Business and Personal Tax Updates
Issue 33 – January 2014
Welcome to 2014. A new year, a fresh start and a time to set goals for the upcoming year. To help you reach your business goals, we’re here to help you with your strategic planning, business plans, growth strategies, budgeting and forecasting, sourcing funds, accounting and bookkeeping. If you’ve hit a rough patch, and you’re looking for a turnaround strategy and management, we’re only a phone call away.
This month’s newsletter updates the latest from CRA on claiming Old Age Security, and if you hold foreign investments, CRA requires significantly more detailed information on your investment. CRA now has a Youtube channel that provides short video tips on personal tax topics. More on these topics below.
The new year also launches the 2013 tax reporting season. Make sure you contact us as soon as possible to discuss how to maximize your deductions and tax credits.
P.S. As a favour to a friend or business colleague, feel free to forward this email to those who you think could benefit from the information below.
OLD AGE SECURITY: Defer It?
The 2012 Federal Budget introduced provisions whereby an individual can delay receiving their OAS for up to five years after age 65. Commencing July 1, 2013, a compensation of 0.6% per month of delay is provided to compensate for the deferral of the OAS pension payments.
This flexibility may permit a person to reduce, or eliminate, the OAS clawback by deferring the receipt of the OAS until the income of the person is below the net income threshold ($70,954 for 2013).
In general, the taxpayer does not need to take any specific action to defer commencement of the OAS receipts. The person simply would not apply for OAS until he or she wishes to receive the payment. An OAS application may be retroactive to as much as eleven months.
Note that the Government may send a letter notifying a 64 year old individual of the ability to apply for the OAS at age 65.
Consideration Item: An individual who has received OAS benefits for less than six months may cancel the benefits and begin the deferral by paying back the total OAS received. This could apply even if the individual has not received any net OAS payments because of a full clawback.
FOREIGN PROPERTY: New Information Needed
Corporations and individuals holding “Specified Foreign Property” (which generally includes investment assets like rental properties or foreign stocks) with a cost of $100,000 or more must complete and submit a T1135 – Foreign Income Verification Statement. A new version of this Form, which requires significantly more detailed information, was released on June 25, 2013. The name and location of the investment, the maximum cost amount in the year, the cost at year-end, the income (or loss) in the year, and any gain (or loss) on disposal must be reported. Each of these items needs to be reported on an investment-by-investment basis. For example, information relating to each of the stocks within a brokerage account would need to be reported (as opposed to details on the brokerage account as a whole). An exemption from the detailed level of reporting is available if income from the investment is reported on a T5 or T3 Slip.
The federal government also announced a three year extension of the normal allowable reassessment period where this Form is not filed when required, or the required information is not properly disclosed.
Action Item: If foreign investments are held, prepare a summary of investments including the aforementioned components to reduce the accounting costs associated with the additional disclosures.
WEB TIPS: CRA’s YouTube Channel, bizpal.ca
CRA’s YouTube Channel
The CRA hosts a YouTube channel which provides a wide range of short video clips on various personal tax topics. The video clips are generally basic and easy to understand. Some of the topics include: Children’s Fitness Tax Credit, E services for Individuals, Pension Income Splitting, and Direct Deposit. To find the channel, go to YouTube.com and search for “CRA Channel”.
BizPal, www.bizpal.ca, is a free online service providing a database to simplify the process for determining the permit and license requirements to start and operate a business in Canada.
This online tool will prompt you for information pertaining to the business, including the location and industry, to populate a list of permits that may be required. Entrepreneurs, accountants and individuals involved in any type of organization, even charities and NPOs, may benefit from this website.
The service is jointly managed by the federal government, most provinces and territories (excluding Quebec and Nunavut), and numerous municipalities. If a community is not included in the online service, one should contact their respective jurisdiction for requirements.
Each participating jurisdiction will manage and determine which industry sectors to incorporate into the online service and subsequently identify various permits and licenses required.
Note that this website may not be all inclusive and the user should still conduct their due diligence to ensure regulatory compliance.
Action Item: Check this site before, rather than after, incorporating your Company to ensure that all angles are covered.
TAX TICKLER … a quick point to consider…
Considering the purchase or sale of a business? Taxation relating to Restrictive Covenants (ex. non-competition clauses) has changed.
If this is applicable in your situation, contact us for further details and planning possibilities.
Donna Mazerolle & Associates provides:
- Strategic Planning
- Business Plans
- Accounting and Bookkeeping
- Growth Strategies
- Budgeting and Forecasting
- Growth Management Strategies
- Turnaround Strategies and Management
- Help with Sourcing Funds
The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this newsletter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents. Do you have questions… give us a call at 506-657-4067 or 1-800-650-4067 (outside Saint John).