“Where do we pay income tax if we retire abroad?”

As originally posted on Money Sense. Click the link to see the original article.

There are tax implications in both countries if Marianna moves to Mexico full-time.

Photo by Mikhail Nilov from Pexels

Q. We’re thinking about moving to Mexico full-time when we retire. Where would we pay income tax on our monthly Canadian pensions?
–Marianna

A. Many Canadians dream of a retirement that includes travel abroad. Some even move abroad part of the year, most of the year, or give up their Canadian residency entirely. 

In the case of Mexico, Marianna, a taxpayer is considered a resident of Mexico if they have a permanent home available to them in Mexico. If they have homes in both Mexico and Canada, the location of their centre of vital interests—their personal and economic ties—must be considered. 

The courts typically refer to the residence article of the OECD Model Tax Convention when defining centre of vital interests:

“If the individual has a permanent home in both Contracting States, it is necessary to look at the facts in order to ascertain with which of the two States his personal and economic relations are closer. Thus, regard will be had to his family and social relations, his occupations, his political, cultural, or other activities, his place of business, the place from which he administers his property, etc. The circumstances must be examined as a whole, but it is nevertheless obvious that considerations based on the personal acts of the individual must receive special attention. If a person who has a home in one State sets up a second in the other State while retaining the first, the fact that he retains the first in the environment where he has always lived, where he has worked, and where he has his family and possessions, can, together with other elements, go to demonstrate that he has retained his centre of vital interests in the first State.”

If you sell or rent out your home in Canada, and establish closer ties to Mexico, you will likely become a non-resident of Canada. There may be tax implications for assets you own when you leave. Assets like non-registered investments will be subject to a deemed disposition (sale) and this may trigger capital gains tax. Other assets, like pensions and investments, will be subject to withholding tax after you leave. 

You ask specifically about monthly pensions, Marianna. Registered pension plan (RPP) periodic payments like a defined benefit (DB) pension are subject to 15% Canadian withholding tax for a Mexican resident. The same 15% rate applies to Canada Pension Plan (CPP), Old Age Security (OAS) and registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) periodic payments. A lump sum payment is subject to 25% withholding tax. 

Tax on non-registered investments is limited to dividends or trust distributions (mutual fund or exchange-traded funds/ETFs). The rate is 15%. Most Canadian interest earned by a Mexican resident is tax-free. 

Capital gains on non-registered investments earned by a non-resident are not subject to Canadian withholding tax. 

If your Canadian income is relatively low, you may benefit from electing under section 217 of the Income Tax Act to file a Canadian tax return voluntarily. The tax would be calculated on your qualifying Canadian income. Qualifying income includes CPP, OAS, pensions, RRSP/RRIF withdrawals, and a few other sources of Canadian income. If you owe less tax than the tax withheld, you can get a refund. 

Canadian tax is only part of the story though, Marianna. Mexican residents pay tax on their worldwide income. Tax rates on low and moderate levels of income are comparable to Canadian rates. The top tax rate on income over about $245,000 Canadian (at current exchange rates) is only 35%, compared to over 50% in most Canadian provinces.  

Canadian withholding tax can generally be claimed as a foreign tax credit in Mexico to reduce the Mexican tax payable on that foreign income. This generally avoids double taxation. 

According to International Living, a comfortable retirement in Mexico, including private health insurance, could cost about US$2,500 per month. 

Good luck with your retirement plans! 

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.

Five ways the federal budget could affect your taxes

As Seen on the National Post website. Click the link to see the original post.

Thinking of buy a new sports car, yacht or private jet in the near future? Better do it before Dec. 31.

The Liberals today unveiled its mammoth 724-page federal budget, the first one in over two years, which contained a variety of tax measures affecting individual taxpayers. Here’s some of the highlights.

Additional weeks of COVID benefits

Five ways the federal budget could affect your taxes

When the Canada Emergency Response Benefit (CERB) ended last year, it was replaced with a trio of new benefits: the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and the Canada Recovery Sickness Benefit (CRSB). In March 2021, about 3.5 million Canadians received income support through the recovery benefits and EI.

