The more things change, the more they stay the same………as many of you know, on September 19, 2017, we returned to our Baseline Rd office location at 301 – 1889 Baseline Road. Clients advised us that they prefer this location. You will see many familiar faces, and a few new ones, as we continue to provide our clients ongoing tax and accounting corporate services. Our telephone and fax numbers are unchanged at 613-728-8681 and 613-729-3168 respectively. Our emails remain firstname.lastname@example.org, email@example.com, firstname.lastname@example.org and email@example.com.
If you are delivering your slips and receipts by email, please use firstname.lastname@example.org
For the 2017 Tax Year, there are a number of minor tax changes. The Transit tax credit was eliminated effective June 30, 2017, as was the text book allowance for students, plus some other minor changes. Ther is a significant change from last year in the new reporting requirement for the Sale of your Principal Residence. Previously, CRA did not require any special reporting when you sold your principal residence (if the property was your principal residence for every year you owned it). Starting with the 2016 tax year, we have to report basic information (when was it bought, how much it sold for and the address) on your tax return, if you want to claim the full exemption. This applies to deemed dispositions as well. If you forget to report, you should ask CRA to amend your income tax return for that year.
CRA has tightened up on the processing of the ‘foreign tax credit’ for taxes withheld in other countries, typically the US. CRA now requires the equivalent of a Notice of Assessment from the I.R.S. The US tax filer has suggested that for those clients who require a US1040 tax return, on your behalf, he asks the I.R.S. for a ‘tax transcript’ at the time when he submits your US1040. If e-filed, it takes 2 – 4 weeks before a transcript becomes available, and about 6 weeks if the return is mailed. There will be a nominal extra charge for this service. We will need that transcript for the inevitable enquiry letter from CRA. (For our UK dual filers, you already supply us with the appropriate paperwork).
INCOMING DEADLINE – Unless your tax data is received by us on or before 4 pm, Friday, April 13th, we cannot guarantee that your T1 taxes will be filed on time. Please help us help you.
Personal Tax Checklist
o Changes to any dependent information in your family (e.g. new children)
o New address information o Change to marital status o Amount of tax installments paid
o Notice of assessment/reassessment for prior year
o Last year’s income tax return (new clients only) o Rent and/or property tax paid
o Are either you or your spouse US citizens or Greencard holders?
o Have either you or your spouse spent more than 120 days in the US in 2016, 2015 or 2014.
o Receipts and Information Slips o Information slips (T3, T4, T4A, T5, T4RSP, T4E, T4P, T4A(OAS), T4RIF, T5013, RC62, etc.)
o RRSP contribution slips o RRSP home buyers plan / lifelong learning plan statements
o Tuition fee slips (T2202)
o Union or professional dues receipts
o Official charitable/political donation receipts
o Medical expense receipts for yourself and your dependents
o Public transit passes through June 30 2017
o Student loan interest receipts
o Statement of interest paid for business or investment loans
Other Income and Deductions
o Amount of spousal support paid or received
o Other pensions not included in information slips
o Sale of stocks, bonds, mutual funds or real estate • Number of units • Sales proceeds • Adjusted cost bases • Commission • Investment broker statements
o Child care expenses – including caregivers name and SIN (for individuals only)
o Sale of Primary Residence o Address/Year Bought/Selling Price
o Moving expenses o Investment counsel/management fees
o First-time home buyer? (acquisition date of home)
Rental Income and Expenses
o Detailed listing of rental income and expenses for the year per property (Please contact us if you would like a template for these types of income and expenses)
o Details on all property repairs/maintenance and fixed asset additions for the year.
Employment Expenses – T777
o T2200 (Statement of Conditions of Employment) signed by employer
o Listing of employment expenses (Please contact us if you would like a template for these types of income and expenses)
o Number of kilometers driven for employment purposes and total kilometers driven for the year (if applicable)
o Area of home used for employment purposes and total area of home (sq. ft.) (if applicable)
Self-Employment Income and Expenses
o Detailed listing of self-employment income and expenses for the year (Please contact us if you would like a template for these types of income and expenses)
o Details on all capital asset additions and/or disposals Number of kilometers driven for business purposes and total kilometers driven for the year
o Area of home used for business purposes and total area of home (sq. ft.)
o Business number and copies of HST returns filed or confirmation that we should prepare your HST returns
Do you own foreign property/investments with a total cost of more than $100,000?
