 or older will be entitled to convert up to 50% of LIF holdings into a tax-deferred savings vehicle with no maximum withdrawal limits. This is on a one time basis.

The threshold of $22,450 will increase with the average industrial wage.

Medical Expenses

The Federal 2008 Budget has clarified its position on the non-eligibility of non-prescription medications for the medical expense tax credit. This will apply to all medications purchased after February 26, 2008. The changes to the Income Tax Act now makes it clear that only prescription drugs will be considered eligible medical expenses.

There are proposals to expand the eligible medical expenses, under Health related Measures proposed in the Federal Budget

GST/HST will no longer be payable on costs of training to help individuals cope with disabilities or disorders, such as autism.

The list of GST/HST-free medical and assistive devices will be expanded, to include other items, such as service dogs.

Pension income Credit

Effective 2006 the maximum amount eligible for the pension income credit has been increased to $2000

Registered Education Savings Plans

The contribution period for Registered Education Savings Plans has been increased by 10 years. They can now remain open for 35 years from 25 years. More tax news.....

RRIF Withdrawals

In an effort to protect the retired taxpayer who has to withdraw a minimum amount from her RRIF,it is proposed that the minimum annual withdrawal from a Registered Retirement Fund (RRIF) would be reduced, on a one-time basis, by 25% for 2008 withdrawals.

If a taxpayer has withdrawn more than the reduced minimum amount, the excess (up to the original minimum amount)can be contributed to an RRSP or RRIF, and deducted on the 2008 tax return. The contribution would be required to be made by the later of March 1, 2009, or 30 days after the legislation receives Royal Assent. More tax news....

Student tax credits

Students may now claim a tax credit to help offset the cost of textbooks. Again although no receipts are required you should still keep any receipts to substantiate your claim if required. A typical full-time post secondary student stands to save about $80.00 per year. These credits can be carried forward to future years along with other unused tuition amounts.

Transportation employees

Effective with their 2006 tax returns, qualifying transport employees will see an increase in the flat rate when claiming meal expenses. The new rate is up to $17 per meal up to a maximum of $51 a day. Transport employees always have the option of keeping receipts and claiming actual expenses or using the flat rate. In either case CCRA allows a deduction of 50%.

Tradespeople and Apprentices

Tradespeople who are required to buy their tools as a condition of employment can now claim a new a $500.00 deduction for costs in excess of $1000.00. The limit on the cost of tools eligible for the 100 percent capital cost allowance has been increased from $200.00 to $300.00.

Transit Tax credit

You will now be able to claim a tax credit for the amounts you have paid for public transit passes for travel that occurred after June 30, 2006. This applies even if the pass was paid for prior to July 1, 2006 as would be the case of the July pass. This is a non-refundable tax credit and applies to monthly or longer duration passes used on buses, streetcars and subways, commuter trains and local ferries.More tax news updates.....

Lower corporate taxes

Qualifying small business income will have the 12 percent tax rate reduced to 11.5 percent in 2008 and 11 percent in 2009. The amount of small business income eligible for the 12 percent tax rate will also increase from $300,000 to $400,000

As of January 1, 2006 the federal capital tax is eliminated while the corporate surtax will be eliminated by January 1, 2008. There is also a proposed reduction in the corporate income tax rate to 19 per cent from 21 percent by 2010.