In Feb. 2021, the government increased the number of weeks available under the CRB and the CRCB by 12 weeks to a total of 38 weeks, and the number of weeks of EI regular benefits available by 24 weeks up to a maximum of 50 weeks. It also doubled the number of weeks available under the CRSB to four weeks from two weeks.

In today’s budget, the government proposed to provide up to 12 additional weeks of CRB, to a maximum of 50 weeks, the first four of which will be paid at $500 per week, and the remaining eight weeks to be paid at a lower amount of $300 per week for recipients who have claimed the full 42 weeks at $500, as well as for new claimants. The budget also proposed to extend the CRCB by an additional four weeks, to a maximum of 42 weeks, at $500 per week, in the event that caregiving options, particularly for those supporting children, are not available.

Tax treatment of COVID benefit repayments

In late 2020, the CRA sent out 441,000 “educational letters” warning individuals that they may not be eligible for the CERB. The letters were sent out to individuals whom the CRA said it was “unable to confirm … employment and/or self-employment income of at least $5,000 in 2019, or in the 12 months prior to the date of their application.”

Individuals who needed to repay the CERB were encouraged to return it in 2020 (vs. in 2021) since the CERB amounts are taxable and would be reported on the T4A tax information slip for inclusion in the year they were received. If the CERB wasn’t returned until 2021, CERB recipients were to have paid tax on the full CERB amount received in 2020, and then claimed a deduction for this amount on their 2021 tax return. While for many, this is simply a cash flow or timing difference, for others, who may not have enough income in 2021 to benefit from the deduction, this could have resulted in many Canadians effectively paying tax on CERB funds they ultimately had to return.

Fortunately, the government realized that this harsh treatment would be unfair to many Canadians and as a result, today’s budget proposed a change in the law to allow individuals the option of claiming a deduction for the repayment of a COVID benefit amount for the year in which the benefit amount was received, rather than the year in which the repayment was made. This option will be available for benefit amounts repaid at any time before 2023.

For these purposes, COVID-19 benefits would include: the CERB, EI emergency response benefits, the Canada Emergency Student Benefits, the CRB, CRSB and the CRCB.

If you recently made a repayment, but already filed your 2020 return for the year in which you received the benefit, you can ask the CRA to adjust your return for that year.

Increasing OAS for Canadians 75+

Older seniors may be getting some additional cash this summer as a result of Monday’s budget. The government announced it will be providing a one-time payment of $500 in August 2021 to Old Age Security (OAS) pensioners who will be 75 or over as of June 2022. It also proposes to increase regular OAS payments for pensioners 75 and over by 10 per cent on an ongoing basis as of July 2022. This would increase the benefits for approximately 3.3 million seniors, providing additional benefits of $766 to full pensioners in the first year, and indexed to inflation going forward.

Improving access to the disability tax credit

The disability tax credit (DTC) is a non-refundable tax credit intended to recognize the impact of various non-itemizable disability-related costs. For 2021, the value of the federal credit is $1,299. Provincial and territorial credits are also available. To be eligible for the DTC, an individual must have a certificate confirming that they have a “severe and prolonged impairment in physical or mental functions.”

Earlier this month, the CRA’s Disability Advisory Committee released its second report which contained a variety of recommendations towards improving the eligibility criteria for the DTC in the areas of mental functions and life-sustaining therapy. To help more families and people living with disabilities access the benefits of the DTC, including the ability to open up a Registered Disability Savings Plan (RDSP), the budget proposes to update the list of mental functions of everyday life that is used for assessment for the DTC.

Under current rules, mental functions necessary for everyday life include: memory, problem-solving, goal-setting and judgement (taken together), and adaptive functioning. The budget proposes to expand this list to include a wider array of mental functions necessary for everyday life, including: attention, concentration, memory, judgment, perception of reality, problem-solving, goal-setting, regulation of behaviour and emotions, verbal and non-verbal comprehension and adaptive functioning.

