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Category: Personal

Trust Reporting Requirements

Posted on by david

UPDATE: August 12, 2024

The Department of Finance recently proposed additional relief for bare trusts, aiming to give trustees extra time to adjust to new reporting requirements. The proposal suggests that bare trusts would not need to file a T3 return for the 2024 tax year. Furthermore, Finance intends to permanently exempt certain categories of bare trusts from these reporting requirements.

This proposal was included in draft legislation released on August 12, 2024. If enacted, these adjustments would reduce the number of bare trusts required to file trust returns compared to the current rules, although many common bare trusts would still not qualify for any proposed exemptions.

The proposed changes include temporary relief from filing a 2024 T3 return for bare trusts and propose that certain types of bare trusts would be exempt from filing obligations starting with the tax year ending December 31, 2025. Additionally, the proposals clarify the criteria for what constitutes a “bare trust” for reporting purposes.

Proposed exemptions to filing T3 returns:

Starting with the 2025 tax year, certain bare trusts may be exempt from filing a T3 return if, throughout the year:

  • All beneficiaries are legal owners of the trust property, and all legal owners are also beneficiaries.
  • All legal owners are related individuals, and the property qualifies as real estate eligible to be designated as a principal residence for at least one of these owners.
  • A legal owner is an individual holding real estate solely for the benefit of their spouse or common-law partner, and that property could be designated as the owner’s principal residence.
  • Each legal owner is a partner (not a limited partner) holding property exclusively for the partnership’s benefit, and at least one partner is obligated to file a partnership information return.
  • The property is held by a legal owner in accordance with a court order.
  • A non-profit organization holds funds from federal or provincial governments for the benefit of other non-profits.

Under these proposals, certain common bare trusts may be exempt from T3 filing, such as:

  • Spouses with a joint bank account for their mutual benefit.
  • A parent on the title of a child’s primary residence to help secure a mortgage.
  • Spouses living in a jointly occupied family home where only one is on the title but it can be designated as a principal residence.

However, some bare trusts would not qualify for these exemptions. For example, where an adult child has been added to a parent’s bank or investment account to help administer it, or an in-trust account for a minor or an adult child.

The Department of Finance also suggested expanding exemptions from filing the T3 Schedule 15 which requires the disclosure of detailed information for each trustee, beneficiary and settlor of the trust, as well as any person who has the ability to exert influence over trustee decisions regarding the allocation of trust income or capital in a year. To be exempt from filing the T3 Schedule 15, the trust must meet the following conditions:

  • Each trustee of the trust is an individual;
  • Each beneficiary is an individual who is related to the trustee; and
  • The total fair market value of the trust’s property does not exceed $250,000 throughout the year, and the trust’s only assets held throughout the year are one or more of the following:
    • Cash;
    • A guaranteed investment certificate (GIC) issued by a Canadian bank or trust company;
    • A debt such as a bond or debenture issued by a government agency where the interest is fully exempt interest;
    • A debt obligation, such as a bond issued by:
      • A Canadian publicly traded corporation, mutual fund trust or partnership;
      • A foreign publicly traded corporation; or
      • A Canadian branch of a foreign bank.
    • A share or debt listed on a designated stock exchange;
    • A share of a mutual fund corporation;
    • A unit of a mutual fund trust;
    • An interest in a related segregated fund trust;
    • An interest as a beneficiary under a publicly traded trust;
    • Personal-use property of the trust; or
    • A right to receive income on property described above.

As a result, smaller trusts without any corporate trustee, corporate beneficiary and assets that meet the above criteria with a total fair market value of $250,000 or less would be exempt from the enhanced reporting requirements (Schedule 15).

Moreover, amendments have been proposed for smaller trusts that hold assets with a total fair market value of $50,000 or less to also be exempt from the enhanced reporting requirements even if those trusts have corporate trustees or whose beneficiaries may not be an individual who is related to each trustee. Under the existing legislation, the “small trust” exception only applied where the trust held certain types of property; the proposed amendments have removed any exclusions based on the types of property held for the “smaller” trusts.

Even if a trust qualifies for a T3 Schedule 15 exemption, it may still need to file a T3 return for that tax year.

