Tax Tips

As a Tax professional, we always believe and make sure that we are giving you quality tax tips. We make sure that we get you more for your money and S & M Tax services will always work with you all year round.

Important Dates to Remember:

March 1, 2018, Final date for 2017 RRSP contributions
April 30 Due date for 2018 income tax return due and payment of taxes owing
June 15, 2018, Filing due date for 2017 income tax return due for self-employed individuals

What is RRSP?

A Registered Retirement Savings Plan, or RRSP, is a special type of investment account designed to help Canadians save for retirement. The main advantage of an RRSP account, as compared to a regular investment account, is the tax benefits it offers.

How much can I contribute and deduct?
Generally, the amount you can contribute to your RRSPs or your spouse or common-law partner’s RRSPs, for a given tax year without tax implications is determined by your RRSP deduction limit. This is often called your “contribution room.” There are limits on how much you can contribute each year to your own RRSPs and your spouse’s RRSPs. Your total contribution room for the year is the lower of 18% of your earned income for the previous year.

What is my RRSP deduction limit?
You can find your RRSP deduction limit by checking the amount (A) of the RRSP Deduction Limit Statement, on your latest Notice of Assessment or notice of reassessment;

Use the calculator link below to calculate how much RRSP to contribute to get more refund:
Tax refund calculator

Canada Revenue CRA & Unfilled/Overdue Canadian Taxes

What happens when you don’t file your taxes or have overdue taxes?

There is an increase in a number of people who have not filed their tax returns. It is understandable that there are many priorities in everyone lives and it is becoming increasingly difficult for the person to catch up with their filing requirements.

The CRA however, is not very sympathetic. To CRA not being in compliance with income tax act no matter what the cause, merits financial or legal punishment.

CRA will not offer any relief from CRA collection actions such as income garnishment or bank levy, until you complete and file all tax returns. So the sooner you file all your back taxes, the sooner the CRA will be willing to negotiate with you.

CRA will send you a demand to file for the current year tax return; CRA may also wait for few years and then take increased measures to make you file( lock up your bank, garnish your income, bank levy, etc). You need to keep in mind that CRA will eventually find you and if they do, you will have to face the late filing tax penalties and accumulated interests starting from the date when the tax is due.

With advances in technology, CRA has been using an enhanced database to identify people who have unfiled tax returns. If you have unfiled returns, you are automatically on the list of most wanted people for tax collection. If you can act before CRA gets to you, you have a better chance of resolving your tax problems without going through the pain of legal action. Intentionally not filing, or filing a false return, is a crime. It is critical to take action to resolve your unfiled return problems before a simple mistake becomes a crime.

To control your damage right away, we do the assessment and determine your filing obligations. Then we will quickly help you to reconstruct all the financial information and locate all your missing pieces of tax information to report your returns properly.

Contact us today and we will help to get you maximum return by taking advantage of all eligible tax credits and benefits at an affordable price.

What Expenses can I deduct if I am renting my property?

If you rent out one or more rooms in your home, or if you own a rental property, there are many expenses that can be deducted in calculating your net rental income. These expenses include mortgage interest (but not principal), property taxes, utility costs, house insurance, maintenance costs, advertising, and property management fees.

What is first-time Homebuyer Credit?

First time home buyers who acquire a qualifying home during the year you may be entitled to claim a federal non-refundable tax credit up to $5000 and worth $750 (5000×15%). To qualify, neither the individual nor his or her spouse or common-law partner can have owned and lived in another home in the calendar year of the new home purchase or in any of the four preceding calendar year. The credit can be claimed by either the purchaser or spouse or common law.

What is First-time Charitable donor credit?

A first time donor is entitled to a one-time 40% federal credit for money donation of $200 or less, and a 54% federal credit for donations between $200 and $1000. This credit may be claimed once in the first-time donor’s 2013-2017 taxation years.

The maximum amount of donations that may be claimed in a year is 75% of net income. Donations can be carried forward for Five years if they are not claimed in the year made.

What is DTC (Disability Tax Credit) and who qualify for it?

The disability tax credit (DTC) is a non-refundable tax credit used to reduce income tax payable on the income tax and benefit return. A person with a severe and prolonged impairment in physical or mental functions may claim the disability amount once they are eligible for the DTC.
Currently, the disability tax credit is non-refundable, meaning that it’s worth nothing to you if you don’t earn enough to owe tax. And while it may be possible to transfer all or part of the tax credit that can’t be used to one’s spouse, common-law partner or another supporting person.
The requirements to be eligible for the disabled tax credit are laid out in the T-2201 DTC certificate application form. Among other things, there must be a prolonged impairment in physical or mental functions that must have lasted, or be expected to last, for a continuous period of at least 12 months.

Find out if you’re eligible for the DTC

CRA Disability Tax Credit link

The disability tax credit can be claimed retroactively up to 10 years if a person has been experiencing eligible impairments but has only now applied for the credit. That can add up to a major tax refund.

Should I “Incorporate or Not” my business?

The decision to incorporating a business is based on an individual client’s circumstances and needs.

Listed under are some reasons why many businesses choose not to incorporate:

  • Losses are trapped in the corporation
  • Increased Tax reporting costs, have to file annual corporate returns to CRA

Listed under are some reasons why businesses choose to incorporate:

  • Separate legal identity
  • Limit liability
  • Reduced Taxes
  • Beneficial for Estate planning

As a general rule when starting a new business many owners choose not to incorporate as the company is more likely to incur losses in the beginning and small business owners are often unsure of the future viability of the business. This way they can offset the losses from their business income against other forms of income they may have. But as soon as they see potential growth and profitability businesses incorporate to take advantage of the benefits as mentioned above.

Contact us now and we can go through it with you.