In addition, the budget proposes to recognize more activities in determining time spent on life-sustaining therapy and to reduce the minimum required frequency of therapy to qualify for the DTC.

New luxury tax on cars, boats and aircraft

Thinking of buying a new sports car, yacht or private jet in the near future? If so, you best make your purchase by Dec. 31, 2021 to avoid the new luxury tax.

“If you’ve been lucky enough, or smart enough, or hard-working enough, to afford to spend $100,000 on a car, or $250,000 on a boat — congratulations!” reads Monday’s budget document introducing the new luxury tax. “Thank you for contributing a little bit of that good fortune to help heal the wounds of COVID and invest in our future collective prosperity… Those who can afford to buy luxury goods can afford to pay a bit more.”

The new tax kicks in on Jan. 1, 2022 and applies to sales of luxury cars and personal aircraft with a retail sales price over $100,000, and boats, with a price over $250,000. The tax will be calculated at the lesser of 20 per cent of the value above those thresholds, or 10 per cent of the full value of the luxury car, boat, or personal aircraft.

Upon purchase or lease of the car, boat or plane, the seller or lessor will be responsible for remitting the full amount of the federal tax owing, regardless of whether the good was purchased outright, financed, or leased over a period of time.

And, by the way, the GST/HST applies to the total sales price, inclusive of the new luxury tax.

Jamie.Golombek@cibc.com

Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Private Wealth Management in Toronto.

File your 2020 taxes or risk waiting up to two months to receive any COVID-19 financial aid, warns the CRA

Click the link to go directly to the original published article on the National Post website.

It is essential that you file your 2020 personal income tax and benefit return by April 30, 2021, warns the Canada Revenue Agency Author of the article: Christopher Nardi Publishing date: Apr 16, 2021

OTTAWA – If you were hoping to apply for one of many COVID-19 financial aid benefits on May 1, the federal government has one warning: file your 2020 taxes by the end of the month, or risk a long wait before you get your money (and even being cut off).

“It is essential that you file your 2020 personal income tax and benefit return by April 30, 2021,” warns the Canada Revenue Agency from the get-go in a “tax tip” published Wednesday.

Though one could argue that it’s always important to file ones taxes on time, it’s of particular importance to do it before the deadline this year for anyone who thinks they will claim either the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB) or the Canada Recovery Sickness Benefit (CRSB) beginning in May.

That’s because the federal government generally pays benefits to people based on their previous year’s tax filings, which allows the CRA to determine if the individual is eligible for them (such as the Canada Child Benefit).

The eligibility criteria for the CRM, CRCB and CRSB varies, but all three notably require the applicant to have earned at least $5,000 in 2019, 2020 or in the 12 months preceding the request.

So whereas an eligible applicant who has filed their taxes by the end of the month can expect money in their bank account within three to five business days, the CRA warns that those who don’t can expect the agency to request more documentation before paying out.

That process can take up to eight weeks if the documentation is in order, but can logically also result in your application being flat-out refused if you can’t prove your eligibility.

“The CRA is committed to having validation and security measures in place, to ensure that we deliver benefit payments only to people who are entitled to receive them. Where eligibility is in question, a review will be conducted to ensure that recipients were only paid amounts they were entitled to,” agency spokesperson Sylvie Branch said in a statement.

The significant delay for non-tax filers is new compared to the application process for the government’s first COVID-19 aid program launched last spring, the $2,000 per month Canada Emergency Response Benefit.

At the time, CRA approved most applications from Canadians who hadn’t filed their 2019 taxes because the program was launched months after the beginning of 2020. That meant that applicants could have made the minimum amount of money to be eligible during that period if even they didn’t in 2019.

Back in November, the CRA revealed that 800,000 recipients of CRB’s predecessor, the Canada Emergency Response Benefit, had not filed taxes in the year leading up to the pandemic.