Navigating the New Trust Reporting Rules in Canada with In-depth Insights on Bare Trusts

The Canadian government’s new trust reporting rules, effective from the 2023 tax year onward, aim to enhance transparency and ensure accurate reporting of income generated within trusts. These changes apply to various trust structures, including family trusts, testamentary trusts, alter ego trusts, and notably, bare trusts. T3 Returns and disclosure forms for taxation years ending on or after December 31, 2023, must be filed by April 2, 2024.

Key Highlights:

Enhanced Disclosure Requirements: All trusts, including bare trusts, must adhere to more detailed reporting. This includes identifying trustees, beneficiaries, and settlors, including names, addresses, and Social Insurance Numbers. Specific transactions and events, such as distributions and contributions, must also be reported. Under these rules, beneficiaries include persons who currently have a right to income or capital as well as those having residual or contingent interests. As a result, some beneficiaries might not know that they have an interest in the trust, which could cause issues when collecting information from them.

A trust would be considered to have met the reporting requirements if it provides this information for each trust beneficiary whose identity is known or ascertainable, with reasonable effort at the time of filing. For beneficiaries whose identities are not known or ascertainable, a trust can comply by supplying sufficiently detailed information on the T3 return to determine with certainty whether any particular person is a beneficiary.

Penalties: The updated reporting rules also introduce a new penalty for non-compliance: either $2,500 or 5% of the property’s value, whichever is greater. This is in addition to the existing penalties for the failure to file a trust return. In guidance issued on December 1, the CRA announced that no penalties would be imposed for submitting a trust return and a Schedule 15 for bare trusts after the 2023 tax year deadline. It’s important to note that the filing requirement remains in place, and penalties may be applied for knowingly or grossly negligent failures to file, according to the CRA. Recognizing that the 2023 tax year marks the first instance where bare trusts must file a T3 return with the new Schedule 15, the CRA is taking an education-first approach to compliance and offering proactive relief to address potential uncertainties among bare trusts about these new requirements.

Common Exceptions:

  • Trusts which have been in existence for less than three months at the end of the year;
  • Trusts which hold less than $50,000 in assets throughout the taxation year (provided their holdings are confined to cash, certain debt obligations, and listed securities)
  • Estates that qualify as graduated rate estates during the initial 36 months after the individual’s death
  • Trusts that qualify as non-profit organizations or registered charities

Insights on Bare Trusts – Real-Life Examples: Bare trusts are a simple concept; it is where one person’s name is shown as the owner of an asset, but the asset truly belongs to someone else. The trustee is merely vested with legal title and has no independent duties or powers concerning the trust property. The trustee’s sole responsibility is to deal with the property as the beneficiary directs. The beneficiary retains the full beneficial ownership of the property in question, and, as a result, the income and gains realized on the trust property are taxed in the beneficiary’s hands.

Adding Children on Title to a Family Home or Cottage:
Scenario: Parents put property in their children’s names for estate planning purposes, or to minimize probate tax, with the parents retaining beneficial interest.

This joint ownership typically results in the creation of a bare trust, where the adult child becomes the trustee, holding legal title but with limited authority. The parent, as the settlor and sole beneficiary, retains control over decisions related to the property. The adult child acts solely on the parent’s instructions and cannot take any action without their direction.

For instance, if the parent decides to sell the family home, the adult child’s role is to convey legal title based on the parent’s instructions. The proceeds from such a sale entirely benefit the parent.

Reporting Obligation: The bare trust, in this case, involves children holding legal title while the parents are the settlors and the beneficiaries. The children must report the details of the property and the beneficial interest held by the parents.

Parents Holding Partial Title on Children’s Property:
Scenario: Parents and children jointly own a property, with each party having a distinct share in the property.

In the current competitive real estate market, it’s not uncommon for parents to agree to be included on the deed and mortgage for their adult child’s home. This helps facilitate the child’s eligibility for a mortgage even though the parents haven’t financially contributed to the purchase and won’t have any active responsibilities concerning the property. In this case, it is likely a bare trust has
been created.
Reporting Obligation: In this scenario, each party’s ownership interest must be disclosed. The trustees, in this case, are both the parents and the children and the reporting should outline the specifics of each party’s share.

Joint Bank Accounts:
Scenario: A parent includes their child as a joint owner of a bank account, allowing the child to assist with tasks like bill payments and other banking matters on behalf of the parent. Both individuals acknowledge that the funds in the account are intended exclusively for the parent’s benefit.

