Alberta Child Benefit

Keep posted for an update on any proposed upcoming changes to this benefit in 2018.

The Alberta Child Benefit is available to assist lower-income families with children under 18. To be eligible for the ACB, you must:

  • be a parent of 1 or more children under the age of 18
  • have a family net income of less than $41,746 per year
  • be a resident of Alberta for at least 1 month prior to receiving the benefit
  • file a tax return

 To apply for this benefit, visit: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview.html#nt or contact our office and one of our personal tax professionals would be glad to assist you. 

2017 Personal Tax

It’s that time of the year again! Get your 2017 personal taxes filed on time. For self-employed individuals, the filing deadline is June 15, 2018. For all other individuals, the filing deadline is April 30, 2018. We can begin to file online as early as February 26, 2018.

If you are new to our firm, contact Carrie Tsui at (780) 482-3431, extension 312 to get started.

Changes in Reporting Requirements for Employers for Taxable Benefits

In 2018 the Canada Revenue Agency is making the following two changes to ease the burden for employers who have to report taxable benefits:

  • Employers who pay group term life insurance premiums for retirees will only have to report a paid premium if it is greater than $50 and it is the only income reported on a T4A slip. Previously, all amounts, regardless of how small, had to be reported.
  • The threshold for reporting employee benefits that result from employer-sponsored social events will be $150 per person, instead of $100. All other aspects of the related policy will stay the same.

Correct your taxes with the Voluntary Disclosures Program

The Voluntary Disclosures Program (VDP) gives you a chance to change a tax return you previously filed or file a return that you should have filed. By making these changes through the VDP, the Canada Revenue Agency (CRA) may give you relief from prosecution and penalties.

How do you make a voluntary disclosure?

Complete Form RC199, Voluntary Disclosures Program (VDP) – Taxpayer Agreement and submit documents online service through My Account and My Business Account or your accountant can submit it on your behalf.

 

Important facts

By applying to the CRA under the VDP, you might only pay the taxes you owe plus interest.

A valid disclosure has to meet all four of the following conditions:

  • a penalty would apply
  • it is voluntary, which means you make it before you are aware of the CRA taking any compliance action against you
  • the information is at least one year overdue
  • it includes all the relevant information.

Anyone can use the VDP, including individuals, businesses, employers, payers, trusts and estates, whether a resident or a non-resident of Canada.

Estate Planning – Trusts and Wills

We get a lot of questions regarding the estate planning process. Some common factors to note in the planning process include:

·       Creating a will

·       Creating a trust

·       Considering gifting

Creating a will is an important step in an individual’s estate planning process. If an individual passes away without a will, it becomes an intestate, in which assets become frozen and are distributed by the government or courts. Creating a will allows an individual to ensure their assets are distributed appropriately after death. Expenses to be considered upon death include funeral expenses, payment of outstanding debts, and probate fees. Probate is the process of verifying the will and validating the executor.

In Alberta, assets such as real estate held in the estate may be subject to probate fees when an individual passes away. In this case, gifting your assets or creating a trust can be established to avoid these probate fees. 

There are several types of trusts that can be created:

1.       A testamentary trust arises upon the death of a person. However, if you would like to create a trust during your lifetime, there is an option to create an inter-vivos trust.

2.       The advantage of creating an inter-vivos trust is to allow the separation of control of an asset from its ownership. When an inter-vivos trust is created, the individual is able to transfer ownership of assets into the trust to beneficiaries (such as children) without actually having to pass the control of the assets yet. This type of trust may be beneficial from a tax perspective. The process of creating a trust includes providing a legal trust agreement, applying for a trust number, and filing annual returns. Note that a trust is different from a personal tax return as a trust cannot claim personal tax credits and are subject to different tax rates should there be taxable sources of income. Contact our office to see if creating an inter-vivos trust is the right choice for you.

Principal Residence Exemption: New Legislation and Reporting Rules

Starting in 2016 tax year, all taxpayers are required to report basic information on their income tax return when their principle residence is sold in order to claim the principal residence exemption. The information that must be disclosed includes:

·        date of acquisition,

·        proceeds of disposition, and

·        description of the property.