For the CRA, the 2020 tax season will also be critical in the monumental task its facing to recoup any COVID-19 benefit overpayments to Canadians. Since those programs were designed to delivery money quickly when the pandemic struck, many of the usual pre-payment verifications were cast aside at the time.

As of now, the agency doesn’t quite know how many ineligible people or companies (via the Canada Emergency Wage Subsidy) received money it will have to claw back. But with crucial employment and revenue information now flowing in from likely millions of COVID-19 aid program recipients via their tax filings, the CRA says it will be in a better position to determine how much money it will have to recoup over the next years from ineligible or illegal claims.

Already, the auditor general revealed last month that the government had paid $500 million to CERB double-dippers that it now had to reclaim. That doesn’t even include any fraudulent, erroneous or ineligible CERB claims.

“What we are trying to do in terms of controlling fraud, where we see cases where it looks like there’s something suspicious, we do block accounts, and prevent the money from going out. So we are taking actions along the way, but we’re really going to get a big swath of information in the coming weeks that will help us determine what happened,” CRA commissioner Bob Hamilton told a parliamentary committee Thursday.

Difference between current and capital expenses has big tax consequences for rental property owners

Please go the this Financial Post article to view.

Canadian tax news and COVID-19 updates

Please go to the www.cpacanada.ca website to view current news.

The DB pension plan business model has failed – and everyone is paying the price

Brent Simmons Contributed to The Globe and Mail Published September 10, 2019

Brent Simmons is Senior Managing Director & Head, Defined Benefit Solutions at Sun Life

For the past 20 years, many private-sector companies across Canada followed the same risky strategies for their defined-benefit (DB) pension plans as they did in previous decades. Unfortunately, over this time these strategies cost stakeholders almost $158-billion and jeopardized the retirement security of millions of Canadians.

As a result, many companies have abandoned these perilous approaches, but a surprising number have not. To better understand why new strategies are needed, think of the DB pension plan as a division of the company – the DB Pension Division.

A company’s employees lend the DB Pension Division money in the form of deferred wages. In return, the company promises to provide a pension to those employees when they retire. Until then, the DB Pension Division invests this money with the goal of being able to pay these promised pensions.

However, many DB Pension Divisions are investing this money in a way that’s mismatched from the bond-like promises they made to employees. They make bets on equity markets and interest rates in the hopes of generating excess returns that will make it cheaper to pay these promised pensions.

Imagine – what do you think would happen if you went to your CFO and told her that you had a great idea for a new business. You want to borrow money and invest it in the equity markets to generate excess returns for shareholders. I suspect you’d find that it would be a pretty short and career-limiting conversation!

So why would this idea work for a DB pension plan? What’s clear is that for the past 20 years, it has not.

After a lot of ups and downs, the average DB Pension Division is essentially in the same place that it was 20 years ago from a funded-status perspective.

In fact, the typical company contributed significant dollars to its DB Pension Division during this period. According to Statistics Canada, companies in Canada contributed almost $158-billion between 1999 and 2018 to shore up deficits in their pension plans. This means that a typical DB Pension Division earned a negative return – destroying value for shareholders who invested in the company.

If the business model had been successful, the typical DB Pension Division would be well over 100-per-cent funded by now and these $158-billion of contributions wouldn’t have been required.

It’s not surprising that some DB Pension Divisions stuck with their historical business models over the past 20 years. After all, interest rates were at historic lows and were widely expected to rise and equity markets had a long history of providing excess returns.

So why didn’t things turn out as expected? The business model involves making multiple bets on equity markets, interest rates, credit conditions, foreign exchange rates and life expectancy. Companies need to win all these bets consistently as the gains from good bets can be wiped out by the losses from bad bets.

Making multiple successful bets with the DB Pension Division is very hard to do – especially given the increased unpredictability of the markets over the past 20 years. In addition, most companies rely on the same investment managers as their competitors, which doesn’t create a competitive advantage for their shareholders.

Given these challenges, many forward-thinking companies are concluding that the DB Pension Division’s business model no longer works – an appropriate conclusion for a division that’s been losing money for 20 years.