Reporting Obligation: The trust reporting requirements may extend to joint bank accounts where one party holds legal title, and the other party is a beneficiary. The details of the account, including transactions and beneficial interests, must be accurately reported.

In-Trust-For Accounts:
Scenario: A parent deposits money into an “in-trust” account for the benefit of a minor family member. In this arrangement, the minor, designated as the beneficiary, has the right to close the account and access all funds once they reach the age of 18.

Reporting Obligation: The trust reporting requirements may extend to informal “in-trust-for” accounts where one party holds legal title, and the other party is a beneficiary. The details of the account, including transactions and beneficial interests, must be accurately reported.

Conclusion
Staying informed about the new trust reporting rules, especially concerning bare trusts, is critical for trustees. It is crucial to note that bare trusts will now be required to file a T3 tax return, adhering to the enhanced disclosure requirements outlined by the Canadian government. Our team is here to support you in adapting to these changes and ensuring a seamless transition. If you have any questions or require further clarification on how these changes may impact your specific bare trust situation, please do not hesitate to reach out to us. We are committed to assisting you in navigating the evolving landscape of
tax regulations.

First Home Savings Account

Posted on by david

Beginning in 2023, Canadians planning to buy their first home may open a First Home Savings Account (FHSA). This is a registered savings plan for any Canadian, over the age of 18, who has not previously owned a home that they have resided in for the past four years.

The FHSA begins when you first open an account; it does not begin automatically. It is therefore important that you open your FHSA immediately if you plan on purchasing a home in the short-term, even if you don’t have funds to contribute in the first year. And when you do open a FHSA, you must file your income tax return for that year. Accounts may be opened through a FHSA issuer, such as a bank, credit union, or a trust or insurance company.

You may carry forward up to $8,000 of your unused annual contribution amount to use in a later year (subject to the $40,000 lifetime contribution limit). For example, if you open an FHSA in 2025 and contribute $5,000, you can contribute up to $11,000 in 2026. Carry-forward amounts do not start accumulating until after you open an FHSA.

Don’t have $8,000?  No problem. You can transfer amounts from your RRSPs to your FHSAs without any immediate tax consequences, as long as it is a direct transfer. These transfers are subject to FHSA annual and lifetime contribution limits and are not deductible from income.  Transfers from an RRSP to an FHSA do not restore your RRSP contribution room.

First Home Savings Accounts can be used to invest in Stocks, ETFs, options and much more just like a TFSA or RRSP. In essence, the FHSA is similar to TFSA and RRSPs, but specifically for people looking to buy their first home. You can also continue to contribute until you’ve reached the lifetime limit, or 15 years after the account’s initial opening.

The FHSA is different from an RRSP Home Buyers’ Plan which allows you to withdraw up to $35,000 from your RRSP to help you buy your first home. The money must be repaid to your RRSP within 15 years, otherwise it is included in income. For details visit our Home Buyers’ Plan page.

To be eligible, you must not have owned real property including a condominium or house solely or jointly with a spouse or common-law partner within the last four years. Your spouse or common-law partner also may not own your current primary residence.

For more details on the FHSA, call us at 905-898-4900, or check out CRA’s page

Registered Retirement Savings Plan (RRSPs)

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Contribution Deadline

The deadline for contributing to your 2025 RRSP is March 2, 2026.

Contribution Limits

The basic overall 2025 limitation for individuals (regardless of whether or not they are members of a pension plan) is the lesser of $32,490 and 18% of earned income (based on 2024 income). The contribution limit is reported on your latest notice of assessment or notice of reassessment. Your contribution limit can be confirmed by calling Canada Revenue Agency’s T.I.P.S. service at 1 (800) 267-6999. You will be asked for your SIN, month and year of birth and your net income from your 2024 return. In addition, information on your RRSP can be obtained through the internet at my account.

For members of company pension plans, the limitation will be reduced by the “pension adjustment” as calculated by their employer and reported on their T4. The pension adjustment represents the value of pension benefits accruing to the employee for the year, as well as any past service pension adjustments.

Future years’ contribution limits have been established as follows:

2026  $33,810

2027  $35,390

Age Limit

The year you turn 71 is the last year you can make a contribution to your RRSP. If you contribute to a spousal RRSP, your spouse must be 71 or younger on December 31 of the year you make the contribution.