The Individual Tax Payer

Glossary

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VISION AND MISSION Who we Are A Glance at Our Services Express Client Services Where to Begin? TAX CHECKLIST INDIVIDUALS BUSINESS Tax Education, Planning and Investing TAX BLUEPRINT Tax Planning Strategies Tax Resources Contact Us CRA	Tax News Tax News Updates Legislative changes are an ongoing process and it is very important to be aware of any news or changes which might affect your financial well being. Changes in the economy have a large influence on the taxes we pay, the tax credits and income tax deductions we get and on our spending habits. Government budgets create new opportunities to save on taxes. Tax News for the 2010 tax year New changes this year present tax planning opportunities for single parents, students, self-employed individuals, seniors, and investors. The benefits of lower provincial taxes by Ontarians will be felt primarily by lower income earners. Lower Ontario Tax rates. The tax rate at the lowest tax threshold has been reduced to 5.05%, from 6.05% and the surtax threshold levels have changed. Lower levels also apply to the donations and gifts tax credit Universal Child care benefits (UCCB) A single parent now has the option of including the UCCB amounts in her/his income or as income for the dependent. By declaring the UCCB as dependent income, the individual's net income and taxable income will decrease, resulting in a lower tax bill. It is a good idea to set up a separate bank account, in the dependent’s name, to receive the payments. Special relief for tax deferral elections on securities options This includes employee stock option programs and allows the employee to defer paying taxes on securities which they didn’t exercise. Scholarship program A scholarship exemption is awarded for post secondary programs which deal mainly with research and which lead to a degree or diploma. Employment Insurance premiums for the self-employed For the first time self employed individuals have the opportunity to contribute to the employment insurance program. The taxpayer must indicate their willingness to join the program and must earn more than a minimum amount to be eligible Medical Expenses Beginning this year medical expenses for cosmetic surgery will be restricted to only those that are required for medical or reconstructive purposes. This applies to all procedures and related expenses incurred after March 4, 2010 Investment tax credit Eligibility for the mineral exploration tax credit has been extended to flow through shares agreements entered into before April 1, 2011 Ontario Property and Sales Tax Credit This credit has been replaced by two separate credits: the Ontario Sales tax credit which is issued in four installments and the new Ontario Energy and Property Tax Credit. A new Form ON-BEN, which includes the Application for the 2011 Ontario Senior Home owner Property tax Grant, the 2011 Ontario Energy and Property Tax credit and the Northern Ontario Energy Credit, must be submitted with your tax return New Ontario Children’s Activity Tax Credits are based on fees that relate to the cost of enrolling in qualifying extracurricular programs. This is a refundable tax credit. Tax News for 2009 season For the 2009 tax season, the tax news is generally positive and should lead to more savings for the average tax payer. Some of the more positive developments in the news are.... Personal and spousal amounts will increase for the 2009 tax year Home Buyer's Plan. Allowable amounts have been increased to $25,000 from $20,000 dollars for RRSP withdrawals used to purchase a home, by first time buyers. This is the first full year for the TFSA. In order to qualify to contribute, a tax return must be filed. Uncontributed amounts from last year can be made this year, in addition to this year's contribution. Also in the news, new initiatives will allow self employed people and sole proprietors to be eligible for Employment Insurance starting in 2010. If the agreement is entered into before April 30,2010 a person could be eligible to apply as early as January,2011. After April it will be on a calendar basis. There are a few more caveats of which one should be aware, before making this move, but overall this could prove to be very useful for the small business owner or self-employed person. The Home Renovation Tax Credit is proposed to end in February 2010. Although there is some tax news suggesting that it will be extended, it is prudent to get as much as possible done and paid for, by the deadline. The tax news for small business owners brings an increased small business deduction. Tax News for 2008 season For 2008 both individuals and small businesses should experience some savings in their income taxes. Some of the measures came into effect during the year, while others will be phased in over several years. In January, 2009 Canadian eligible residents will be able to open a tax free savings account (TFSA) which will allow funds to accumulate tax free and also allow tax free withdrawals. The contributions to a TFSA are not tax deductible TFSA Most personal amounts will see small increases for the 2008 tax year. The CPI for 2008 is 1.9%. The basic personal amounts spousal or partner amount and the eligible dependent amount will remain at $9600. The basic amounts along with government incomes like the CPP and the Old age amounts are currently indexed Personal Tax Rates Federal Rates for 2008 15% for $37,885 or less 22% on next $37,884 up to $75,769 26% on next $47,415 up to $123,184 29% income in excess of $123,184 Increase in Personal amounts Personal amounts,tax brackets and income which reduces personal amounts for certain dependents are indexed to the Consumer Price Index. The Consumer Price Index is influenced by our spending. Any increases in personal amounts will fluctuate with these