2013 Tax Change: Foreign Income Verification Statement

Thank you for following along with our blog posts that discuss 6 important changes that you should know when filing your 2013 Canadian Income Taxes.


Form T1135 must be filed by most Canadian-resident individuals, corporations or trusts that, at any time during a year, owned specified foreign property (including most types of income-earning property held outside of Canada, other than personal property and property used in carrying on an active business) costing in total more than $100,000. Form T1135 must also be filed by partnerships that hold more than $100,000 in foreign investment property and whose non-resident members’ share of income or loss is less than 90% during the reporting period. For 2013, the CRA introduced the new Form T1135.  The new form calls for more detailed information requirements for each specified foreign property including:

  • The name of the specific foreign institution, investment or other entity holding funds outside Canada.
  • The specific country to which the foreign property relates.
  • The cost of the property at the end of the year, the highest cost amount during the year and the income or gains generated from the foreign property, on a property by property basis.

Make sure you have your details ready!

Contact us to find out what other tax credits you could be making the most of »

2013 Tax Change: Filing a Return — No Matter What

More in our series about 6 important changes that you should know when filing your 2013 Canadian Income TaxesFollow us on Twitter so you don’t miss our next discussion covering updates to the Foreign Income Verification Statement.


Why you should filing a tax return for 2013 and prior years even if you are certain that you have no balance owing or refund due in a given year? Because filing a return:

  • Reduces the ability of the CRA to subsequently make arbitrary adjustments to your income and taxes owing for that tax year
  • Determines your eligibility for government programs, like the Canada Child Tax Benefit (CCTB), GST/HST credit or any new tax rebates that may be announced
  • Reports earned inome, which increases your future RRSP contribution room – and we all know the value of RRSPs as tax reduction tools

Don’t miss out on those unexpected programs!

Contact us to find out what other tax credits you could be making the most of »

2013 Tax Change: Family Caregiver Credit

Continuing our series of blog posts that discuss 6 important changes that you should know when filing your 2013 Canadian Income TaxesFollow us on Twitter so you don’t miss our next discussion about Filing A Return – No Matter What.


caregiver with happy child in a wheelchairDid you know, for 2013 and subsequent years, if you have a dependant with an impairment in physical or mental functions, you may be eligible to claim an additional amount of $2,040 for one or more of the following amounts:

  • Spouse or common-law partner amount;
  • amount for an eligible dependant;
  • amount for children born in 1996 or later; and
  • caregiver amount

To qualify as a dependant with the impairment, the individual must be an individual, 18 years of age or older and dependent on you because of an impairment in physical or mental functions; or a child under 18 years of age, with an impairment in physical or mental functions. The impairment must be prolonged and indefinite and the child must be dependent on you for assistance in attending to personal needs and care when compared to children of the same age.

To claim this deduction, you must have a signed statement from a medical practitioner showing when the impairment began and what the duration of the impairment is expected to be. You do not need a signed statement from a medical practitioner if the CRA already has an approved Form T2201, Disability Tax Credit Certificate, for the specified period.

You can claim the Family Caregiver Credit for more than one eligible dependant.

A little more savings to help those in need!

Contact us to find out what other tax credits you could be making the most of »

2013 Tax Change: Tax-free Savings Account Increase

We’re posting discussions on 6 important changes that you should know when filing your 2013 Canadian Income TaxesFollow us on Twitter so you don’t miss our next discussion covering details on the Family Caregiver Credit.


tax-free-savings-account-tfsaThe Tax-Free Savings Account (TFSA) investment for 2013 has increased from $5,000 to $5,500 annually.  The TFSA allows Canadians, age 18 and over, to set money aside tax-free throughout their lifetime. Each calendar year, you can contribute up to the TFSA dollar limit for the year, plus any unused TFSA contribution room from the previous year, and the amount you withdrew the year before.

Great news for Canadian’s to earn income without paying tax!

Contact us to find out what other tax credits you could be making the most of »

2013 Tax Change: New First Time Donor’s Super Credit

Continuing our series of blog posts that discuss 6 important changes that you should know when filing your 2013 Canadian Income TaxesFollow us on Twitter so you don’t miss our next discussion covering updates to the Canadian tax free savings accounts (TFSA).


Canada Revenue Agency formThe new first-time donor’s super credit gives you an extra 25% non-refundable federal tax credit when you claim your charitable donation tax credit. This means that you can get a 40% credit for up to $200 in cash donations and a 54% credit for the part of the cash donations that is over $200 but not more than $1,000. This is in addition to the provincial credit.

An individual qualifies as a first-time donor if neither the individual nor the individual’s spouse or common-law partner has claimed the charitable donation tax credit since 2007.  The credit will apply only to cash donations made after March 20, 2013 up to a maximum of $1,000 in donations.  As a temporary credit, you can only claim it once from the 2013 to 2017 taxation years.

A win-win for the first time donor and the charities!

Contact us to find out what other tax credits you could be making the most of »

2013 Tax Change: Adoption Expense Tax Credit

We are starting a series of blog posts over the next week to discuss 6 important changes that you should know when filing your 2013 Canadian Income Taxes.

Follow us on Twitter so you don’t miss our next discussion on the new first-time donor’s super credit.


Canada-adoption-tax-credit-changes-2013If you adopted a child under the age of 18 during the year, you may claim a personal federal (Canada) tax credit for eligible adoption expenses. For 2013, you may claim expenses up to a maximum of $11,669. Eligible adoption expenses may include, but are not limited to, fees paid to a licensed adoption agency, court costs, legal costs, and reasonable amounts related to travel. To claim these expenses they must have been incurred during the adoption period. The adoption expense credit should be claimed in the year in which the adoption period ends.