If so, please provide the following:
o Investment statements at December 31 for each Canadian brokerage account that holds foreign investments
o Details of any Canadian brokerage accounts that were closed during the year that held foreign investments
o Name of foreign institution/investment, country where property is held, adjusted cost base, highest cost base during the year, gross income and capital gains generated from property
o Listing of any income generating foreign real estate property owned
The Million Dollar Savings Calculator: Want to Know How Long You Need to Save to Become a Millionaire?
This financial calculator will tell you how many years you will need to save in order to accumulate $1,000,000.
For example, if you’re planning to retire with $1,000,000, you’re able to save or invest $400 a month and think you can achieve a 6% return on your money each year, enter “$400” as the Monthly Savings Amount and “6%” as the Annual Rate of Return. If you already have $20,000 saved up, enter “$20,000” as your Current Amount Saved.
How many years will it take you to accumulate $1,000,000? Use this financial calculator to find out.
|Current Amount Saved:|
|Monthly Savings Amount:|
|Annual Rate of Return (%):|
A fixed-rate mortgage amortizes over the loan’s repayment period, meaning the proportion of interest paid vs. principal repaid changes each month while the total monthly payment stays the same. As the loan amortizes, the amount of monthly interest paid decreases while the amount of principal paid increases.
To generate an amortization calculator for a fixed-rate mortgage, use the calculator below. For example, if you’re going to borrow $100,000 at 5% and repay it over 30 years, enter “$100,000” as the Mortgage Amount, “30” as the Term, and “5” as the Annual Interest Rate.
This loan amortization calculator creates a table that shows the total amount of interest and principal payable to the lender, the portion of each monthly payment that is interest or principal, and the balance outstanding at any given point in time.
|Annual Interest Rate (%):|
I find John easy to work with, friendly, and flexible in his approach in terms of listening carefully and addressing what’s important to me as a client.
John provides international tax advice which includes a significant amount of US and cross border services.
We wanted to share with you what colleagues are saying:
“Since 2015, our firm has worked with you extensively, with U.S. Income Tax and the associated U.S. informational tax returns.
Based on my experience, I can attest to your knowledge of the complex U.S tax law and cross border tax issues unique to US persons living/working in Canada or Canadian Citizens living/working in the US. It is rare to find a tax professional that understands, or cares to understand, foreign tax rules and requirements.
What I find just as satisfying is your professionalism, particularly with priority to customer satisfaction. This is evident from my contact with our clients, from my review of your work product and on how quickly you respond to my requests for more information at all hours of the day.
I look forward to our continued relationship”.
Thanks for the shout out.
John and Laura Lunn and the team at John Lunn Chartered Accountant
Our doors are open, files are coming in, and we are here to help. Prepare your paperwork, check what is missing and note it down for us and for yourself, and bring in the file this week. We will open this year’s file and get the ball rolling. You can bring in the missing slips when they arrive.
We are energetic and want to do your work sooner rather than later.
Help us to help you.
See you soon
John and the tax team
Sunday April 13th at 3pm CRA opened the portal and the site was live. We logged on immediately and started to file.
All the files waiting for E File were processes when the site came up on Sunday.
“Thank you,” (The thank you is here because at this time of year an accountant
needs all the “thank you” that he can get)
Email text from a client.
It is great to get to see our clients over the tax season. Thank you for your appreciation of our efforts. A client emailed the above quote.
You made our day. We all have big smiles.
Keep those tax files a coming……..
Happy New Year, and best wishes for 2013.
• TFSA limits have increased. One can now contribute up to $5,500 per year to your TFSA account. Plus up to $5,000 p.a. of any unused contributions from prior years.
• CRA is extending the audit of Medical claims. In order to assist our clients, we have a new process in place. If you have incurred significant medical expenses, (more than $3,000 in 2012) we ask that you make every effort to deliver the medical slips/summaries/receipts early, that is by February 15th, as we need extra time to book this paperwork in the required format. You can request an annual summary statement from your Extended Health Care provider, Pharmacy and Dentist. We also ask that you deliver the balance of your tax paperwork at the regular time.
• The Healthy Homes Renovation Tax Credit is a permanent, refundable personal income tax credit for seniors (65) and family members who live with them. If you qualify, you can claim up to $10,000 worth of eligible home improvements for each calendar year on your tax return. Your refundable credit (cash back) is calculated as 15 per cent of the eligible expenses you claim. For example, if you spend and then claim $10,000 worth of eligible expenses, you could get $1,500 back. Not all renovation work qualifies for this tax credit. Before you start any improvements, check to see that the work qualifies so you can claim the expense. Examples of work that qualifies: Non-slip flooring in the bathroom, installing a hand-held shower, widening passage doors, wheel-in showers, hands-free taps, and door locks that are easy to operate. Examples of work that does not qualify: Renovations or repairs that simply improve the value of a home or are recurring repairs don’t qualify, such as: Plumbing or electrical work, replacing insulation, outdoor maintenance services, repairs to a roof, and installing new windows.
