In order to manage anything that involves our self it is required to have control of our lives and self. Indeed it is impossible to control over anything, but we all have a degree of control over most things that involve us. When we are strategizing a time management scheme, we have to factor in all details of life because all things in life affect us in some way.
Albeit many people think that it is so, time management is far from a quick process. You will notice this, once you start your calculations. Especially when you are alone in time management the road can be rocky.
For this problem time management has its own stop, go, and yield signs. In order to start a time management plan you need to calculate and analyze your plan carefully to weed out flaws, evaluating where your time is spent.
The beginning process of controlling time management is to calculate time with factors like family and work. Moreover you have to calculate problem areas like troubles with your computer that may arrive. You regard this by calculate large and small disasters into the equation of time management. But when you have done this the process, you have not finished for a long time yet.
The fact is that there is no end to managing time, because we have to include personal factors. When we calculate time management, we must include details such as, entertainment, relaxing and everything that makes us who we are. If you are spending too much time in one area, you can cut back time by spending more time in important areas.
For example, if it takes you a long time in the morning to get motivated you have to think about why is it taking me such a long time? In the majority of cases this is caused by a desideration of preparation. Now, to win back time you will need to think! Why is it taking me so long to get dressed in the morning? When you are searching through your closet trying to find a suit the solution is taking a few minutes each night to pick your suit fore the next day, so that when you get up in the morning you only need to dress.
If you are spending for example 45 minutes dressing, you are wasting time. If you do not waste time, we can subtract at least 30 minutes from dressing and move forward to other areas in our life where our time is either spent well, or wasted.
The question coming up is: What are you doing at work? Are you chatting online with someone, or standing around drinking coffee? If your workday looks like this, you are not only wasting company time, you are wasting your time. As long as you do not have a goal in mind, this is not a controlling way in time management.
In today’s society it is practically impossible to stay on top of bills, increasing gas prices and extraneous financial obligations with just one job. What’s more, it is becoming increasingly scary to rely on one stream of income because the economy is so shaky. Who knows when that one lifeline will falter? Many people are discovering that the way to stay afloat in today’s rapidly fluctuating market is by using multiple streams of income. This simply means drawing funding from various venues.
One venue that many people find convenient to their schedules and their lives is taking part in an Internet business. Since lots of people are only using their Internet businesses as one of several streams of income, they only do it on a part time basis. There are lots of opportunities on the Internet to earn multiple streams of income, including starting an ebay business, taking part in an affiliate program, making contacts for freelance work, and writing and selling an ebook. The flexibility of working a business on the Internet is valuable for many people who also work other jobs, and especially for those with loved ones who need to be taken care of.
Other off-the-web venues that people use as multiple streams of income include real estate, starting a small independently owned business, mail and phone-based freelance work, and childcare. Many of these businesses are owned and operated out of people’s homes, which is time effective for people who are multi-tasking.
If you are planning on using multiple streams of income to stay on top of your growing pile of bills, remember that it is important to think about your personal needs as well. Make sure that you still have enough time to sleep, eat, and spend quality time with loved ones. Time efficiency is very important, so think about cutting down on commuting by multi-tasking from home, or by commuting only to one job. Though more complicated than relying on one job alone, using multiple streams of income can be an effective way to ensure your financial stability.
Death is never easy to deal with and knowing what to expect in probate will ease your concerns and allow you to think only of your dying loved one. The definition of probate is legally settling the deceased’s property, also known as their estate. When a death occurs, the debts, property, possessions and money of the deceased will need to be dealt with in a legal manner and according the wishes of the deceased. There are few instances when probate is not needed in the event of a death. If the person is married, in most cases without a legal will, everything belonging to the deceased will be transferred to their spouse upon their death. If a will does not exist, the courts will need to ensure that all the property left by the deceased is legally distributed.
If a will does exist, the will names a person chosen by the deceased as an executor of the will. This is generally a family member or an attorney. The executor is responsible for following the instructions the deceased has written into the will and ensure that the probate process is followed as they wish.
When it comes to probate, the process will take place in what is known as probate court. What will happen during probate will depend on where you live. However, the general aspects of probate court are as follows. The entire purpose of probate is to ensure that your debts are paid and your assets are properly transferred to your loved ones. Upon the death of a person, the executor is sworn in as such. All creditors, the public and heirs are notified of the death. Then all the property is inventoried and finally the estate is distributed in an orderly fashion.
It is important that you understand there are some possessions or property that cannot be presented to the courts. A good example is a life insurance policy. If there is a beneficiary listed on the policy then this will transfer to that beneficiary. The only time this will not occur is if the named beneficiary is also deceased and no other beneficiary is named. Other types of assets and property that cannot be presented to the courts include anything that is payable upon death to named beneficiaries. These instances do not require probate because the deceased has already named who these assets are to be released to.
Everybody hates taxes, am I right? It doesn’t matter if you are rich or poor, barely making ends meet, or raking in heaps of cash, the CRA will come for their piece of your income.
After years of helping to prepare taxes for friends and family, the only thing I’ve seen that makes this financial obligation a bit more bearable is finding as many tax breaks as possible.