The first step these companies take is realizing it’s better to take risk in their core business rather than in the DB Pension Division. General Motors was one of the first companies to articulate this strategy. In 2012 Jim Davlin, vice-president of finance and treasurer at General Motors, said: “We’re in the business of making great cars – that’s our core competency. It’s not managing pension investments to provide a lifetime income to folks.”

The second step these companies take is changing the business model of their DB pension plan to embrace better risk management. These companies are investing plan assets to match liabilities and/or transferring portions of their plans to insurers through the purchase of annuities.

The bottom line? Everybody pays the price for a failed DB Pension Division. Let’s not lose track of why we created pension plans in the first place – to help Canadians be ready for retirement. Isn’t it time to adopt better risk management and switch to a business model that works?

As posted on The Globe and Mail

CRA updates principal residence folio

With the price of real estate skyrocketing, Ottawa is concerned that Canadians are accessing the PRE inappropriately

By: Rudy Mezzetta Source : Investment Executive August 23, 2019 00:27

The Canada revenue Agency’s (CRA) revised principal residence exemption (PRE) reporting rules, introduced three years ago, are changing the way Canadians think about a tax benefit that homeowners tend to take for granted, tax experts say.

Now that the CRA has more information about each property sold, many Canadians recognize that they need to understand the rules governing the PRE better in order to avoid paying tax on the sale of their home.

“People realize they have to fill out this paperwork now when they sell [their property] to claim the PRE,” says Debbie Pearl-Weinberg, executive director of tax and estate planning in Toronto-based Canadian Imperial Bank of Commerce’s financial planning and advice group. “We’re seeing

questions on what constitutes a principal residence: ‘Does the property qualify; what if a portion is rented out; what about change of use?’ Things like that.”

Says Mariska Loeppky, director of tax and estate planning with Investors Group Inc. in Winnipeg: “There are lots of people who will rent out their home for a while and not give a second thought to it, but that’s a taxable event.”

The CRA issued in July an updated Income Tax Folio S1-F3-C2, Principal Residence to help Canadians navigate the rules governing the PRE. The document includes information about the revised reporting requirements and key technical changes made to the PRE rules over the past few years, as well as a comprehensive explanation of how the rules work.

In October 2016, the federal government announced that beginning with the 2016 tax year, taxpayers must report basic information, such as proceeds of sale, description of property and date of acquisition, at the time the principal residence is sold in order to claim the full PRE. Previously, homeowners didn’t have to report the sale of a property if they were designating it as their principal residence for every tax year they owned it.

Under the revised reporting rules, taxpayers provide information about the sale on Schedule 3 of their tax return, and by filing Form T2091, Designation of a Property as a Principal Residence by an Individual. Late filing the form comes with a penalty of $100 per month, to a maximum of $8,000 – although the CRA did indicate, when it introduced the revised rules, that it would exercise leniency in applying the penalties. “That discretion is probably going to end at some point,” Loeppky says.

The CRA now has the right to reassess a tax return, beyond the normal three-year reassessment window, if a taxpayer fails to report the sale of a home. “That’s really a big step,” Pearl-Weinberg says, because it thwarts taxpayers who may hope the CRA won’t “discover [the sale] within the normal reassessment period.”

For many homeowners, the revised reporting rules will not hinder their ability to access the PRE, says Wilmot George, vice president of tax, retirement and estate planning with Toronto-based CI Investments Inc. The basic rules haven’t changed: if a Canadian resident (and/or the Canadian resident’s family unit) owns an eligible home – and “ordinarily inhabits” it – he or she will be able to designate the property as his or her principal residence and not pay tax on the capital gain realized on the sale.

“The message isn’t that you’re not entitled to the PRE, for the large majority of Canadians,” George says. Rather, if the property is eligible for the PRE, the message is “be sure to report it.”

The government’s motivation for tightening the reporting rules is to increase compliance in the real estate sector in general. With the price of real estate skyrocketing in recent years, Ottawa is concerned that Canadians are accessing the PRE inappropriately. In the 2019 budget, the federal government proposed giving the CRA $50 million over five years, and $10 million ongoing, to fund a task force with a mandate to ensure people are paying their fair share of taxes in relation to real estate transactions.