Save and summarize your eligible receipts for any modifications you make. Each slip has to be entered individually, by vendor, including his/her GST/HST #, the dates and the amounts.
The Big Picture
• Do you have a ‘bucket list’ of things you’d like to do before you die? Create a plan and a time line to get them done, sooner rather than later. After all, wasn’t Henry VIII right to say carpe diem.
• Do you want to make an impact in ‘the world out there’? How about volunteer work or making a significant donation to charity?
• What can you do to improve your relationships with family and friends? Could you spend more time with them, especially the out-of-towners? How about helping out those who are having a tough time financially? Help now, while they need it, not in 20 years time from your Estate.
• Treat yourself better…when was last time you ‘dressed for dinner’ and went to a really good restaurant? Ask yourself, ‘Why do we save money?’ Is this an exclusive responsibility? There is more to life than building a ‘pile’.
When you do not report all your income….
Subsection 163 (1) of the Income Tax Act is gruesome. If you fail to report an amount of income in any two years out of four, you are subject to a special penalty under that subsection. This penalty is 20% of the unreported income, being 10% at the Federal level and a parallel 10% provincial penalty. CRA will assess the combined penalties in every province other than Quebec (where Revenu Québec will assess it). This penalty applies even if you paid tax on the income, such as by having tax withheld at source on employment income. Please double-check that you have gathered up and brought in all your slips. What we have seen happen with a handful of our clients is that they get busy, or distracted with children’s activities or aging parents or careers or such, and they ‘miss’ something at tax time, such as in the assembly of paperwork or at the review/sign-off session.
Here is an example of what happened in one such case….
In 2009, a client had $65,000 of employment income from two different jobs, and $3,000 of interest income on investments. When she gave us her records in April 2010 to have her T1 return prepared, she overlooked one T5 showing $500 of the $3,000 interest income, and so her return reported total income of $67,500 instead of $68,000. As it was late in the tax season, in the rush, she signed the return without noticing this oversight. The $500 came from a new investment, so we had no comparative number against which we could check.
In 2011, she had $80,000 of employment income from three different jobs, and tax was withheld at source from each one. We are still not sure if one of the employers did not send her a T4 for $15,000 of income, or perhaps he sent it to a wrong address. When she gave her records to us in April 2012, she did not realize that she provided us only two T4’s instead of three. So we prepared her return (for E-filing it, as is now required), and when she reviewed it, she again did not notice that $15,000 of income was missing. Again, as this employment was a ‘new’ event, we had nothing against which we could compare. However, since tax of $6,000 was withheld on the $15,000 of income, and the T4 showing the amount withheld was not included with her return, she was not actually underpaying her taxes because she did not claim a credit for that $6,000 withheld.
A harmless oversight, since no tax was underpaid? Think again., When CRA found the missing income (which CRA has copies of all T-slips including the T5 from 2009 and the T4 from 2011), it assessed our poor client a penalty of 20% of the unreported $15,000, or a very painful $3,000. This penalty applied even though her under-reporting in 2009 was only $500. There is a remote possibility that the taxpayer can prove she acted with due diligence, in which case we can apply to have the penalty reversed.
While we go to extra-ordinary lengths to review and check your T1 tax returns, we (like any other tax preparers) rely on the client to provide us with the essential data. So be very careful to report all your sources of income — especially small amounts of investment income that might count as the “first” of the two years of non-reporting!
Passwords and Computer Security 25 Worst Passwords –
1. password 2. 123456 3. 12345678 4. Qwerty 5. Abc123 6. monkey 7.1234567 8. letmein 9. trustno1 10. dragon 11. baseball 12. 111111 13. iloveyou 14. master 15. sunshine 16. ashley 17. bailey 18. Passw0rd 19. shadow 20. 123123 21. 654321 22. superman 23. Qazwsx 24. michael 25. football
Now that you’ve had a chuckle, try to create passwords that can be easily remembered. One way to do this to create a password based on a song title, affirmation, or other phrase. For example, the phrase might be: “This May be One way to Remember” and the password could be: “TmB1w2R!”, or Tmb1W>r~” or some other variation.
