It pays to know what you can claim in work-related tax deductions
As an employee, it can be quite difficult to take advantage of tax deductions. Regardless, you may still be entitled to make a claim. Here are just some of the deductions you should investigate. One area is your vehicle expenses provided you didn’t receive a reimbursement or a tax-free allowance, then you may be able to claim the work-related portion of your vehicle costs. Other areas to look are sales expenses if you’re a commissioned employee, the cost of supplies and tools, food and beverage costs, travel costs, home office space, legal fees, assistant’s salary and capital cost allowance on your vehicle. Whether you qualify will depend on certain conditions being met and may require additional documentation from your employer. It’s best to speak to a tax specialist if you’re unclear or need help with your special circumstances.
“If you happen to be an employee, you’re no doubt aware that tax deductions for employees are rare. Still, you may be entitled to claim a thing or two on your tax return this year.”
Personal Investor: 3 risk-free ways to boost your net worth
Many of us assume that investment goes hand in hand with risk; that you have to be willing to take on the possibility of losing it all for the chance of higher investment returns. However, for many people, there are other ways to make or keep more of their money without incurring risk. For instance, if you’re carrying debt, pay it off to avoid the interest charges. Create an investment strategy to avoid, reduce or delay taxes, which will allow you to achieve a higher after-tax return. And, look for low-fee investment opportunities as even a one percent annual saving will compound over time.
“Utilizing available tax tools including a registered retirement savings plan (RRSP) and tax-free savings account (TFSA) can divert much of your money from the Canada Revenue Agency back into your account, and that money can compound over time.”
Read more: https://www.bnnbloomberg.ca/personal-investor-3-risk-free-ways-to-boost-your-net-worth-1.1118719
Reality cheque: Will paper cheques soon be a thing of the past for small business?
The old ways of making payments is not just shrinking; they’re often vanishing entirely. Consider cheques, printed slips of paper your bank issues to you, tied to your account, and filled out by you to pay for a purchase or bill. Electronic means of payment, like Apple Pay, PayPal, and Interac, are taking over where once only a paper cheque was an accepted method of payment. Most of the changes have occurred at the consumer level. Increasingly, small businesses want more options when it comes to point-of-sale payment choices for customers, in addition to back-office payment options for suppliers and vendors. However, to make these options available, Canada needs to modernize its payment infrastructure, and to cover the cost of making these changes, banks may need to charge a fee for these services. Keeping these costs low is key to small businesses using them.
“Why cheques? For starters, accepting a cheque as payment can be less costly for a small business than accepting a credit card payment, which has merchant fees as high as three to four per cent of the transaction value.”
This updated rule of retirement saving has you working longer, running out of money sooner
With the global economy having gone through tremendous upheaval in the past decade, some of the principles used to calculate what we need to save for retirement need to be adjusted to better account for today’s investment environment. A common rule was to assume $20 of savings would generate $1 of investment income in retirement. However, with today’s lower investment returns, the rule needs updating. Using this formula now requires that we start at 65, not 60, and savings are projected to last about 25 years assuming an inflation rate of 2.5 percent. You may also want to tweak it to $21 or $22 in savings, in order to be more conservative with your financial planning.
“The Rule of $20 was just updated, and it’s still a useful gauge of how much income you can generate from your retirement savings. But it’s a more demanding rule than it used to be, largely thanks to today’s thinner investment returns.”
Ensure you’re in the clear: Tax court decision serves as warning to home buyers
If you are planning on buying property in Canada, be sure to research who you’re buying from, or you could be stuck with a costly tax bill. A recent court case in which property was bought from a non-resident (who claimed that he was a Canadian) left the purchaser with a $92,000 tax bill. This is due to Section 116, which requires 25 percent of the purchase price to be sent to the CRA. The Canadian courts determined that the purchaser did not do enough research on the buyer, despite obtaining a declaration from the seller, and as a result, he was responsible for the tax payment. According to the judge, a “solemn declaration” is required to determine the tax residency of the seller.