changing rates. Canada Employment Credit Effective July 1, 2006 Canadians will get a tax credit of up to $500.00 on employment income. This will double to $1000 as of January 1 2007 Universal Child Care Benefit The Universal Child care Benefit (UCCB) is a new taxable benefit paid monthly to help eligible families provide child care for children less than 6 years of age. The UCCB will pay families $100.00 each month for each child under six years of age. The payment will be paid separately from the Child tax credit and will not affect federal income-tested benefits. Child Fitness tax credit Families will receive a child fitness tax credit for up to $500.00 in eligible fees for physical fitness programs for each child under age 16 The maximum annual Child Disability Benefit has been increased from $2044 to $2300. Middle and high income families caring for children who are eligible for the disability tax credit are also eligible. In addition, the maximum amount of the refundable medical expense supplement has been increased from $767 to $1000.00 Canada Child Tax credits Charitable donations Publicly listed securities which are donated to public charities are exempt from the capital gains tax, effective immediately. Also exempted are donations of ecologically sensitive land under the Ecogift program. For tax news on Strategic Philanthropy and how it can help you to maximize your tax credits. Just click here. Tax News and Charitable Donations Life income funds (LIF) For federally-regulated LIFs: All individuals facing financial hardship (low income , high disability or medical-related costs) will be able to unlock up to $22,450. Individuals 55 or over with LIF holdings of up to $22,450 will be able to wind up their accounts with the option to convert to a tax-deferred savings vehicle. Individuals 55 or older will be entitled to convert up to 50% of LIF holdings into a tax-deferred savings vehicle with no maximum withdrawal limits. This is on a one time basis. The threshold of $22,450 will increase with the average industrial wage. Medical Expenses The Federal 2008 Budget has clarified its position on the non-eligibility of non-prescription medications for the medical expense tax credit. This will apply to all medications purchased after February 26, 2008. The changes to the Income Tax Act now makes it clear that only prescription drugs will be considered eligible medical expenses. There are proposals to expand the eligible medical expenses, under Health related Measures proposed in the Federal Budget GST/HST will no longer be payable on costs of training to help individuals cope with disabilities or disorders, such as autism. The list of GST/HST-free medical and assistive devices will be expanded, to include other items, such as service dogs. Pension income Credit Effective 2006 the maximum amount eligible for the pension income credit has been increased to $2000 Registered Education Savings Plans The contribution period for Registered Education Savings Plans has been increased by 10 years. They can now remain open for 35 years from 25 years. More tax news..... RRIF Withdrawals In an effort to protect the retired taxpayer who has to withdraw a minimum amount from her RRIF,it is proposed that the minimum annual withdrawal from a Registered Retirement Fund (RRIF) would be reduced, on a one-time basis, by 25% for 2008 withdrawals. If a taxpayer has withdrawn more than the reduced minimum amount, the excess (up to the original minimum amount)can be contributed to an RRSP or RRIF, and deducted on the 2008 tax return. The contribution would be required to be made by the later of March 1, 2009, or 30 days after the legislation receives Royal Assent. More tax news.... Student tax credits Students may now claim a tax credit to help offset the cost of textbooks. Again although no receipts are required you should still keep any receipts to substantiate your claim if required. A typical full-time post secondary student stands to save about $80.00 per year. These credits can be carried forward to future years along with other unused tuition amounts. Transportation employees Effective with their 2006 tax returns, qualifying transport employees will see an increase in the flat rate when claiming meal expenses. The new rate is up to $17 per meal up to a maximum of $51 a day. Transport employees always have the option of keeping receipts and claiming actual expenses or using the flat rate. In either case CCRA allows a deduction of 50%. Tradespeople and Apprentices Tradespeople who are required to buy their tools as a condition of employment can now claim a new a $500.00 deduction for costs in excess of $1000.00. The limit on the cost of tools eligible for the 100 percent capital cost allowance has been increased from $200.00 to $300.00. Transit Tax credit You will now be able to claim a tax credit for the amounts you have paid for public transit passes for travel that occurred after June 30, 2006. This applies even if the pass was paid for prior to July 1, 2006 as would be the case of the July pass. This is a non-refundable tax credit and applies to monthly or longer duration passes used on buses, streetcars and subways, commuter trains and local ferries.More tax news updates..... Lower corporate taxes Qualifying small business income will have the 12 percent tax rate reduced to 11.5 percent in 2008 and 11 percent in 2009. The amount of small business income eligible for the 12 percent tax rate will also increase from $300,000 to $400,000 As of January 1, 2006 the federal capital tax is eliminated while the corporate surtax will be eliminated by January 1, 2008. There is also a proposed reduction in the corporate income tax rate to 19 per cent from 21 percent by 2010. The Individual Tax Payer Glossary Return from Tax News to Home page 2006 www.baileystaxsavings-preparationservices.com All rights reserved SBI!**