Spousal RRSP’s

A spousal RRSP names your spouse as the annuitant of a plan to which you have made a contribution and taken a deduction.

  • This is effective as an income splitting vehicle in retirement years
  • Spousal contributions are subject to the same contribution limits as those of your own plan
  • Attribution of income will occur if funds are withdrawn from any spousal RRSP within the calendar year that the contributions were paid or either of the two following years

Home Buyer’s Plan

See separate page

Conversion

An RRSP must be converted to a Registered Retirement Income Fund (RRIF) by the end of the year in which you turn 71

RRIF owners are required to withdraw a minimum amount each year, starting the year after the RRIF is established. To obtain the amount which has to be withdrawn, please contact us at 905-898-4900

Miscellaneous

Over-contributions in excess of $2,000 are subject to a 1% per month penalty

Contributions early in the year maximize tax-free earnings in the plan

Late contributions minimize the time lag between cash outflow and potential tax refunds

RRSP Decisions

Is it better to invest in RRSPs or in a non-registered account?

Are you better off to pay down your mortgage, or contribute to an RRSP?

Should you borrow to contribute to an RRSP?

Which investments should be held inside vs. outside the RRSP?

Registered Education Savings Plan (RESPs)

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What is an RESP?

  • A contract between an individual who is the subscriber, and a person or organization who is the promoter
  • The subscriber (or a person on behalf of the subscriber) makes contributions to the RESP, which earns income
  • Government grants (if applicable) will be paid to the RESP (see below)
  • The promoter agrees to pay the income as educational assistance payments to one or more beneficiaries designated in the contract
  • Only spouses can be joint subscribers under an RESP
  • RESP contributions are not deductible from the subscriber’s income
  • If a plan allows for more than one beneficiary (commonly called a family plan), each beneficiary must be related to each living subscriber and must not have reached 21 years of age when he or she is named as beneficiary

Canada Education Savings Grant (CESG)

  • Human Resources and Skills Development Canada (HRSDC) provides an incentive for parents, family and friends to save for a child’s post-secondary education by paying a grant based on the amount contributed to an RESP for the child
  • No matter what your family income is, HRSDC pays a basic CESG of 20% of annual contributions made to all eligible RESPs to a maximum $500 in respect of each beneficiary ($1,000 in CESG if there is unused grant room from a previous year), and a lifetime limit of $7,200
  • The 20% grant is doubled to 40% for the first $500 contributed to an RESP by families with incomes up to $55,867 in 2024 (maximum $600)
  • For families with incomes between $55,868 and $111,733 in 2023, the grant will be increased to 30% for the first $500 contributed to an RESP (maximum $550)

RESP Contribution Limits

  • There is no longer an annual contribution limit however there is a lifetime limit of $50,000 for each beneficiary
  • Every child under age 18 who is a Canadian resident will accumulate $400 (for 1998 to 2006) and $500 (from 2007 and subsequent) of CESG contribution room. Unused CESG contribution room is carried forward and used when RESP contributions are made in future years provided that the specific contribution requirements for beneficiaries who attain 16 or 17 years of age are met
  • Only one previous year’s worth of contributions can be used each year so you are limited on how quickly you can “catch-up” on past unused contribution room.  For example, if you open an account for your three-year-old child, you can contribute $2,500 (this year’s contribution room) plus another $2,500 (from previously unused contribution room) for a total of $5,000, to receive a grant of $1,000.  You are allowed to contribute more than $5,000, but there will be no grant paid on the amount above $5,000.  Next year, to fully “catch-up”, you can make another $5,000 contribution to receive an additional grant of $1,000

RESP Fees

  • It is very important to understand exactly what fees are going to be paid out of the RESP to the promoter, and when the fees are taken. Normally the fees are paid before the RESP earns any income, and a subscriber could lose all contributions to the fees if payments to the RESP are discontinued. Fees may also be charged on each payment out of the RESP

Payments from an RESP

Return Of Contributions

  • Subject to the terms and conditions of the RESP, all contributions made to the RESP by the subscriber can be returned to the subscriber
  • Because RESP contributions are not deductible when made, they are not taxable when returned
  • The CESG must be repaid if the beneficiary does not go on to a post-secondary educational institution
  • However, you may not have to repay the CESG when you replace the beneficiary with a child who is under 21 and a brother or sister of the original beneficiary

