Padgett Business Services Ottawa
Just another WordPress site
The deadline for RRSP contributions for the 2011 tax year will be February 29, 2012.
The Income Tax Act sets the deadline as “on or before the day that is 60 days after the end of the year”, which is March 1st except in a leap year, when it will be February 29th.
If you pay the following expenses by December 31, 2011 they will be eligible for the deductions of credits:
|
The most popular tax tool available to taxpayers is investing in a registered retirement saving plan (RRSP).
Contributions to RRSP’s are tax deductible and the income earned within the plan grows tax deferred until retirement. You can claim a contribution of up to 18% of 2010 earned income to a maximum of $22,450. Earned income is defined as income from employment, from business, net rental income from real estate, CPP disability pension, certain types of royalty, and spousal or child support payments that are included in your income.
The contribution limit may be subject to the year 2010 pension adjustment reversals. Pension adjustments reflect, in most cases, your employer’s contributions to a pension plan or actuarial commitments to such plans in the year 2010. The age limit for contributing to an RRSP is 71. The age limit for converting an RRSP to an annuity or RRIF is also 71. Don’t over contribute!
The Honourable Ted Menzies, Minister of State (Finance), today delivered the keynote opening speech at the World Pension Summit in Amsterdam. His address focused on why Canada’s finance ministers decided to introduce a framework for Pooled Registered Pension Plans (PRPPs) as the most effective and appropriate way to bridge existing gaps in the country’s retirement income system.
“Canada’s retirement income system is recognized around the world by expert groups such as the Organization for Economic Co-operation and Development as a model that succeeds in reducing poverty among Canadian seniors and in providing high levels of income replacement to retired workers,” said Minister Menzies. “Our work with the provinces found, however, that some modest- and middle-income households may be at risk of under saving for retirement.”
“We opted to prioritize the PRPP framework because it was considered the most effective and appropriate way to target those individuals who may not be saving enough for retirement—in particular, the millions of Canadians who do not currently have access to a workplace pension plan,” said Minister Menzies.
“PRPPs will allow small business owners and their employees to have access to an accessible, large-scale, low-cost defined contribution pension plan for the very first time—with professional administrators working to ensure that funds are invested in the best interests of plan members,” said Minister Menzies. “And by pooling pension savings, we will allow Canadians greater purchasing power. Basically, Canadians will be able to buy in bulk so that more money is left in their pocket when they retire.”
While Canada’s retirement income system has received increased international attention as a model to emulate, Minister Menzies noted that a healthy system is one that is regularly reviewed to ensure that it serves Canadians as effectively as possible. “That is why we will be tabling PRPP legislation in the near future.”
Parents quite often make loans to their adult children to help them purchase a car, a home, or for other reasons. A loan is different from a gift. The parent can charge interest so that the loan will earn some investment income. The loan can be set up for blended payments of principal and interest or to pay interest only. There is no requirement for the parent to charge interest.
For a long term loan used to purchase a house, for example, it is quite possible that the loan will not be re-paid during the parent’s lifetime. The parent could provide in her or his will that any remaining balance of the loan will be forgiven or instead become part of the child’s inheritance. Such an arrangement does not cause any adverse tax consequences because the “debt forgiveness” rules in the Income Tax Act do not apply to the settlement of loans by inheritance or bequest.
Giving your child this type of “soft” loan is similar to giving them a part of their inheritance early, during your lifetime.
Did you know…
?
Canadians who filed their income tax and benefit return electronically or who have not enclosed their information slips and receipts with their paper-filed return should keep their tax and benefit records on hand in case they are contacted by the Canada Revenue Agency (CRA).
After returns are filed, the CRA begins work to verify reported income, as well as credits and deductions claimed. These reviews are an important method for the CRA to ensure Canadians are paying their fair share of taxes.
Some of the reviews of deductions and credits are done when returns are filed and before taxpayers receive their notice of assessment. However, most reviews take place later in the year, as the CRA works to verify the information on an individual’s return and compare it with information provided by other parties, such as an employer, a spouse, or a common-law partner.
During this review process, the CRA may contact taxpayers, usually by mail, to ask for more information on income sources or dependents. The CRA may ask for copies of receipts or information slips to support a number of different claims, for example:
Once the CRA is in contact, you have 30 calendar days to respond. Keeping your records on hand makes it easier to respond to these requests and will help you explain your tax and benefit situation to the CRA if you do not agree with your reassessment.
Receiving a request for receipts or documentation to support certain deductions and credits does not mean you are being audited by the CRA. When an individual is selected for an audit, the CRA tells them that their tax and benefit situation is being reviewed and calls to arrange a meeting to begin the audit.
For more information about reviews of returns by the CRA, go to www.cra.gc.ca/reviews.
Ottawa (Ontario), August 8, 2011. The Honorable Gail Shea, Minister of National Revenue, highlighted today the continued growth of the Tax Free Savings Account (TFSA) and thanked the Taxpayers’ Ombudsman for the recommendations released in his TFSA report entitled “Knowing the Rules.”
“Canadians gave us a strong mandate to continue our low-tax plan. We built on our aggressive tax relief by reducing taxes on savings with the landmark TFSA, the most important personal savings vehicle since the RRSP,” said Minister Shea.
“We are thrilled to see that Canadians continue to take advantage of this important savings vehicle,” said Minister Shea. “The CRA will ensure the Ombudsman’s recommendations continue to be implemented to further increase awareness of TFSA rules among Canadians so they may continue to enjoy the benefits of this increasingly popular investment vehicle.”
Over 98 percent of Canadians who have contributed to their TFSAs have managed their accounts within the rules associated with contributing to and withdrawing from TFSAs. As Canadians continue to invest their hard-earned money in TFSAs, and in order to benefit from the savings offered by the TFSA, the Canada Revenue Agency (CRA) wants to make sure that these rules are understood. The Agency continues to work with financial institutions and with individual Canadians to address information needs.
The CRA welcomes the Ombudsman’s report as an opportunity to improve services to Canadians and has developed an action plan to address the recommendations identified in the report. The plan includes: updated TFSA web pages, the issuance of relevant Tax Tips, community newspaper articles, and Webinars to financial institutions. These products will highlight the important information that Canadians should have about how the TFSA works, including how:
If you have questions about your TFSA, you are encouraged to contact the CRA at 1-800-959-8281 or visit the CRA Web site at http://www.cra.gc.ca/tfsa
Every business owner should be concerned about creditor proofing his or her assets. Here are several suggestions to consider:
1) Transfer assets out of the company:
2) Secure the business owner’s assets:
If you have a website or a blog and you charge for advertising, links, or reviews, you must report the income on your Canadian income tax returns. Send invoices to your clients and customers. If your invoices exceed $30,000 in the last four consecutive calendar quarters, you must register for HST/GST. Once you are registered, you must charge HST/GST to your Canadian customers and clients. Foreign customers or clients are not charged HST/GST.
If a corporation (including a for-profit or non-profit corporation) fails to deduct, withhold, remit or pay amounts held in trust for the Receiver General for Canada (CPP, EI, income tax and GST/HST), the directors of the corporation at the time may be held personally liable along with the corporation to pay the amount due. This amount includes penalties and interest.
Where the directors take appropriate steps to ensure the corporation makes the necessary deductions or remittances, Canada Revenue Agency will not hold the directors personally responsible.
| Sign up for our Small Biz Builder newsletter: |