If you want to learn how to pay less tax in Canada, I hope these tips will help you out.
There are a number of (legal) ways to pay less tax in Canada. But relatively fewer people take advantage of all the credits and deductions that CRA permits, and that can lower your tax bill significantly. It’s mostly because a lot of people don’t even know where they can save on taxes.
But if you are determined to learn how to pay less tax in Canada, this article will hopefully identify at least some of the ways which apply to your particular situation.
Table of Contents
1. Child Care Expense
Summary: If you have children, you can deduct childcare expenses from your tax bill.
If you and your spouse works and no one is home full-time to take care of the child, the chances are that you are paying a lot of money for daycare expenses. While that’s a necessary expenditure, you can lighten the burden a bit by claiming these expenses on the tax returns. The spouse/parent with the lower income has to claim these expenses on their returns.
You can claim up to $8,000 a year for a child aged seven or younger, and $5,000 for children between seven and sixteen. You can claim daycare, nursery, nanny, caretaker, and boarding school expenses. Make sure you ask for receipts and SIN numbers from these service providers.
2. Maximize RRSP Contribution
Summary: RRSP contributions are tax-deductible and can lower your tax bill by thousands of dollars.
Save for your future and contribute to your RRSP. Not only will your investments grow in a tax-free environment, but you can also lower your tax bill significantly. However, it’s not purely tax-free, and you will have to pay taxes on it once your RRSP matures, but you can convert it into an RRIF and reduce your tax burden.
The 2022 maximum RRSP contribution is $29,210, or 18% of your income, whichever is lower. See this list for updated numbers.
3. Spousal RRSP Contributions
Summary: Lower your tax obligations by contributing to a spousal RRSP.
If you are in a higher tax bracket than your spouse, you can maximize your tax break by contributing to a spousal RRSP (within your contribution limit for the year). Your contributions will not affect the available contribution room your spouse or common-law partner has.
Its benefits are two-fold. If your spouse earns less than you and is in a lower tax bracket, they wouldn’t have gotten a tax break as big as yours, even if they fully contributed to the RRSP on their own. Also, when your spouse finally withdraws from the RRSP (or RRIF), they will be in a lower tax bracket than you and pick up a lighter tax bill.
4. Claim Medical Expenses
Summary: Several medical expenses that are not covered by your insurance are tax-deductible.
If you or a dependent incurs medical expenses that aren’t covered by your insurance, you can claim them on your tax returns and lighten up your tax bill. Many of these expenses can be pretty hefty, like full-time and specialized care. You can claim the entire amount on your tax returns.
Apart from care, expenses like prosthetics, insulin, insulin pens, hearing aids, eyeglasses, contact lenses, vitamins, etc. For some of these, you need a medical prescription to claim the deductions.
5. Donate Generously (And Smartly)
Summary: Donations are a non-refundable tax credit and can reduce your tax bill.
Donations help you earn both provincial and federal tax credit, and can help offset your tax bill. You not only get to claim the tax credit on donations for the current year but also claim tax credits for donations up to five years back if you have proof that you donated to eligible entities.
Since it’s a non-refundable credit, you should only use this deduction for years where your tax bill is expected to be higher. A smart move is to donate securities that have accumulated capital gains directly. You won’t have to pay any tax on capital gains, and your tax charitable credit will be a bit higher.
6. Split Your Pension
Summary: Splitting a pension with a spouse or common-law partner can reduce your taxable income.
You can split your CPP pension by up to 50% with your spouse, depending on how long you have lived together. The pension split only makes sense when you are 60, and the income and tax bracket of one spouse is higher than the other. By splitting the CPP, the higher tax-bracket spouse can lower their taxable income. CPP splitting goes both ways. You can also split RRIF income, but the rules are different.
7. Transfer Tax Credit To Your Spouse
Summary: Some federal tax credits can be transferred between spouses
If your spouse or common-law partner has certain tax credits, but their tax obligation isn’t high enough to be canceled out to zero if they apply all the tax credit towards it, they can transfer the excess to you.
These expenses include tuition, education, and textbook amounts, pension amount, disability amount, age amount, and caregiver amount. This can help the high-income spouse offset their tax obligation, resulting in an overall lenient tax burden on the couple.
8. Contribute To RESP
Summary: Contributing to an RESP account can help you save for your child’s education tax-free.
While an RESP doesn’t lessen your tax obligation right away, it’s a powerful financial tool. Instead of paying for your child’s post-grad education with your taxable dollar, you can contribute to an RESP. It will still be with your post-tax dollars, but the money in the RESP will grow tax-free. At max, you can contribute up to $50,000 to an RESP, that’s equivalent to $2,500 a year for 20 years.
In the right investment vehicle (that offers 5% returns a year as an example), it can grow to $89,000. Plus, the $7,200 you will get from the government through matching contributions. The money is taxable when taken out, but since your child is likely to be in a lower tax bracket, their tax obligation will be close to zero.
9. Home Office Tax Credit
Summary: Working from home can make you eligible for significant tax breaks.
For self-employed individuals, home office expenses can also be a decent amount of deduction. You can claim the portion of your home (based on square footage) that you use as your home office, on your tax returns.