The government is concerned about situations in which taxpayers are repeatedly purchasing, renovating and reselling properties for profit – a.k.a. “flipping” – and claiming the PRE when they are not eligible.

“If there’s a habit of buying and selling in relatively short periods, then that might speak to the generation of business income as opposed to capital gains,” George says. Among other factors, the CRA will look at how long the property was owned, the owner’s recent transactions and whether renovations were made to determine whether profits from the sale would be considered taxable business income, George says.

The revised reporting rules also will help the CRA ensure taxpayers claim the PRE for only one property per tax year. If an individual owns multiple eligible properties – say, a city home and a vacation home – he or she can claim the PRE for one property for some years and for the other property in other years, but not for both properties in same tax year.

Individuals who own multiple eligible properties now must be more careful when deciding whether to claim the PRE at the time they sell their first home or to “save” the PRE for a second home. A formula is used to determine what percentage of the capital gain on the sale of a home the individual can shelter with the PRE.

“It can be a very complicated comparative analysis,” Pearl-Weinberg says. “You have to look at what the consequences would be right now [and] what percentage of the gain would be covered right now versus what might happen in the future.”

Loeppky advises that homeowners keep all receipts documenting the cost of the home and all improvements to it – for all properties owned. When the time comes to sell a home for which the PRE will not be claimed, the cost of the improvements can be added to the property’s adjusted cost base, lowering the capital gain that will have to be reported for that home.

“You don’t know which house will have a bigger gain,” Loeppky says. Sometimes taxpayers won’t keep receipts for their city home, but do so for their vacation home, thinking that the PRE will cover the gain in their city home – only to discover that their vacation home has incurred more of a gain. “You want to put yourself in the position of maximizing the use of the PRE when it comes time to sell,” Loeppky says.

The considerations become even more complex for a rental property when the PRE is concerned.

If a taxpayer owns a property for the sole purpose of renting it out, he or she will pay taxes on the income earned annually and, when the property is eventually sold, the capital gains on the proceeds of the sale would be taxable at the capital gains inclusion rate of 50%.

On the other hand, if a taxpayer lives in a principal residence, but rents out part of the property, the PRE still could be available if certain conditions are met, including that no structural changes are made to the property for rental purposes, and the rental use is ancillary to the property’s main use as a primary residence.

Much will depend on the facts of each case. “If you have [modified] your principal residence in some significant way, then you may have an issue as to whether you can claim the PRE,” says Doug Carroll, practice lead for tax, estate and financial planning with St. Catharines, Ont.-based Meridian Credit Union. “For people who are renting out a room, [claiming the PRE] may not be a problem if [the rental use] is not a major part of the reason that they own the house.”

Sometimes a person will own a primary residence, but wants to turn it into a rental property. Conversely, an individual may own a rental property, but wants to turn it into their primary residence. Both of these scenarios would be regarded as a “change of use” by the CRA, and be treated as a deemed disposition.

In either scenario, the taxpayer can elect to opt out of the deemed disposition, thus extending the number of years that the property can be designated a principal residence by up to four years (subject to certain conditions). These “change of use” special elections may give taxpayers more flexibility in determining when and for which property they can claim a PRE.

A proposal included in Budget 2019 would allow taxpayers to elect not to incur a deemed disposition when there has been a change in use to just a part of a property. This change to the tax rules is not yet law, and is not reflected in the updated tax folio for principal residences.

2019 Brings Lower Taxes for Small Businesses and More Help for Canadian Workers

News release

December 20, 2018 – Ottawa, Ontario – Department of Finance Canada

Every day, in communities all across the country, Canada’s small business owners and entrepreneurs work hard to grow their businesses and create the jobs that middle class families rely on. Collectively, small businesses now account for about seven out of 10 private sector jobs.