The information needs to be included in Schedule 3 and filing it with the T1 Income Tax Return for the relevant year.  Schedule 3 has been modified accordingly.  Form T2091 (or Form T1255 – for a deceased individual) is still required for the designation in cases when the property was not the taxpayer’s principal residence for all of the years of ownership. This is also the case in deemed disposition situations like when a change of use occurs on the property.

If a taxpayer doesn’t make the appropriate filing, then the CRA (tax department) can impose a penalty.  The penalty is the lesser of the following amounts:

1. $8,000; or

2. $100 for each late filing month.

Planning Your Personal Taxes for 2017 – Federal Personal Tax Credits

The personal credits listed below apply for 2017:

                                                                                     Gross                              Credit (15%)

Basic personal                                                               $11,635                              $1,745

Spouse or eligible dependent(1), (2)                            $11,635                              $1,745

Canada Caregiver Credit

Infirm dependent under age 18 (3)                           $2,150                                 $322

Infirm dependent age 18+ (3)                                     $6,883                                 $1,032

Age(4)                                                                               $7,225                                $1,084

Disability                                                                        $8,113                                 $1,217

Additional disability for child under 18 (4)              $4,733                                 $710

Notes:

(1) Reduced by spouse’s net income.

(2) Enhanced by $2,150 ($322 credit) if dependent is infirm.

(3) Reduced by dependent’s net income in excess of $16,163;.

(4) The Age credit is reduced by an amount equal to 15% of an individual’s net income exceeding $36,430.

(4) Reduced if child care and attendant care expenses exceed $2,772.

The CRA (Canada Revenue Agency) has an important new update affecting all Canadian Charities!

The Canada Revenue Agency’s (CRA) is instituting a new online service for all registered charities to:

  • file their information returns
  • update and manage account information
  • check file status
  • receive and manage correspondence online

Charities will be able to access these services through the CRA’s My Business Account portal. The My BA requires each charity to have their own unique Business Number (BN) to access these services. As a result, new BN‘s will be created and issued for all internal divisions that currently share a common BN with their head body. Letters will be automatically sent to each impacted charity, providing them with their new individual number and a Business Number Summary. This summary will show details about all CRA program accounts.

Questions and answers

When will my BN change?
All internal divisions will start to receive their new BN‘s by mail starting fall 2017 and continuing until October 2018.

Do I have to do anything to get my new number?
No. Impacted charities will automatically receive a letter listing the Business Summary of all their updated accounts, including the new number.

Will this affect my registration, registration requirements, or legal structure?
No, it should not have an impact on your registration or requirements. The steps and requirements for registration will remain the same. For further information about registration requirements see our new guidance CG-028, Head bodies and their internal divisions.

If the charity made changes to the way it was legally established, such as becoming incorporated, it must also provide the Charities Directorate with a copy of its new governing document. For more information go to Changing a charity’s legal status.

Will I need to make any changes to my governing documents?
No, you should not need to make any changes to your governing documents if you have not made any changes to the way the charity was legally established.

When do I start using my new number?
As soon as you receive notification from the CRA, you must start using your new BN.

What information do I need to change on my official donation tax receipts?
You will need to change the BN to the new one. However, if you have pre-printed receipts, you can cross out the old number and write in the new one. When you order new ones, make sure to update them with your new number.

What will happen to receipts that have already been issued with the old number?
The receipts that were issued up until the date of the new BN will be accepted. Be sure to use your new BN on all future receipts.

Will this change the way I file my T-3010?
Yes, but the only change will be that you will now be filing using your new BN.

Will I have to file my T-3010 with both BN‘s?
No. You will file a 12 month return and use only the new BN number.

Will I have to file two returns one for the start of my fiscal year up to the date of the new BN and the other from the date of the new BN to the end of my fiscal year?
No. You will not need to file a transitional or short return, you will continue to file a full 12 month return using the new BN provided.

What effects will this have on my other program accounts?
Your other program accounts should not be affected. With the letter notifying you of your new business number, you will find a Business Number Summary that will list all of your accounts. You can review it to confirm the status of your other accounts. If there are any errors you can make changes on the summary and return it to the CRA for action.