So if it accounts for 15% of the total space, you can claim 15% off on your utilities, insurance, mortgage interest, and property tax. You can even claim part of the wages you pay to the individual who provides cleaning services in your home. Stationary can also be claimed, but not capital expenses.
10. Employ In-House
Summary: Hiring your child and spouse can lower your tax obligation.
If you run a business, and you want to inflate your business expenses (legally), enough to lower your taxable income, a smart way is to hire your child or spouse in the business. Be warned that it’s something that CRA monitors closely, and you can’t just pay out a salary to your family members based on a pretend position. They must provide valuable service to the business (even if it’s as your assistant), and they have to be compensated fairly.
Summary: Once your business income grows beyond a certain point, it makes sense to get incorporated.
Some small businesses grow large enough that it makes more sense (tax-wise) to incorporate them because otherwise, the business income will push you in the top tax bracket. But it requires rigorous cost-benefit analysis. If the cost of incorporating your small business (or even a side hustle) outweighs the tax break you will get by incorporating; it doesn’t make financial sense to do so.
Summary: Used effectively, it can be the most powerful tax-management tool you can have.
TFSA contributions aren’t tax-deductable like RRSP, but since whatever comes out of your TFSA is tax-free, if you have accumulated enough wealth in it, you can reduce your taxable income substantially, especially in your retirement years. For example, instead of withdrawing more than the minimum from your RRIF (which is taxable), you can withdraw from your TFSA and enjoy your stay in the lower tax bracket.
Effectively using your registered saving accounts, choosing the right securities to invest in, accounting for all child-related tax credits, benefiting from spousal tax privileges, and business-related tax-breaks – All of these can help push your tax bill to a more reasonable and manageable magnitude.
It’s that time of year again – everyone is talking taxes and it’s at the top of your mind even though you’ve been trying to avoid it all year. Besides just getting your taxes filed to avoid scary calls from the CRA and those hefty penalties and interest – tax season is a great opportunity to get a clear picture of your company’s financial health.
Money is the bloodline of your business so it’s important to have a finger on the pulse of your finances and not be afraid of it.
To make it just a little easier for you and in hopes that you can use tax season as an opportunity to understand where all your hard earned money is going, here is a guide with some quick tips and helpful information that might make this season a little easier and more informative for you!
Get Your Financial Books in Order
If you’re one of those people who have meticulously organized and tracked your business finances (i.e. income and expenses) throughout the year then you’re ahead of the game.
However, if you’ve been putting off dealing with your business finances all year, then now is the time to sit down and get organized!
If you’re a sole proprietor, using a tool like Microsoft Excel is a cost-effective and simple tool to track all your income and expenses. Alternatively, a more robust option is to use cloud-based accounting software such as Xero. There are other great cloud-based solutions such as Receipt Bank or Hubdoc that can really help you get your receipts and invoices organized. These are also great tools to store all your supporting documents, in the event of a CRA audit/review. You wouldn’t want to pass over receipts that have completely faded, in which case, they might disallow your expenses!
If you just don’t have the time to get your books in order and you have room in your budget, consider hiring a qualified bookkeeper to help you. Having clean and organized books will also help reduce your cost to file taxes (if you’re paying an accountant to file for you).
Pro Tip: Keep your detailed and itemized receipts for everything! Bank statements do not count as supporting documents for expense claims.
Don’t Miss The Deadlines for Filing Income Tax Returns
Small businesses that are operating as a sole proprietorship or partnership will have until June 15th to file their taxes. However, it’s important to note that any income taxes owing are due by April 30th. If you file late and end up owing taxes, you’ll pay interest and penalties on your outstanding tax balance until you submit your payment to the CRA. Keep your money in your pockets!
Small Business Tax Myths
1. My business did not make any money so I don’t need to report anything on my tax return.
False. Even if you had a net loss for the year (i.e. more expenses than income), you are still required to report your business income and expenses on your tax return. Moreover, it’s actually beneficial for you to report that net loss as you can apply the loss to other sources of income, such as employment income or investment income. If you can’t use those business losses in the current year, you can carry them back for three years and recover taxes previously paid or carry them forward for 20 years, to offset future earnings.
2. I made less than a thousand dollars and it’s just a hobby so I don’t have to report that income.
False. Even if you only made $10, you are required to report that income to the CRA. The CRA does not determine what is and what isn’t a business by how much money you make or by your intentions to “run a business”. They define a business as “any activity that you do for profit”.
Review the Financial Health of Your Business
Once your business finances are in order after filing your taxes, this is a great time for you to review the financial health of your business, see how you performed in the past year, and set financial goals for the year ahead. Did you make money or did you spend way more than you brought in? Was there an area where you spent way more than you expected? Where can you streamline costs and cutback on expenses?
Most business owners think that racking up tax deductions is great as it reduces your taxable income. However, you are still running a business and the goal is that your business will make money. Reducing unnecessary expenses also means there is more cash in your pockets and less outflow of money. Paying taxes is not a bad thing. It means that you are running a profitable business!