Educational Assistance Payments (EAP)

  • An EAP is the amount paid to a beneficiary (a student) from an RESP to help finance the cost of post-secondary education
    • The student is enrolled in a qualifying educational program. This includes students attending a post-secondary educational institution and those enrolled in distance education courses, such as correspondence courses, provided by such institutions; or
    • The student has attained the age of 16 years and is enrolled in a specified educational program
    • The promoter can only pay EAPs to or for a student if one of the following situations applies:

A beneficiary is entitled to receive EAPs for up to six months after ceasing enrolment, provided that the payments would have qualified as EAPs if the payments had been made immediately before the student’s enrolment ceased.

A qualifying educational program is an educational program at post-secondary school level, that lasts at least three consecutive weeks, and that requires a student to spend no less than 10 hours per week on courses or work in the program.

A specified educational program is a program at post-secondary school level that lasts at least three consecutive weeks, and that requires a student to spend not less than 12 hours per-month on courses in the program.

A post-secondary educational institution includes:

  • A university, college, or other designated educational institution in Canada;
  • An educational institution in Canada certified by Human Resources and Skills Development Canada (HRSDC) as offering non-credit courses that develop or improve skills in an occupation; and
  • A university, college, or a university outside Canada that has courses at the post-secondary school level at which the beneficiary was enrolled on a full-time basis in a course of not less than three consecutive weeks
  • An EAP has to be included in the beneficiary’s income for the year the EAP is received
  • For RESPs entered into after 1998, the maximum amount of EAPs that can be made to a student as soon as he or she qualifies to receive them is:
    • For studies in a qualifying educational program – $5,000, for the first 13 consecutive weeks in such a program. After the student has completed the 13 consecutive weeks, there is no limit on the amount of EAPs that can be paid if the student continues to qualify to receive them. If there is a 12-month period in which the student is not enrolled in a qualifying educational program for 13 consecutive weeks, the $5,000 maximum applies again; or
    • For studies in a specified educational program – $2,500, for the 13-week period whether or not the student is enrolled in such a program throughout that 13-week period.

Accumulated Income Payment (AIP)

  • An AIP is any distribution from an RESP other than a refund of contributions, an EAP, a payment to a designated educational institution in Canada, a transfer to another RESP, or a repayment of the CESG
  • When AIPs are made from an RESP, the RESP must be closed by the end of February of the year after the year in which the first payment is made
  • AIPs have to be included in the recipient’s income for the year the payments are received
  • These payments are subject to two different taxes: the regular income tax and an additional 20% tax
  • The AIP can be reduced by transferring an amount to the subscriber’s RRSP if they have available contribution room

For more information click here

Home Buyers’ Plan

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Withdrawal

  • You (and your spouse) can each “borrow” up to $60,000 from your RRSP to use toward the purchase of a home
  • To qualify, you or your spouse must not have owned a home during the last five years
  • You must file form T1036 (signed by your financial institution)
  • You are given until October 1 of the year following the RRSP withdrawal to purchase a home
  • If you fail to purchase a home by the October 1 deadline, you can return your funds to the RRSP by December 31 of that year without penalty
  • You cannot withdraw money from an RRSP that has been contributed within 90 days, otherwise it will be taxed to you

Repayment

  • The money you borrow must be repaid in annual instalments over a 15-year period or sooner
  • Each year the Canada Revenue Agency will send you a Home Buyers’ Plan Statement of Account, which will indicate the repayment you have to make for the next year
  • Repayment begins no later than 60 days after the second year following the withdrawal
  • For example, for a withdrawal during 2025, the 1st repayment is due by February 29, 2028 (60 days following 2027 year-end)
  • Amounts designated as repayments are not deductible from income, and have no effect on your RRSP contribution limits since they represent repayment of money borrowed from the plan
  • If you do not make the required payment for any particular year, the shortfall for that year will be added to your income

Extended Repayment Grace Period:

For individuals making their first HBP withdrawal between January 1, 2022, and December 31, 2025, the Canadian government has temporarily extended the grace period before repayments must begin:

  • Previous Rule: Repayments commenced in the second year following the year of withdrawal.
  • Updated Rule: Repayments now commence in the fifth year following the year of withdrawal.

