CRA deploys new weapons against tax evasion: Freezing assets, seizing property
Canada Revenue Agency will be implementing a new weapon to get suspected tax evaders to pay their portion of the tax bill. The CRA will now be utilizing proceeds-of-crime provisions in the law to seize assets of suspected tax evaders. Previously, the proceeds-of-crime provisions were only used for cases of money laundering or terrorism. This new tool is designed to frighten offending parties – the CRA also indicated it plans to go after overseas assets in such cases.
“I can say that this is indeed the first time, but I can promise you that this is not the last time that we [will use] those provisions of the Criminal Code to restrain or seize assets that tax evaders have acquired through their illegal behaviours.”
Read more: https://www.cbc.ca/news/politics/tax-evasion-proceeds-of-crime-1.4937176
Things to know for before filing your 2018 taxes
When filing your 2018 tax return, it’s best not to wait until the last minute. Often, when people wait, they become more disorganized in the scramble to get paperwork together. Before you begin be aware of the changes, and if your return is complicated, you might want to consider hiring a tax accountant. This can include high net worth individuals, people with a side business, own investment property, self-directing retirement, or received an inquiry from Canada Revenue Agency. Overall, it’s best never to wait until just before April, because you could miss out on some deductions and credits.
“The April 30 tax filing deadline may seem a long way off, but leaving it to the last minute could mean rushing and missing out on deductions or making a mistake that could mean a costly audit.”
Read more: https://bc.ctvnews.ca/things-to-know-for-before-filing-your-2018-taxes-1.4194989
These are the potential tax measures federal budget watchers are speculating about this year
This year’s federal budget has important implications because of the upcoming October election. Speculation about what it contains, and especially how personal taxes may change are at the forefront. In the pre-budget process some hints at the different tax options being considered include raising taxes for all or making the very rich pay a much larger tax. Raising the capital gains tax inclusion rate is also an option. There are many conflicting opinions, including making the personal tax rates competitive with the US.
Key Takeaways:
- Finance Minister Bill Morneau is expected to table the budget the week of March 18, but some believe it could be postponed until sometime in April.
- During the consultation process the recommendation was to expand the tax brackets and raising taxes on high earners.
- Reassessment of the capital gains inclusion rate, bringing the tax rate closer to the rate for dividend income.
“Of the 99 recommendations for the upcoming federal budget, less than half a dozen of them involved personal tax changes.”
Personal Investor: 2019 small business tax break has strings attached
This year, small businesses in Canada will get a reduced tax rate on the first $500,000 earned from 10 percent to 9 percent. However, if businesses hold over $50,000 in passive income, the tax rate will change based on the excess amount. It’s estimated small businesses with an annual income of $107,000 will save about $1600; giving small business an advantage – provided they do not have passive income. Larger small businesses that have high passive income likely won’t be able to benefit from the reduced rate.
“If the business holds more than $50,000 in what is termed “passive income” that corporate tax rate moves up depending on the excess amount.”
Personal Investor: Boost your RRSP contribution with your refund
If you are looking for ways to increase your retirement savings, consider investing your tax refund early. If you add your refund before the March 1st cut-off, you will generate further tax savings provided the principal is paid back within a few months. This can be done by borrowing the money for a couple of months through a home-equity line of credit, and provided the money is paid back quickly then the small amount of interest will outweigh the additional tax savings on your return. There are plenty of online calculators available to help you with the calculations or speak to an accountant to determine the best way to do this for your situation.
“If you’re scrambling to put together a registered retirement savings plan (RRSP) contribution before the March 1 deadline, there’s a way to boost it by nearly 40 per cent by contributing the refund.”
Americans living in Canada: Be aware that the IRS is watching you
America requires its citizens to pay taxes even when those citizens being taxed are not living inside the borders of the United States of America. This can sometimes come as a surprise to some who move abroad or out of the country to Canada, but the Internal Revenue Service (IRS) is still keeping track of income and payments issued to its citizens, and expects every citizen to file a tax return and remit any taxes due. Even if you’ve not been back to America for years, you’re still required to file and pay.
“The IRS enforces many different tax rules on U.S. citizens living abroad. Here are five additional cross-border tax issues for Americans living in Canada.”
As small business appetite to borrow grows, banks step up with speedy loan approval platforms
Small businesses in Canada looking for business loans are finding it easier to secure financing these days. Lenders have made the process so easy that businesses looking to borrow can be approved the same day as they apply. Use of technologies that determine what’s important to secure loans have made the application process more streamlined. As more Canadians are looking to start or finance existing businesses, the banks are ready and able to provide financing they are looking for.
“According to the bank, the small business-specific lending ‘platform’ allows it to cut down on the amount of time it takes to approve loans from weeks to minutes.”
Payback Time: As contribution room grows, the TFSA is the gift that keeps on giving
Investors who enjoy the benefits of a TFSA, especially income created from tax free dividends, can soon get more out of their accounts. The amount that can be contributed will go up by $6,000 in the next year. Those planning for retirement should consider also maintaining a RRSP account with a fully contributed TFSA. Taking small withdraws that are come with lower tax penalties from your RRSP and using a TFSA for the rest of your income can prevent large taxes on what could be considered high retirement incomes.
“In comparison, half of capital gains on equities in non-registered accounts are taxed and income is fully taxed. Dividends are also subject to full taxation with the exception of a tax credit on eligible payouts.”
Better data and approaches help the Canada Revenue Agency identify Canadians trying to hide …
Thanks to new approaches, new tools, and better data, Canada can better identify and take action against Canadians who evade taxes and use aggressive tax avoidance. With the introduction of the Common Reporting standards in 2017, the CRA now has access to greater information on Canadian’s overseas financial accounts. There are more than 100 jurisdictions and 80 partners, who share information on each other’s citizens, to help taxpayers to comply with their obligations. The CRA has also been a leader in creating a joint international tax force consisting of several countries cooperating to find and pursue tax evaders.
“Canada continues to be a leader in international collaboration as a member of the expanded Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC).”
‘The water’s starting to rise’: Insolvency business booms in Canada amid rate hikes
Financial expert and loan professionals in Canada are seeing a further spike in the rate of insolvencies. Official data says the rate of people going in into insolvency rose 9.4 percent in October. Additionally, interviews with individuals involved in the insolvency industry say they are seeing further spikes since October. They blame rising interest rates, a slowing economy and the proliferation of high-interest payday loans, which are difficult for the borrower to pay off.
“The tide has turned, and the water’s starting to rise”