Scenario 1 –
If you made $1000 of income and spent $500 on expenses. You will only get taxed on $500. The taxes you would have to pay to the CRA would be approximately $125.
Amount of money left in your pocket at the end of the year = $375 ($1000 of income minus $500 of expenses and $125 of taxes).
Scenario 2 –
However, if you made $1000 of income and spent only $200 on expenses. You will get taxed on $800. The taxes you would have to pay to the CRA would be approximately $200.
Amount of money left in your pocket at the end of the year = $600 ($1000 of income minus $200 of expenses and $200 of taxes).
You are still better off at the end of the year, if you managed your expenses and spent less money on things just for the sake of a “tax write off”.
A T4 slip, or “Statement of Remuneration Paid,” is a tax form produced by an employer and furnished to both an employee as well as the CRA. The form includes wages paid, taxes withheld as well as assorted other information, such as amounts contributed to pension plans and employment insurance.
What are T4 slips?
If various tax slips were ever assembled in a police lineup, the T4 would be the one that gets picked out every time. Every Canadian adult who’s had a full time job would recognize the T4, the shorthand name for “Statement of Remuneration Paid” form. Right here on the CRA’s website, “T4 Statement of Remuneration Paid (slip),”you’ll find the T4’s official home. The slip includes your name, social insurance number and how much you were paid in a given year, as well as the amount of taxes that were withheld. Additionally, on the form, you’ll find scads of other financial information from a tax year–the amount of your contributions to a registered pension plan (RPP), union dues you paid, how much you contributed to Employment Insurance (EI), Canadian Pension Plan (CPP) or Quebec Pension Plan (QPP). The CRA sets out all the particulars on this page here.
Who gets T4 slips?
Employers send T4s not only to you, the employee, they also provide identical copies to the CRA. Besides feelings of moral obligation, this is the big reason you really need to pay your taxes every year; you may feel invisible, but if you received a T4, the tax authorities know exactly how much you earned in any given year.
When do I receive my T4?
T4s are a pretty reliable bunch, arriving annually at the very beginning of March, a good eight weeks before tax day. If an employer mails in the slips, the T4s must be postmarked on the last day of February, or the employer will risk being assessed penalties.
Other T4 Slips
The T4 is the king of the jungle in an ecosystem of hundreds of slips. Completists may enjoy spending hours reviewing the CRA’s “forms listed by number” page but for brevity’s sake, we’ll acquaint you with a few of T4s more popular cousins. What do all these T slips have in common? They’re statements of income and both you and the CRA receive copies.
T3: statement of trust income allocations and designations
T4A: statement of freelance, pension, retirement, annuity or other income
T4A§: statement of Canada Pension Plan benefits.
T4A(OAS): statement of Old Age Security benefits.
T4RSP: statement of RRSP withdrawals
T4RIF: statement of Registered Retirement Income Fund income
T5: statement of investment income
What is a T4 summary?
T4 summary, also known as Summary of Remuneration Paid, is the one-page form filled out by employers and sent to the CRA that adds up the total dollar amounts of the T4 slips the company has provided for individual employees. An employer submits its T4 summary along with its T4 slips to the CRA.
The T4 form explained
The Most Important Boxes on the T4
We’re not big on playing favourites. We love all the boxes on the T4, and if you do too, check out the CRA’s guide that outlines the purpose of every box on the form.
But here are a select few T4 boxes that you’ll hear about quite a bit.
Box 14: employment income.
Box 16/Box 17: employee’s CPP/QPP contributions
Box 18: employee’s EI premiums
Box 20: RPP contributions
Box 46: charitable donations
Box 85: employee-paid premiums for private health service plan
How to get a T4 online
The absolute best way to access your current tax year T4 and past year T4 slips is through the CRA’s website. You’ll find T4 forms in the CRA’s personal taxpayer section known as “My Account,” an interface the agency explains is “a secure portal that lets you view your personal income tax and benefit information and manage your tax affairs online.” There are two ways to sign in and access “My Account.” The first is you have an account with one of the sixteen big banks the CRA calls “sign in partners.” If you can access your account online, you can easily use that sign in info to get directly into the “My Account” section. The second method is by using a CRA user ID and password to log directly into the CRA website. If you don’t have a login and password (or have forgotten it) register for one here. To confirm you are indeed you, they’ll ask for your social insurance number as well as one of the figures from a past T4 slip. On its “Registration process to access the CRA login services” page, the CRA provides step-by-step instructions and various trouble shooting solutions.
How to get past T4 slips
If you’ve lost one or more T4 slips and need a copy, the absolute best place to retrieve them is through the “My Account” section on the CRA’s website. Directly above, in the “How to get a T4 online” section, you’ll find some detailed instructions on how to access the site. The CRA should have T4 slips dating back several years. If the information you’re seeking is missing, reach out to the human resources department of the current or former employer who issued the slip. They should be able to set you up.
Good morning everyone! It’s almost that time again! Tax Season 2021/2022!
Here is the rounded-up list of essential links you NEED to review in order to be properly prepared for tax season. There are sections for personal income tax, WCB, business reporting, trusts and much much more!