This extension provides an additional three years before the onset of the repayment period.

Other

Complications can arise where there are special circumstances such as;

  • Overpayment or underpayment in a particular year
  • Contributions to spousal plans
  • Age (over 71)
  • Emigration
  • Death

For more information click here

Pension Income Splitting

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Canadian residents are allowed to allocate any amount up to 50% of their eligible pension income to their resident spouse or common-law partner.

The amount allocated is deducted when determining the net income of the person who actually received the pension income, and then added to the net income of the spouse or common-law partner. Pension splitting affects the calculation of income and tax payable for both persons, so they must both agree to the allocation in their tax returns for the year in question by filing Canada Revenue Agency’s (CRA) form T1032 – Joint election for pension splitting with the tax return.

Eligible Pension Income

For taxpayers who are 65 or older in the year:

  • Life annuity payments from a superannuation or pension plan, including life income funds (LIFs) and locked-in retirement
  • Locked-in Retirement Income Funds (LRIFs)
  • Payments from a Registered Retirement Income Fund (RRIF)
  • Annuity payments from a Registered Retirement Savings Plan (RRSP) or from a Deferred Profit Sharing Plan (DPSP)
  • Certain payments on the termination or winding-up of a DPSP
  • Regular annuities and Income Averaging Annuity Contracts (IAAC) reported in box 24 of a T4A or box 19 of a T5

For taxpayers who are less than 65 for the entire year:

  • Life annuity payments from a superannuation or pension plan, including LIFs and LRIFs
  • Payments from a RRIF or annuity payments from an RRSP or DPSP that were received as a result of the death of a spouse or common law partner

Ineligible Pension Income

  • Old Age Security (OAS) or Canada Pension Plan (CPP) benefits
  • Death benefits
  • Retiring allowances
  • RRSP withdrawals other than annuity payments
  • Payments from salary deferral arrangements, retirement compensation arrangements, employee benefit plans, or employee trusts
  • Quebec Pension Plan or Saskatchewan Pension Plan benefits

If both spouses or common-law partners are in the same tax bracket, pension splitting may not provide the benefit of a reduction in the marginal tax rate. It may still be beneficial, however, if it creates or increases a pension tax credit for the transferee. There is a federal pension income tax credit on the first $2,000 of eligible pension income.

Miscellaneous

  • It is not necessary to contact the payer of the pension. Splitting eligible pension income does not have any effect on how or to whom the pension income is paid, so it does not involve the payer of the pension. Information slips will be prepared and sent to the recipient of the pension income in the same manner as in previous years.
  • The income tax that is withheld at source from the eligible pension income will have to be allocated from the pensioner to the spouse or common-law partner in the same proportion as the pension income is allocated.
  • The CRA cannot approve a reduction of tax withheld at source based on an election to split pension income.

Moving Expenses

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You may claim the expenses to move yourself and your family, including the costs to move your personal items. To qualify, your new home must be at least 40 kilometers (by the shortest usual public route) closer to the new place of work.

movingexpenses

Deductible Expenses

Transportation and Storage Costs (while in transit):

  • Hauling your personal items to the new location
  • Parking
  • Storing your personal items
  • Insurance

Travel Expenses:

  • Vehicle expenses
  • Accommodations for up to 15 days near your old or new residence
  • Meals while in transit
  • You may claim vehicle and meals expenses using the simplified method (SEE BELOW)

Costs Related To Your Old Residence:

  • Any lease cancellation fees (does not include rent)
  • If you sold your old house, you may deduct advertising costs, legal or notary fees, real estate commissions and any mortgage penalties
  • If you are attempting to sell your old house but cannot sell it before the move, the expenses to maintain that house may be deducted (i.e. utilities, property tax, interest, etc.) to a maximum of $5,000. These costs may be deducted in the following year when the house is sold

Costs Related To Your New Residence:

  • If you have purchased a new home, you may deduct the costs related to your new home purchase including land transfer taxes, notary or legal fees and registration (note that the costs of purchasing are not deductible when you rented prior to the move)

Incidentals:

  • You may claim expenses such as driver’s license change-over, license plates replacement, utility connections / disconnections
  • Costs for job hunting, house hunting trips to the new location or renovations required for your previous house or rental unit are not deductible.

