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Who reports capital gains if a stock is owned jointly?

Capital gains can be confusing, due to the way they’re taxed, and if they are a shared asset, e.g. owned jointly by spouses. First, it’s important to determine your capital gains by subtracting the Adjusted Cost Base minus your outlays and expenses from the Proceeds of Disposition. The resulting positive number is a capital gain. However, only half of your capital gains are taxed, and you can also offset those gains with any losses you had in previous years. Second, determine the true owner of the asset in the partnership. For instance, if you put in 50 percent and your partner also contributed 50 percent, then it is fair to claim 50 percent of the capital gains.

Key Takeaways:

Half of that gain is taxable; and added to your other income for the year to be subject to your marginal tax rate.
Capital losses can be carried forward throughout your entire lifetime to offset capital gains in your future. They can also offset capital gains of the immediately preceding three years in any order.
Who reports the income depends on who provided the capital or how much each contributed to the purchase of the stocks.

“When you invest together, you get taxed together.”

Stashing your cash

There are plenty of options for your savings and choosing the right one for your situation will help you make the most of it. One of the first places to consider investing in is a retirement savings plan (RSP). An RSP is an investment account designed to help you to grow your retirement savings, and your contributions reduce your taxable income. You can hold equities, bonds and most mutual funds in an RSP. Another good choice is a tax-free savings account (TSFA). Inside a TSFA gains and investment income are not taxed, and unlike an RSP, your money is not taxed when withdrawn. Non-registered options will have different tax implications. Depending on what your situation, an RESP or paying down your mortgage may be good uses for your extra cash.

RESPs: free money from government that half of Canadians don’t ask for

According to Statistics Canada, less than half of parents take advantage of free money from the government. Any Canadian can open a Registered Education Savings Plan (RESP) for their child. And the best part is that for every dollar you put into the plan, the government kicks in an extra 20 percent towards the cost of paying for education expenses. There are also additional programs for low-income families that receive government help. While there are rules regarding the government portion, you have options available to you if the child named in the RESP doesn’t attend university or college.

Key Takeaways:

Even if you don’t have money to put into it right now, open an RESP so you can add as little as $5-10 when you can.
The government contributes through the Canada Education Savings Grant (CESG), which provides 20 cents for every dollar contributed, up to a maximum of $500. Depending on your income, the contribution may be even higher, and you may qualify for the Canada Learning Bond.
The CESG allows families to carry forward unused contribution room, so you can catch up from the previous year’s contribution.

“Millions of Canadians struggle under the financial burden of parenthood…It’s hard enough to pay the bills, let alone save for the kids’ education. That’s why it’s so baffling that less than half of those eligible participate in a program offering parents free money for their kids post-secondary education.”

Cash is no longer king, as small businesses who don’t accept cards will learn to their detriment

Small businesses, who have a policy of not accepting credit cards, it’s time to revisit it. According to a recent Square study, 79 percent of Canadians choose to pay with their cards over cash, and 47 percent do not frequent cash-only businesses. In fact, the average Canadian carries $46.50 in cash on them, and only visits the bank every 17 days on average to withdraw cash. All of this means that it’s a risk for Canadian business owners to not accept cards. Just ask Jim McKelvey. He lost a $2,000 sale for a glass faucet because his business didn’t accept a customer’s credit card. But, by adding mobile wallet services such as Apple Pay, a company is being flexible and showing potential customers that they are forward-thinking.

Personal Investor: Missing your tax deadline could get costly

In Canada, your taxes are due on April 30th. This is a hard deadline as far as the Canadian Revenue Agency (CRA) is concerned. Once it clocks over to midnight on May 1st, if you owe money then you’ll start to owe a lot more. You’ll automatically accrue 5 percent interest on your due payment, and it is compounded daily. It gets worse, as another percentage point is added each month up to a maximum of 12 months. After a year passes and if you still haven’t paid the CRA, then 10 percent interest is charged on the balance owing plus 2 percent for each full month, up to 20 months. You could see a small payment of $100 slowly balloon to thousands if you’re not careful.