To support Canada’s hard-working entrepreneurs, the Government cut the small business tax rate from 10.5 per cent to 10 per cent effective January 1, 2018, with a further reduction to 9 per cent coming into effect on January 1, 2019.

With this reduction, the combined federal-provincial-territorial average income tax rate for small business will be 12.2 per cent—the lowest in the G7 and the fourth lowest among members of the Organisation for Economic Co-operation and Development. For small businesses, compared to 2017, this will mean up to $7,500 in federal tax savings each year—savings that they can reinvest in purchasing new equipment, developing new products, or creating new jobs.

The year 2019 also marks the replacement of the Working Income Tax Benefit with the more generous Canada Workers Benefit (CWB). The CWB will put more money in the pockets of low-income workers—encouraging more people to join and stay in the workforce, and offering real help to more than 2 million Canadian workers. In addition to being more generous, the CWB will be more accessible than the program it replaces, as the Canada Revenue Agency will be able to calculate the CWB for anyone who has not claimed it on their tax return. Canadians will begin to receive enhanced benefits under the new CWB in early 2020, when they file their 2019 tax returns.

Details on these and other tax measures coming into effect in 2019 are available through the links below.

In addition, the Government’s 2018 Fall Economic Statement introduced three immediate changes to Canada’s tax system that will further support investment, jobs and growth in Canadian businesses, creating opportunities in communities across the country. These changes, which apply to qualifying assets acquired after November 20, 2018, include:

• Allowing businesses to immediately write off the full cost of machinery and equipment used for the manufacturing and processing of goods.
• Allowing businesses to immediately write off the full cost of specified clean energy equipment.
• Introducing the Accelerated Investment Incentive, which will allow businesses of all sizes in all sectors of the economy to write off a larger share of the cost of newly acquired assets in the year the investment is made.

Originally Posted On Government of Canada

Phil Heisz Elder Planning Counselor

Press Release

PHILIP HEISZ Qualifies as a Member Of “Elder Planning Counselor” Program

TORONTO, ON – A nationally recognized designation, was conferred on Philip Heisz after successfully completing an intense and rigorous test of knowledge regarding current seniors issues.  The “Canadian Initiative for Elder Planning Studies” (CIEPS) course was established as a standard of service to seniors for all professionals and business people in providing seniors with high quality services and products that best suit their lives and circumstances.  The “Elder Planning Counselor” (EPC) designation will immediately help seniors identify the business people and professionals who have a special interest and proficiency in dealing with them and their needs.

“Studies show that seniors want advisors who understand their life issues, alternatives and concerns, which respect their circumstances and experiences and can accommodate their physical and health needs.  The EPC is the Canadian professional development standard for elder education,” says Thomas Miller, President of CIEPS.

Achieving this designation is a distinguished career milestone, attained only by those who have demonstrated proficiency in all relevant programs about seniors issues, including aging, health issues, financial planning considerations, long term care as well as end of life issues.  This makes the “EPC” graduate a valued counselor to seniors, regardless of the service or product they provide.

The Elder Planning Counselor educational program has been designed by Canadians for Canadian Professionals.

For further information visit www.elderplanningcounselor.com

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When the CRA calls:

Jamie Golombek on his 10-month, transit pass reassessment saga
Don’t panic if you get a plain brown envelope from the CRA — but some frustration may be unavoidable

Originally posted Financial Post website.

If you recently received a letter in a plain, brown envelope from the Canada Revenue Agency, chances are it was because your 2017 personal income tax return is being reviewed to “make sure the benefits or credits you’re receiving are correct.”

If you received such a letter, the CRA’s advice, issued in a press release this week, is: “Don’t panic. You’re not alone.”

Each year, the CRA sends out approximately 350,000 letters and questionnaires asking taxpayers to provide additional information to ensure that taxpayers are properly entitled to the various benefits, deductions and credits which they claimed on their returns.

They may ask for documents to confirm that the information in the CRA’s records is correct and up to date. For example, the CRA may ask you to validate your marital status, where you live, and who cares for your children. This information can change as life events occur and may affect both whether you’re eligible to receive certain benefits and credits and how much you may be entitled to receive.