2021 Due Date for Tax Returns & Payments is May 2, 2022.
Personal income tax returns, except for those of individuals with self-employment income, are normally due by April 30th, as is any amount owing. Penalties and interest may be charged for late returns or late payments.
Self-Employed Due Date
Individuals with self-employment income have until June 15th to file their 2020 personal tax returns, but any amounts owing must still be paid by April 30th. This extension applies to individuals who carried on a business in the year, other than a business whose expenditures are primarily the cost or capital cost of tax shelter investments. The extension also applies to the spouse of an individual who carried on a business in the year. S. 150(1)(d)(ii) of the Income Tax Act regarding the extens
As part of its ongoing efforts to make sure charities meet the requirements of registration, the Canada Revenue Agency (CRA) uses a variety of compliance activities. Historically, the CRA has audited approximately 800 to 900 charities per year, representing about 1% of registered charities.
More recently, the CRA has rebalanced its compliance activities to better focus and increase its coverage of the charitable sector. The CRA currently plans to conduct audits of 500 to 600 charities per year. In addition, we plan to contact an additional 700 to 800 charities outside of the audit process. These contacts include new initiatives, such as the Charities Education Program (CEP) that provides an opportunity to meet with charities to help them better understand and comply with their filing obligations. Overall, the CRA will now be able to reach about 1.5% of registered charities each year.
Table of Contents
How is a charity selected for audit?
A charity can be selected for audit for various reasons including the following:
referral from another area of the CRA
complaints from the public
articles in the media or other publically available sources
review of specific legal obligations under the Income Tax Act
information from their T3010 annual information return
follow-up on a previous compliance agreement
How does the CRA audit a charity?
There are two main types of audit: the field audit and the office audit. The size and complexity of a charity, as well as the issues involved, will often decide the type of audit required.
A field audit is done on the charity’s premises and usually lasts between three and five days. It will include examining the charity’s books and records such as bank accounts, contracts, governing documents, annual reports, board minutes, and other documents that relate to its activities. The auditors will interview the charity’s directors and ask questions about the charity’s activities. They may also want to tour the premises to better understand the transactions recorded in the books and to see the charity’s programs and activities in action.
An office audit is done by the Charities Directorate at CRA Headquarters, as opposed to at the charity’s place of business. Office audits are commonly used to make sure the charity is following the terms of a previous compliance agreement. The auditor will review the information and documents in the charity’s file. This may include its most recent governing documents, descriptions of its programs and activities, its annual information returns, and its financial statements. With an office audit, it is often necessary to contact the charity to get more information about its activities.
What happens when the audit is finished?
When the CRA has finished its audit, it will send the charity a letter outlining the results.
If the charity’s operations and all its activities are in line with the Act, the CRA will confirm in writing that there will be no change to the charity’s registered status.
When the audit uncovers that the charity is not following the Act, the CRA will send the charity a letter that:
outlines in detail each of the CRA’s concerns
gives its preliminary view of whether the charity needs to take corrective actions or whether the non-compliance warrants imposing sanctions or revoking or annulling the charity’s registration
gives the charity the chance to make representations before the CRA comes to a final decision
Generally, the CRA gives a charity 30 days to reply to its concerns, although the charity can request an extension.
What types of letters might a charity receive after it has been audited?
The CRA takes an education-first approach. This means it will generally give the charity the chance to correct its non‑compliance through education or a compliance agreement before it resorts to other measures such as sanctions or revocation. Only a very small proportion of the CRA’s audits result in serious consequences like sanctions or revocation.
The facts of the charity’s case will determine which of the following compliance approaches the CRA will take:
Education letters: When the non-compliance is minor, the CRA will send an education letter. The letter will identify where the charity has not followed the law and will offer guidance to the charity so that it can make the required changes. An education letter does not adversely affect the charity’s registration, and the charity does not have to reply to the letter.
Compliance agreements: In cases of moderate non-compliance, the Charities Directorate may suggest entering into a compliance agreement with the charity. A compliance agreement outlines the non-compliance issues and the remedial actions that the charity has agreed to take, sets out the timelines for the necessary changes, and outlines the consequences if the charity does not follow the agreement. The CRA will follow up to make sure the charity is acting according to the agreement.
Sanctions: In cases of serious or repeat non-compliance, the CRA may propose imposing a sanction (financial penalties or the temporary suspension of the charity’s tax receipting privileges or both). The CRA may also propose imposing a sanction when the charity has been found to be disregarding the terms of its compliance agreement.
Revocation of registration: When the CRA finds a serious case of non-compliance, it will propose revoking the charity’s registered status. Although the CRA usually uses revocation as a last resort, under the Act the CRA can revoke a charity’s registration at any time, when it is appropriate. This includes situations where:
the non-compliance is serious and intentional
the non-compliance has had a substantial, adverse effect on others (beneficiaries, donors, or funders)
the charity had a previous record of serious non-compliance or cannot or will not follow the rules
A charity whose registration is revoked must dispose of its assets within one year to other charities or pay a 100% revocation tax on any assets remaining. This tax helps make sure the funds donated for charitable purposes stay in the charitable sector.