Characteristics of Strong Passwords
• Contain at least three of the five following character classes: Lower case, upper case, numbers, punctuation, special characters. • Contain at least fifteen alphanumeric characters • Not a word found in a dictionary • Not a common usage word
MIXED MARRIAGE – Trap or Tip
In a ‘mixed marriage’, where one spouse is both a Canadian and a US tax filer, and the other spouse only files Canadian Tax returns, there is a tax ‘trap’ or ‘tip’ of which you may be aware. In Canada, as you know, there is a full income tax exemption on the sale (disposition) of one’s primary residence. In the US, however, only the first US$250,000 is exempted. This may leave an unexpected tax burden on the US tax return of the Estate of a dual citizen who dies owning all or a share of their home in Canada. (Yes, complex stuff, I know, so it is okay to go back and read the sentence again). The answer may be to GIFT your half of the family home to your (Canadian) spouse, and gift it now. Much of this issue depends on the value of your estate….the limits were US$5,000,000, which expire on December 31, 2012. From 2013 onwards, that limit drops to US$1,000,000. So if you own a large home, and a cottage, and if your estate is worth more than $1,000,000, you may wish to make some changes.
Watch your pension designation after a divorce or separation…
A landmark Ontario case has sparked a dramatic shift in the way pension plan administrators must deal with the common law spouses of plan members. In Carrigan vs. Carrigan Estate, a man died before retirement, with both a legal and a common law spouse. Previously, the law deemed the (newer) common law spouse to be the beneficiary, however this split decision has caught administrators by surprise. If you are in a new relationship, we suggest you check the pension designation carefully.
PUZZLES & BRAIN TEASERS: This year’s Quiz
Use four 9’s in a math equation that equals 100. Every year, the Quiz response has grown, and I encourage you to respond. As you know, I donate to charity based on your answers.
Here is one for fun. Pick a number between 1 and 10 (including 1 or 10). Multiply your number by 9. Add the digits of the number created in step two. Subtract 5 from the number created in step three. Find the letter in the alphabet that corresponds to the number created in step four, ex: 1=A, 2=B, 3=C,… Pick a country in Europe that starts with the letter you found in step five. Pick an animal that starts with the last letter of your country. Pick a colour that starts with the last letter of your animal. Let me guess what you got!
Scientists have finally discovered……
What is wrong with the human brain: One the left side, there is nothing right, and on the right side, there is nothing left.
Due to a water shortage in Ireland……
Dublin swimming pools have announced they are closing lanes 7 and 8.
Did you ever notice: The Roman Numerals for forty (40) are XL. Does the name Pavlov ring a bell?
Wheels cost a bundle….
Jason Heath reports that a typical four-door sedan, driven 18,000 km per year, costs about $6,500 p.a., or about $18 per day. With those costs, more and more people are using car-sharing.
Income Tax Checklist:
For returning clients, we recommend you pull out the package we prepared for you last March/April.
Find the folder with the ‘Slip summary’. Try to sse that as your guide as you assemble paperwork.
Our tax Checklist is available on request, or online at http://www.johnlunnca.com. This may be useful for clients who are new to our practice and who might need guidance in organizing your T-slips and tax data.
Also, we remind all our clients that CRA now require that tax preparers e-file ALL tax returns.
As you know, we try to be responsive to the individual needs of each client. In terms of dropping off the tax paperwork if you find you are over-committed at home or at work, or if you have difficulty with stairs, CALL US. We have a reliable courier service, and we easily make arrangements on a case-by-case basis.
John H. Lunn CPA CA
John Lunn Chartered Accountant
Tel 613-729-8681 email email@example.com Fax 613-729-3168
Thanks to Marcil Lavallee, and the National Post for help with many of these articles. Did you get an orange kangaroo?
On September 19, 2012, Accountants and Simply Advisors received their advance copies of the 2013 version of what used to be called Simply, now SAGE 50.
There are three new items of special interest…..
A The ability to post FUTURE YEAR payroll cheques (a useful feature at year end, while cleaning up the ‘old’ year)
B The report writing capabilities have grown significantly
C Another layer of analysis, (useful to some), has been added,
in addition to DEPARTMENTS, there is now also a JOB SITE category.
There are other nice features as well, such as the ability to set up on-line sales to US$ customers….
It keeps getting better.
Let me know if you have any questions.
TEL: 613-729-8681 FAX 613-729-3168