For adoptions finalized in 2013 and subsequent years, the time frame in which eligible adoption expenses can be incurred has been extended. It will now begin at the time that the adoptive parent makes the application to register with a provincial or territorial ministry responsible for adoption or with a provincially or territorially licensed adoption agency.   This change will allow additional adoption expenses, such as fees for a provincially or territorially required home study and mandatory adoption courses, to now be eligible for the adoption expense tax credit.

Great news for adopted parents!

Contact us to find out what other tax credits you could be making the most of »

Taxes for US Citizens living in Canada

MPj03168680000[1]Unlike other countries, US law dictates that American citizens must file tax returns and report their worldwide income every year to the IRS, regardless of where they live and work. This includes Americans citizens, dual American-Canadian citizens and US green card holders.

Personal income tax laws differ greatly between Canada and the United States. One of the primary differences is that Canadian income tax laws are based on residency, while US tax laws are based on citizenship.  US citizens have an ongoing obligation to declare and report their worldwide income to the US, regardless of where they reside. US citizens who have permanently departed the US and have become full-time permanent residents of Canada are still required to file US income taxes on an annual basis with the Internal Revenue Service (IRS).

The only way for US citizens to avoid this obligation would be to go through a process to renounce their US citizenship.  This however may not be practical or desirable for most people. Therefore, US citizens who resides in Canada are essentially subject to the same US filing requirements as they would if they continued to reside in the US.

This of course means filing a US income tax return, Form 1040 every year, and reporting worldwide income.  However, the Tax Treaty between Canada and US has several mechanisms available know as foreign tax credits, to make sure the person does not have to pay double tax.  These credits include:

  • Foreign earned income exclusion: US citizens may be able to exclude up to $97,600 from their 2013 earned income for US tax purposes by completing Form 2555 (Foreign Earned Income) and attaching it to the 1040 income tax return. To claim this exclusion the person must meet 7 specific criteria which include 3 residency tests:  Bona Fide resident of Canada, Physical Present in Canada for at least 330 days during the last 12 months, and whether Canada was the ‘Tax Home’ country.
  • Tax Treaty Benefits: In most cases, treaty benefits are not available to US citizens by virtue of Article XXIX, paragraph 2. This provision states that nothing in the treaty can prevent the US from taxing its own citizens, except for those articles listed in paragraph 3. One of these exemptions is the article governing Social Security payments. This means that if a US citizen receives Social Security benefits from the US, these benefits are not taxable in the US, however, they are taxable in Canada. A 15% deduction however can be claimed on the Canadian income tax return on these benefits.
  • Foreign Tax Credit or Deduction: A US citizens can avoid double taxation by claiming a foreign tax credit on their US income tax return for taxes required to pay to Canada. To claim the credit, Form 1116 (Foreign Tax Credit) must be completed and attached to the US return. Alternatively, Canadian taxes paid can be claimed as an itemized deduction. Both the deduction and credit are limited to foreign income that is subject to US tax, so neither can be claimed for income excluded on Form 2555.

Do you need help with how to file your income tax return? Find out how we can help »

 

Disciplined Saving: The Next Generation

560px-Star_Trek_TNG_logo
It’s not quite as bad as “Star Trek: The Next Generation” but it’s a close second.  People are always asking us about trends.  Interest rates, stock charts, social media and above all; the next generation.  We have all heard the media go on about how the 20 and 30 somethings represent the first generation to not exceed their parents, and how social media and violence in gaming is creating a lazy and desensitized workforce.  I’m not saying that those statements are not true, but I’m in the business of looking for shelter when its raining, not analyzing the toxicity of the water that’s falling.

Watch this great video that discusses the savings vs. debt discussion for the next generation.

One of the issues that is outlined is the clear disconnect between fact and fiction. Start saving later, spend more and retire at the same historical age…I don’t think so. It is important to understand that the discipline of saving is in fact centered around the principle of delayed gratification.  Whether you are a 20-30 something looking to be well established for retirement or you are influencing a 20-30 something, understand this: The “Golden Years” club doesn’t generally consist of home-run, long-ball hitters, but those that consistently stepped up to the plate and put the ball in play. Come up with a plan that makes sense. Stick to it. There’s no deeper science behind it.

Strong Team – Strong Business

JMA Group Team WorkIt’s an easy statement to make.  You would be hard pressed to find a business owner that doesn’t want and even communicate a desire for a strong(er) team.

The problem lies in the process and execution of delivery.  From recruiting to hiring to training to retaining…having a strong team is a process that never reaches completion and can always be improved.  We see it in many of our clients, their business issues stem from one of two areas;

(1) Needing more Sales/Profits
(2) People Problems.

Over the past 18-24 months, we have tried to focus our team building efforts on the full range described above, starting with where we look for new team members to how we retain our existing ones.  Whether you are a large multinational corporation or a small 3-4 staff small business, understanding your people and helping them to grow personally, professionally and as a team is critical to the success of your business!

Tax Planning for Small Business Owners

Tax Planning Tips www.JMAGroup.caThe chief end for all small business owners is to make as much money as they can and build a business that they can one day get out from under and retire happy, healthy and at a minimum financial stable. RRSP’s and Canada’s new Tax-Free Savings Account (TFSA) are two of the tools that are used to build wealth now to plan for the future.

In the past, small business owners have pulled money above their personal draw out of their company to invest within their RRSP or TFSA. David Milstead of the Globe & Mail outlines the benefits of keeping money invested within the company for use during the retirement years. Invest, draw, pay tax makes more sense for the small business owner than draw, pay tax, invest.

HERE is an article by Jamie Golombek that may help clarify some of the advantages.

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