Monday, December 17, 2012
Transition Provisions Relating to HST and GST/PST
The Government of BC has published information about transitioning from the Harmonized Sales Tax back to the Provincial Sales Tax and Goods and Services Tax at this link: HERE. The New Housing Transition Tax and Rebate Act covering the temporary housing transition tax and the temporary housing transition rebate came into effect on December 1, 2012.
Due to the complexity of the transition provisions and the potentially significant implications for sellers and buyers, clients are advised to seek appropriate and timely tax advice if there is any doubt as to whether these provisions may apply.
Monday, October 22, 2012
Grant for new secondary or recreational homes available
If a client buys a new or substantially renovated secondary or recreational home in BC, but outside of Greater Vancouver or Victoria, before April 1, 2013, they may qualify for a provincial grant for the Harmonized Sales Tax (HST).
The grant for new secondary or recreational housing is directly administered by the BC Ministry of Finance. This grant should not be confused with the BC New Housing Rebate available for new residential homes bought as a primary residence, and administered by Canada Revenue Agency (CRA).
The grant for new secondary or recreation housing is 71.43% of the provincial portion of the HST paid on the new home up to a maximum rebate of $42,500. Secondary or recreational homes priced at $850,000 or more are eligible for a flat grant of $42,500. To be eligible, the secondary or recreational home must be:
• a new home (detached, semi-detached, duplex, condominium, townhouse) constructed or substantially renovated (more than 90%) together with land bought from a builder;
In addition to the general qualifications above, buyers must meet other conditions depending on the type of home and whether the client buys or builds the house alone or with others. For example, if two or more individuals buy a new secondary or recreational home, or build or substantially renovate a home, each buyer must meet all eligibility conditions, but only one may apply for the grant as the claimant.
You do not have to be a BC resident to be eligible for the grant. Buyers of secondary or recreational homes must complete an application form and provide supporting documents within six months from the date the HST was paid and before October 1, 2013 (whichever date is earliest).
To learn more, contact:
Monday, January 30, 2012
9 Tax Deductions Canadians Often Miss
Does the looming tax deadline have you gritting your teeth? Here's how to get a bigger, better refund.
Does the looming tax deadline have you gritting your teeth? We all have to pay our taxes. And nobody wants to pay too much.
“Unfortunately, people tend to pay more tax than they need to because they do tend to overlook some of the savings they can take advantage of,” said Carol Bezaire, vice-president, tax and estate planning, at Mackenzie Financial.
A deduction is valuable because it reduces your income for tax purposes.
Rack up enough of deductions and you’ll pull yourself down into a lower tax bracket and end up with a big refund, if you’re lucky.
These are worth more to those in higher tax brackets. By contrast, a non-refundable tax credit reduces the amount of taxes owed. The value is the same for everyone. The term “non-refundable” refers to the fact that if the tax credit exceeds the amount of tax payable, you won’t get a refund for the difference.
1. RRSPs: Contributions to Registered Retirement Savings Plans are the mother of all tax deductions. Roughly speaking, you are allowed to contribute up to 18 per cent of your earned income from the previous year, and deduct that amount from your income at tax time.
The government even gives you an extra two months past the end of the previous calendar year to sock that money away. (That’s why January and February are known as RRSP season.) The trick here is that you can carry forward contribution room indefinitely.
You can also carry the deduction forward to use in a year when your income is higher. Check your Notice of Assessment from the Canada Revenue Agency for more details about how much you are allowed to contribute and deduct.
If you carry forward those RRSP contributions to deduct in a future year, keep track of them carefull. This amount will determine how much you can put into your account in the current year.
2. Capital losses: Losses from buying and selling shares in an unregistered account (not your RRSP or your TFSA) can be carried back to any of the previous three years or carried forward indefinitely. These can be applied against capital gains to reduce your total income from investments.]
3. An equivalent-to-spouse-tax-credit: Taxpayers who are single, divorced or separated with children, can be claimed for a child. This non-refundable tax credit is worth $10,527 this year federally. (That’s multiplied by 15 per cent when calculating the final credit, but it’s still far higher than the $4,282 tax credit for a dependent child.)
In the case of a child, the dependent has to be a Canadian, resident, under 18, and financially dependent on you.
4. Child care expenses: These expenses, whether for a nanny or day-care centre, must be claimed by the parent with lower net income in most cases. Allowable expenses are those paid for the care of a child age 6 or under, to enable the parent to work, carry on a business, or go to school.
5. Medical expenses: Claim non-refundable tax credits for medical expenses paid by either you or your spouse or common-law partner.
“People forget to take a look or they assume it’s not eligible,” Bezaire said. But, in fact, any non-reimbursed medical expense can be claimed, including prescription medication, dental surgery that’s not covered by insurance, or laser eye surgery.
Expenses that total more than $2,052 or 3 per cent of net income can be claimed. To make the most of the tax credit, the expenses should be claimed by the person with the lower net income, Bezaire said.
6. Moving expenses: If you moved at least 40 km to be closer to a new job, run a business, or go to school, you may deduct the moving expenses. Eligible expenses include transportation and storage costs, reasonable costs for meals and accommodations, real estate commission, legal fees, and costs related to changing your address, such as replacing your driver’s licence and connecting or disconnecting utilities.
“What many people overlook is that you can claim the cost of moving your children to university or college,” Bezaire said. [More: 10 tax tips to save you money]
7. Carrying charges: This refers to costs incurred in order to earn income on your investments. Fees paid for the management of your investments, other than commissions, are eligible. If you use a safety deposit box for safekeeping your investments, you can claim the cost as a carrying charge.
8. Physical fitness and arts activities for children: Eligible programs must be supervised, appropriate for children and must be at least eight consecutive weeks or five consecutive days long, with at least half of the activities involving a significant amount of physical or artistic activity.
Additional tax credits are available for a child with a disability. The sports programs must build muscular strength, endurance, flexibility and balance. On the arts side, eligible programs can focus on literary, visual or performing arts, music or language.
9. Charitable donations: keep in mind that these donations can be carried forward.
“If you’re doing your housekeeping and find a charity receipt and you say, ‘rats, I didn’t use it’, hang on to it. You can still use it still.
If you have a spouse, pool them and include them on the return of the person who pays the most tax, she added.
January 27, 2012 YahooFinance Article by Madhari Acharya-Tom Yew, available online at http://ca.finance.yahoo.com/news/9-tax-deductions-canadians-often-miss.html
Tuesday, October 11, 2011
Transition Period for HST
The Province has announced that it will reinstate the combined 12 per cent PST and GST tax system, a process it expects to take a minimum of 18 months. The Ministry of Finance has established an action plan to guide the transition to the PST. This includes:
The anticipated target date for the switchover is March 31, 2013. "During the transition period, the provincial portion of the HST will remain in place at seven per cent," explains Finance Minister Kevin Falcon. "The PST will be reinstated at seven per cent with all permanent PST exemptions and will not be applied to items such as restaurant meals, haircuts, bikes and gym memberships – just as it was before the HST was introduced in BC," says Minister Falcon.
Businesses collecting the PST will need to change their electronic and manual systems and processes to assess, collect, report and remit the PST and other related taxes to the provincial government.
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