Annulment of registration: In rare cases, an audit may find that a charity was not established and operated for exclusively charitable purposes when it was registered, or a change of law has caused it to no longer qualify as a charity. Although the CRA is obligated to remove the charity’s registration because it should never have been registered, it may be unfair to penalize it by applying the revocation tax to any assets it has accumulated. In such cases, the Act allows the CRA to propose to annul the charity’s registration. A charity whose registration is annulled can no longer issue tax receipts, but it can keep its assets.
What recourse does a charity have during and after an audit?
As mentioned earlier, the charity is given the chance to make representations to the CRA. The charity’s response may include explaining why it disagrees with the CRA’s position, including giving more information or proposing changes to satisfy the CRA’s concerns.
The CRA will fully consider the charity’s representations and make a determination on the appropriate compliance outcome. If, after considering the charity’s representations, the CRA finds it is reasonable to impose a sanction or annul or revoke the charity’s registration, it will send the charity a letter by registered mail outlining its decision.
When a charity receives one of these letters and believes the CRA has not interpreted the facts or applied the law correctly, it can object in writing to:
Assistant Commissioner Appeals Intake Centre Post Office Box 2006, Station Main Newmarket ON L3Y 0E9
The charity must set out the reasons for the objection and all the relevant facts.
The charity has to file its objection no later than 90 days after the date of the final letter it got from the CRA. The Appeals Branch is responsible for the objection process, and its mandate is to review the decision fairly and transparently. If the charity disagrees with the CRA’s decision about its objection, it has the right to appeal to the Federal Court of Appeal or the Tax Court of Canada, depending on the type of appeal.
What audit information is available to the public?
As an exception to the general rules around taxpayer confidentiality, the Act allows certain information about charities to be released to the public. When the CRA revokes or annuls a charity’s registration or when it imposes a sanction, it posts this information in the List of charities. Under the Act, the CRA can release a copy of the letter(s) it sent to the charity outlining the reasons for its decision. This is to make sure the CRA’s decision about the charity is transparent.
The GST/HST (Goods and Services Tax/Harmonized Sales Tax) are sales taxes that Canadian businesses must collect and remit to the government. With some exceptions, all businesses are responsible for paying applicable taxes at the federal and provincial level in the form of the Federal GST (Goods and Services Tax) and the Harmonized Sales Tax. In order to account for and remit these taxes, you must register your business for a GST/HST account.
Certain products and services are exempt from these taxes. Livestock and feminine hygiene products are both exceptions, for example, along with services like residential housing, health care and dentistry, certain child care services, and many educational services. Businesses don’t have to charge sales tax on these items or remit them to the Canadian government via the GST/HST Registry. Also, “small suppliers,” or those that earn less than $30,000 in a calendar quarter or over the last four consecutive calendar quarters.
Non-resident businesses without a permanent establishment and that don’t engage in any business in Canada don’t have to register for or pay this tax. Also, certain groups of people are exempt from being charged GST/HST, such as Indigenous peoples, and provincial and territorial governments.
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How do you register for the GST/HST?
Once you determine you must start collecting and remitting this sales tax, you can begin the registration process on the Canada Revenue Agency (CRA) website.
Before you start the process of registering for a GST/HST account, you need to have some information handy:
Effective date of registration
Your effective date of registration is usually the day you stop being a small supplier. It could also be an earlier date.
Your fiscal year
Typically your fiscal business year for the GST/HST is the same as your tax year for income tax purposes. Generally, the tax year for the following “persons” is a calendar year:
Individuals and certain trusts
Professional corporations that are members of a partnership (such as a corporation that is the professional practice of an accountant, a lawyer, or a doctor)
Partnerships, where at least one member of the partnership is an individual, a professional corporation, or another affected partnership
Some persons use non-calendar tax years. If this is the case, you may choose the same year as your GST/HST fiscal year. Corporations use the same fiscal year for both income tax purposes and GST/HST purposes. However, if a corporation has a non-calendar tax year for income tax purposes, it can use a calendar year for its GST/HST fiscal year.
Total annual revenue
To calculate your total annual revenue, include revenues from your taxable sales, leases, and other supplies, including zero-rated supplies (0% tax rate) as well as taxable supplies of all your associates. If you are a new business without revenues, you can give the CRA an estimate of your income for the year.
You’ll need to provide personal information:
Social insurance number (SIN)
Date of birth
Personal postal code (where you live)
You’ll need to provide your business information:
Business number* (if the business already has one)
Type of business or organization (such as sole proprietor, partnership, corporation, registered charity)
Name and SIN of all owners
Mailing address (if different from the physical address)
Description of major business activity
*Note: It’s important to know that your GST/HST account number is part of a business number (BN). If you don’t have a BN yet, you will receive one when registering for your GST/HST account.
Ways to register for your GST/HST account
The CRA allows you to register in a few different ways:
By mail or by fax
What do you do after confirming your GST/HST account number?
You will receive a GST/HST account number to confirm that your registration is complete. You can access this number on the “My Business Account“ section of the CRA website. In your account, you can manage your program accounts online and see your GST/HST information.