How to ensure a smooth succession

While succession is a common and complex problem for many business owners, most have not put adequate time into preparing for it. In fact, according to a 2016 survey of business owners, only 8 percent had a formal, written succession plan in place. This lack of preparation puts this group at significant risk should they exit the business sooner than expected. It’s important to set the company up for the next generation of leadership with a strong financial foundation, tax plan, and legal structure. If the company is being handed over to a family member, it’s crucial to have a development framework in place so that the individual has a leadership roadmap. Finally, be sure to communicate with employees early and often about succession plans, so that they remain loyal and are not caught by surprise.

Key Takeaways:

Goals: What are they? Increasing wealth for your retirement or the business.
Planning: Do the key players know who they are and what they should do.
Knowledge: What is the real worth of your business and can you retain needed employees as you transition.

“As the saying goes, nothing is certain but death and taxes. For entrepreneurs, you can add “exiting the business,” whether through a sale, transfer to the next generation or their own passing.”

New mortgage rules sending borrowers to alternative lenders

Mortgage brokers and others, who work with consumers to arrange mortgages, say that rejection rates are on the rise. Major banks and other traditional lenders have tightened their willingness to lend after Canadian banking regulators instituted a new “stress test” that applies to all home buyers. As a result, rejection rates have risen by approximately 20 percent.

The new guidelines, known as B20, have also pushed some buyers to consider private lenders, mortgage investment corporations (MICs) and credit unions, who are provincially regulated and not required to implement the stress test. The changes were implemented to curb risky lending as a consequence of rising household debt and high home prices in some markets.

Tax deadline looms: Which credits have changed?

If you’re rushing to finish your taxes before the deadline, then you’ll want to be aware of some of the tax credit changes in Canada for 2017. One change is that the children’s fitness and arts programs are no longer available. There are also changes to how and when you can claim some of the costs for fertility-related expenses. Previously, it was only for those that had a medical condition, but that’s changed. As of January 1, 2017, the textbook credit has been eliminated. There are also changes to public transit, disability credit and caregivers to name a few.

The top 10 things the taxman may review on your tax return

After you’ve submitted your tax return, here are the items that Canada Revenue Agency (CRA) is likely to question. This list is based on conversations with several tax professionals, and from a list by the CRA of the most common mistakes found on Canadian tax returns. The top ten items deal with: employment expenses, carrying chargers, moving expenses, medical expenses, charitable donations, capital gains & losses, allowable business investment losses, tuition credits, student-loan interest, and providence of residence.

Overall, receipts are key, and also knowing what you can and can’t claim. For instance, a lot of people try to claim non-deductible things like safety deposit box fees and brokerage fees, and there’s still a lot that can’t be claimed on medical expenses like vitamins or over-the-counter medications cannot be claimed.

Key Takeaways:

Employees are not allowed many deductions on employment expenses. Improper employment expenses should not be deducted because auditors scrutinize this area closely.
People sometimes fail to keep valid receipts. Make sure you have documentation, such as receipts, for all your deductions.
Changing your province of residence can result in increased scrutiny.

“The following is a list of the top 10 items that the taxman is likely to question.”

Tax Season 2018: Here Are All The New Things You Need To Know

Taxes have changed for 2018. Those filing this year will need to watch out for these changes from Ottawa. One of the major changes is that the Canada caregiver credit replaces the caregiver credit, the family caregiver credit and the credit for infirm dependants age 18 or older. Furthermore, having an older parent or grandparent live with you doesn’t automatically qualify you for this credit. Now, they must be infirm for you to claim the credit. Other changes include the elimination of the education and textbook tax credits, the children’s fitness and arts credit, and public transit tax credit up to June 30th. (Anything after July 1st is ineligible.)