“Section 116 requires the buyer to make a “reasonable inquiry” and have “no reason to believe that the seller is a non-resident of Canada.” Without this reasonable inquiry and belief about the seller, the buyer is supposed to withhold 25 per cent of the purchase price and send it to the taxman.”
Four reasons why business owners should consider life insurance
While life insurance may not be top-of-mind for your business, it can be the difference between going through a rough period or keeping your business afloat. Starting your own business or operating one of any size, is a big step, and one full of risk. Some of that risk can be mitigated by taking the proper measures such as using life insurance to cover your business. Many businesses rely heavily on key employees, or even the owner; insuring them against an untimely death can help mitigate the costs incurred should the worst happen and someone new needs to replace them and take over their responsibilities in the business.
“Today, I want to speak to those who are business owners – big or small. There are four situations in which life insurance can provide needed cash to solve some pretty big problems..”
Vehicle allowances and deductions can put you on a collision course with the taxman
The CRA is taking a closer look at Canadian’s automobile deductions to determine if they met the conditions for eligibility. Two cases this summer focused on whether the car allowance being paid by an employer was a reasonable per-kilometre rate to cover the actual operating costs of the “work” portion of usage. In both cases, the judge decided that it wasn’t reasonable because one was a fixed allowance and the other was an estimate, and thus not based on the actual number of kilometres for which the vehicle was driven. Therefore, the allowance could not be used as a deduction and the amount needed to be included in the taxpayer’s income.
“Automobile expenses continue to be an area of scrutiny for the taxman, so you shouldn’t be surprised if the Canada Revenue Agency starts asking you questions about how you may have claimed any vehicle expenses or employer’s travel allowances on your tax return.”
Alberta is still deep in debt, but some say there’s nothing to worry about?
Alberta continues to lead the country when it comes to average consumer debt at $37,278 for non-mortgage debt, and Calgary is even worse at $38,438. Although this isn’t as bad as it may seem according to TransUnion Canada. The higher debt, isn’t necessarily because Albertans are big spenders, but rather, it may be due to coming out of a difficult economic time for the province. In addition, consumers are getting better at paying down their debt loads as indicated by the reduced delinquency rates. As the economy continues to recover, it is expected that we’ll see these debt levels and rates reduce further.
“Albertans continue to rack up their credit card and other debt. But as Globals Tomasia DaSilva explains, one credit reporting agency says consumers are also getting better at paying it back.”
Personal Investor: A hard lesson on student debt is spelled RESP
The cost of post-secondary education can be expensive, especially with the costs constantly rising. If you start saving early for your child’s education, there is an investment plan that will help towards the cost, called a Registered Education Savings Plan (RESP). An RESP is an 18 year investment that matches parent’s contributions with grant money. Taxes are taken only at the time of withdrawal, and the fund can reach up to $50,000, which is a sizable amount of what will be needed for a student’s education.
“It might seem like a glimpse into a grim future for some parents, but there is a federal government program that can help relieve the financial burden of post-secondary school for those who start saving while their kids are still young.”
Federal Court refuses to authorize abusive “fishing expedition” by Canada Revenue Agency
A recent court case decided that there should be limits to the Canada Revenue Agency’s intrusiveness and powers. The CRA attempted to obtain information from a third-party. In this case, they wanted information from Hydro-Quebec about their business customers, and the company fought back. The court ruling agreed that the CRA shouldn’t be allowed to obtain the information it wanted on these customers as it was determined to have no valid criteria. The ruling is a win for taxpayers, and serves as a reminder that it is the courts, not the CRA, that sets the limits on its powers.
“This case highlights the CRA’s attempt to construe its powers in the broadest possible terms. The Court found the CRA’s request was “a full-fledged fishing expedition”, of “unprecedented magnitude”, of “practically unlimited scope” and “a complete lack of consideration for the invasion of privacy and the consequences for all taxpayers involved in the request.””