Once you receive your number, you’re required to start remitting the sales tax you collect to the Canadian government.
Charge and collect the GST/HST
In essence, the tax rate to charge depends on the place of supply or where you make your sale, lease, or other supply. The rate for other taxable supplies depends on the province or territory. The current rates are:
5% (GST) in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon
13% (HST) in Ontario
15% (HST) in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island
The rules around charging and collecting sales tax can get somewhat complicated, especially if you do business and make sales across several provinces and territories in Canada. If possible, use accounting software or the help of a financial professional to ensure you are in compliance with the requirements for federal sales taxes.
Complete and file a GST/HST return
The personalized GST/HST return (Form GST34-2) has your filing due date at the top of the form. The due date of your return is determined by your reporting period.
The CRA will charge penalties and interest on monies not paid and returns not filed by the due date. Even if you don’t have any business transactions or taxes to pay, you must still file a GST/HST return.
Remit sales tax
Your payment is due at the same time as your GST/HST returns.
Why should I register for the GST/HST?
If you sell products and services in Canada, it’s something that you cannot avoid. If you’ve reached the revenue threshold and don’t remit the applicable sales tax, you could face financial penalties.
One part of financial health includes remaining solvent to the best of your ability—which includes paying your tax obligations on time and as agreed. Taxes are one of those liabilities that can negatively impact your business if not handled properly.
Registering for the GST/HST, charging, collecting, filing and remitting sales tax will ensure you are following the law and setting yourself up for financial success on both a personal and business level.
It’s a yearly rite of passage for Canadians to jump through hoops trying to figure out how much tax to pay. Normally, it’s an exhausting exercise. But we’ve gathered all of there relevant information in one place to help you get through everyone’s least favourite season. Here’s what you need to know about income tax rates.
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Federal Tax Bracket Rates for 2022
The following are the federal tax rates for 2022 according to the Canada Revenue Agency (CRA):
15% on the first $49,020 of taxable income, and
20.5% on the portion of taxable income over $49,020 up to $98,040 and
26% on the portion of taxable income over $98,040 up to $151,978 and
29% on the portion of taxable income over $151,978 up to $216,511 and
33% of taxable income over $216,511
How to Identify your Tax Bracket
How much tax you’ll pay is determined by where you live in Canada, and how much income you declare from all sources. Importantly, your provincial rate is determined by the province you are living in on December 31 of the tax year. So, if you move from Ontario to Nova Scotia in July, and you find yourself living in Nova Scotia on December 31, you would fall under the Nova Scotia provincial tax rates.
How Tax Brackets Work
Your tax bracket is based on “taxable income”, which is your gross income from all sources, minus any tax deductions you may qualify for. In other words, it’s your net income after you’ve claimed all your eligible deductions.
Once you know what your taxable income is, you’ll then apply the relevant federal and provincial rates to your net taxable income. You should calculate your federal income tax first, your provincial rate second, and then add the two together — and presto!
Your marginal tax rate is the combined federal and provincial income taxes you pay on all sources of income at tax time. The tax rate varies by how much income you declare at the end of the year on your T1 General Income Tax Return (the form with the exciting-sounding name that you fill out at tax time) and where you live in Canada.
Federal Tax Bracket Rates 2022
The following are the federal tax rates for 2022 according to the Canada Revenue Agency (CRA):
15% on the first $49,020 of taxable income, and
20.5% on the portion of taxable income over $49,020 up to $98,040 and
26% on the portion of taxable income over $98,040 up to $151,978 and
29% on the portion of taxable income over $151,978 up to $216,511 and
33% of taxable income over $216,511
Provincial Tax Brackets Rates 2022 (in addition to federal tax)
Like we said, the province you are living in on December 31 will determine the provincial portion of your income tax. So, if you are planning skipping town to a province with lower taxes, do it before December 31 of the calendar year. The following are the provincial tax rates for 2022 (in addition to federal tax) according to the Canada Revenue Agency:
5.06% on the first $42,184 of taxable income
7.7% on the next $42,184 up to $84,369
10.5% on the next $84,369 up to $96,866
12.29% on the next $96,866 up to $117,623
14.7% on the next $117,623 up to $159,483
16.8% on the amount over $159,483 up to $222,420
10% on the first $131,220
12% on the next $131,221-$157,464
13% on the next $157,465-$209,952
14% on the next $209,953-$314,928
15% on the amount over $314,928
10.5% on the first $45,677 of taxable income,
12.5% on $45,677 up to $130,506
14.5% on the amount over $130,506
10.8% on the first $33,723 of taxable income
12.75% on the next $33,723 up to $72,885
17.4% on the amount over $72,885
5.05% on the first $45,142 of taxable income
9.15% on the next $45,142 up to $90,287
11.16% on the next $90,287 up to $150,000
12.16% on the next $150,001-$220,000
13.16 % on the amount over $220,000
15% on the first $45,105 of taxable income
20% on the next $45,105 up to $90,200
24% on the next $90,200 up to $109,755
25.75% on the amount over $109,755
9.68% on the first $43,835 of taxable income
14.82% on the next $43,835 up to $87,671
16.52% on the next $87,671 up to $142,534
17.84% on the next $142,534 up to $162,383
20.3% on the amount over $162,383
8.79% on the first $29,590 of taxable income
14.95% on the next $29,591-$59,180
16.67% on the next $59,181-$93,000
17.5% on the next $93,001-$150,000
21% on the amount over $150,000
Prince Edward Island
9.8% on the first $31,984 of taxable income
13.8% on the next 31,985 – $63,969
16.7% on the amount over $63,969
Newfoundland and Labrador
8.7% on the first $38,081 of taxable income
14.5% on the next $38,081 up to $76,161
15.8% on the next $76,161 up to $135,973
17.3% on the next $135,973 up to $190,363
18.3% on the amount over $190,363
4% on the first $46,740 of taxable income
7% on the next $46,740 up to $93,480
9% on the next $93,480 up to $151,978
11.5% on the amount over $151,978
6.4% on the first $49,020 of taxable income
9% on the next $49,020 up to $98,040
10.9% on the next $98,040 up to $151,978
12.8% on the next $151,978 – $500,000
15% on the amount over $500,000
5.9% on the first $44,396 of taxable income
8.6% on the next $44,396 up to $88,796
12.2% on the next $88,796 up to $144,362
14.05% on the amount over $144,362
Remember: Your marginal tax rate is the total of both federal and provincial taxes on income.