Normally, you have to respond within 45 calendar days. If you can’t get the documents the CRA is asking for or if you need more time to reply, you can call the number provided in the letter to ask for guidance and more time. If you ignore the letter or don’t reply in time, your benefits will stop and you may be asked to repay benefits or credits that were previously sent to you.

Any requested information and documents can be scanned and downloaded online using the CRA’s My Account portal or they can be sent to the CRA by mail or by fax to the address or fax number provided in the CRA’s letter.

The CRA advises taxpayers that “it’s important that you reply and send all the information requested as soon as possible. This will help the CRA review your file quickly and easily.”

Of course, how one defines “quickly and easily” is another matter. Let me share with you my own, personal experience of dealing with the CRA on such a letter.

The letter — October 2017

On Oct. 20, 2017, I received a letter from the CRA indicating that my 2016 tax return was being reviewed. The six-page, single-spaced typed letter was asking for detailed information about my claim for the public transit credit.

You may recall that prior to July 1, 2017, you could claim the cost of monthly or annual public transit passes for travel within Canada on public transit. The credit was eliminated in the 2017 federal budget, with the government concluding that “this credit has been ineffective in encouraging the use of public transit and reducing greenhouse gas emissions.”

The public transit amount the CRA was reviewing was $747. Note that this was not the amount of tax under review as the transit “amount” was eligible for a non-refundable federal tax credit at 15 per cent, meaning the CRA was asking for proof to substantiate a $112.05 federal tax reduction I claimed on my 2016 tax return.

Fortunately, I’m careful to keep all my receipts in a well-organized file and was easily able to photocopy each month’s Toronto Transit Commission (TTC) Metropass and scan them for download to the secure CRA My Account web portal.

I submitted the documents on Nov.17, 2017. And then, I heard nothing. For days. Then weeks. Then months.

The first reassessment — Feb. 2, 2018

On Feb. 2, 2018, I came home to find a brown CRA envelope waiting in my mailbox. Initially, I was excited as I assumed that this would be the reassessment I was waiting for, granting me my 2016 transit credit.

Alas, it was not to be. Rather than confirming my transit credit, I received a formal notice of reassessment saying I owed $112.05 of tax plus $2.12 in arrears interest.

The next day, I received a four-page, single-spaced letter from the CRA politely informing me that “we have adjusted your claim for the public transit amount from $747.00 to $0.00.” The reason? According to the CRA, while “we acknowledge (receipt of the copies of) the front sides of your Metropasses … the passes do not contain all the required information which includes … the identity of the rider.”

In other words, the CRA denied my $112.05 transit credit because I did not send them photocopies of the back sides of my Metropasses, which contained my “unique” signature. Was the CRA perhaps worried that I was borrowing someone else’s transit passes for the purpose of illegally claiming the credit?

Rather than be discouraged, I promptly photocopied the back sides of my Metropasses, clearly showing my signature on each one, scanned the documents and submitted them electronically to the CRA.

And then I waited again. For weeks. Months. Nothing.

While I attempted to follow up at least half a dozen times, I was unable to get through to the CRA on the phone until late July 2018. When I reached an agent, they were unable to explain why the matter still hadn’t been resolved, despite acknowledging receipt of my additional information nearly six months earlier. I was told that my 2016 return would be “expedited” for immediate processing.

The second reassessment — Aug. 23, 2018

Last week, I finally received a new notice of reassessment which stated that “We changed your return to reinstate your claim for the public transit amount.” It was issuing me a refund of $112.05 and reversing the $2.12 of arrears interest I was previously charged. In fact, I was even paid some refund interest of $3.21.

And the icing on the cake? The CRA was kind enough to remind me that since the $3.21 of refund interest “is taxable in the year you receive it, you have to include it as income on your 2018 tax return.”

Jamie.Golombek@cibc.com

Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Financial Planning & Advice Group in Toronto.