Simplified Method:

  • Under this method, a per-kilometre rate for travel and meal expenses can be used.  Although you do not need to keep detailed receipts for actual expenses, you may still be asked to provide some documentation to support your claim. You should be able to substantiate the length of the trip required. CRA requires that the shortest possible route on major roads be used in the calculation.
    You cannot use the simplified method to calculate expenses if you deduct mileage for business or employment use
  • The 2023 rates were:  (NOTE:  2024 rates will be available in early 2025)
    • $23 per meal, up to 3 meals per day of travel (maximum $69 per day) per person
    • $0.59 per km of travel in Ontario

Other Considerations:

  • Expenses may only be deducted from employment or self-employed income earned at the new location
  • If expenses exceed income from your new employment (because you moved close to the end of the year), you can carry-forward those expenses to deduct from income in the following year
  • To be eligible for this deduction, your employment or self-employment income from the previous location must stop
  • If your employer has reimbursed you for moving expenses, you may still claim expenses that exceed the reimbursement. Typically, your employer would include the reimbursed amount on your T4 as a taxable benefit, in which case the moving expenses may be claimed in full
  • HST and other sales taxes may be included in expenses except in the case of a new home purchase

Students:

  • You can claim eligible moving expenses if you moved to study courses as a student in full-time attendance at a university, college or other post-secondary educational institution.  However, you can only deduct these expenses from the part of your scholarships, fellowships, bursaries, certain prizes and research grants that are required to be included in your income.

Anti-Flipping Rule

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In an attempt to cool off the housing market the federal government has implemented an anti-flipping rule on properties.

Any residential property that has been held for less than 12 months is considered ‘flipping’. This means that the profits on that property will be considered business income, and will be subject to full taxation. The property will not be eligible for either capital gains treatment (which is 50% of the gain), or the principal residence exemption.

This new tax will be applied to any property sold after January 1, 2023.

In addition, the Fall Economic Statement proposed to extend this rule to assignment sales. Therefore, profits arising from an assignment sale would be deemed to be business income if the rights to purchase a property were assigned after having been owned for less than 12 months.

Exempt from this rule are life changing events that otherwise explain the quick turn-over of the property, including a birth of a child, new job, separation or divorce, death, disability, insolvency, or other significant changes in life circumstances.

Contact us or visit www.canada.ca for more information.

Tracking Your Mileage

Posted on by david

If you use your personal vehicle for work or business, it is important to track your mileage because you may be able to deduct some of your vehicle expenses against your income. 

However, it can be difficult to remember to log all your trips, which can lead to lost deductions.

Luckily, there’s an app for that, several actually but the best of the lot from my testing is MileIQ. 

Advantages

  • MileIQ can be download on iOS and Android, so it does not matter what device you use. 
  • The app allows you to enter information about your vehicle and then set different rates for each type of trip 
  • Turn on Drive Detection
  • You can save work locations you drive to often so the app automatically calculates the rates for those drivers
  • Automate further by setting your work hours, this causes the app to track personal hours which can be used for calculating moving expenses
  • You can easily send your mileage to your accountant by using the send report link in the app

Disadvantages

  • If you choose to not “always allow” the app to track your location, the background feature does not work. 
  • If the app did not automatically track your trip, then you need to wait until you have a computer to classify your trip

Price

If you do not do a lot of driving, this is a great app as you get all the features just described for free but it is capped at 40 trips per month. 

Each drive counts as 1 trip.

Visit mileiq.com or contact SSL Group in Barrie or Newmarket today.

HST New Housing Rebate

Posted on

Did you know that you can recover some of the HST charged on newly constructed and substantially renovated homes? You could receive a rebate of 36% on the federal portion of HST and 75% on the provincial portion of HST when you buy, build or renovate your home.

When you purchase a newly constructed home, the rebates are usually factored in the selling price.  However in some instances, such as rental property purchases, owner-built homes and substantially renovated homes, you must apply for these rebates yourself.

These rebates are significant.  See the table below and contact our office for further information.

Does Your Home Qualify?

  • Did you a purchase a newly constructed home?
  • Did you build or have a contractor build a new home?
  • Did you substantially renovate or build a major addition to your existing home?
  • Did you build or buy a home to be leased by a tenant?
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