Example of tax calculation
Meet a fictional chap named John who lives in British Columbia. John has been contributing to a RRSP to reduce his taxable income. After his RRSP contribution and other tax deductions and tax credits, he has taxable total income of $55,000. Here’s what his tax calculation might look like:
John’s Federal tax bill The first $49,020 is taxed at 15% (the lowest income tax bracket), which works out to $7,353. He has $5,980 remaining, ($55,000-$49,020) — that amount will be taxed at a higher rate of 20.5% which works out to $1,225.9. This means his total federal tax owing is $7,353 + $1,225.9 = $8,578.9
John’s provincial tax bill (using BC rates as example) Remember, John’s provincial rate is based on his province of residence as of December 31 of the calendar year. John’s first $42,184 will be taxed at 5.06%, which works out to $2,134.51. The remaining $12,816 ($55,000-$42,184) will be taxed at 7.7% which works out to $986.83. His total provincial tax is $3,121.34.
John’s total tax bill John’s combined federal and provincial taxes owing is $8,578.9 + $3,121.34 = $11,700.24.
Tax Credits and Tax deductions
Tax credits and tax deductions can reduce either your income or the amount of tax you owe.
Both federal and provincial tax credits exist, and you’ll be glad to hear they help you pay less tax. There are two types: Non-refundable and refundable
A non-refundable tax credit reduces the amount of tax payable. In order to claim a non-refundable tax credit, you must actually owe taxes — in other words, you must have earned enough income to owe income tax. Non-refundable tax credits can reduce your tax owing to zero, but if you have more tax credits than tax owing, you do not receive a refund for any surplus amount. Let’s make that more concrete: if you owe $2500 in taxes and have non-refundable tax credits for $2700, your taxes will be reduced to zero, but you will not receive the extra $200.
Some non-refundable tax credits include:
Personal exemption amount (anyone who owes tax is entitled to claim this exemption)
Exemption for taxpayers over age 65
Exemption for taxpayers with children
Exemption for people receiving a pension
Exemption for people with a certified disability
Exemption for people who are caregivers to someone with a disability
Some other non-refundable tax credits include tuition, medical expenses, Employment Insurance and Canada Pension Plan deductions, interest paid on student loans and adoption expenses. Most provinces have tax credits to reduce the provincial tax owing.
Refundable Tax Credits
Refundable tax credits are paid to anyone who qualifies for them, whether they had income or not. Usually, they’re paid out over the year. The most well-known non-refundable tax credit is the GST/HST payment that people with a combined family income of less than $42,000 received.
Tax deductions don’t work as many people suppose. Instead of reducing the amount of taxes you need to pay, a tax deduction actually reduces the amount of your gross income, which can put you in a lower tax bracket and reduce the amount of taxes you will owe.
The most common tax deductions are:
Pension Adjustment. You get credit for any pension contributions made in the calendar year on your behalf. Your employer will list the Pension Adjustment amount in box 52 on your T-4 slip that lists your income and income tax deducted for the year.
Union and professional dues
Child care expenses
Registered Retirement Savings Plan (RRSP) contributions up to the maximum allowable amount per year. Your financial institution will provide you with a contribution receipt, and you can find out how much RRSP contribution room you have by looking on your Notice of Assessment (the summary form that you receive after you have filed your previous year’s taxes), by looking on your tax account or by calling CRA at 1-800-959-8281.
Donations to charitable organizations or political parties
If you owe income tax, the Canada Revenue Agency will let you work out a payment plan if you cannot pay the taxes all at once. You will be charged interest on any balance you still owe. But be careful: if you owe income tax and don’t pay, and you don’t make an attempt to work out a payment plan, CRA can seize any refundable tax credits you may be eligible for, and they may take you to court and seize the contents of your bank account.