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Teachers School Supply Tax Credit

School Supply Tax Credit for Teachers

Teachers School Supply Tax Credit

Prime Minster Justin Trudeau’s proposal to teachers will be rolled out in 2016. Teachers who dip into their own wallets to buy school supplies are finally being offered an extra token of support.

The 2016 budget has introduced a new teachers School Supply Tax Credit for the cost of educational supplies. The credit is available to teachers and early childhood educators who incur the cost of supplies for the purpose of teaching or otherwise enhancing students’ learning in the classroom or learning environment. This new credit will allow an employee who is an “eligible educator” to claim a 15% refundable tax credit based on up to $1,000 in expenditures made by the teacher for “eligible supplies.” The credit would be worth $150 which is 15 percent of $1,000.

Teachers will qualify as eligible educators if they hold a teacher’s certificate that is valid in the province or territory in which they are employed. Similarly, early childhood educators must hold a certificate or diploma in early childhood education.

The list of allowable school supplies includes items like:

  • Bulletin board decorative items, such as borders and illustrations;
  • Construction paper and Bristol board for activities, flashcards, or activity centres;
  • Posters with instructions, such as punctuation rules or chemistry formulas;
  • Items for science experiments, such as seeds, vegetables, fruits, potting soil, milk, vinegar, coffee stir sticks, straws, spaghetti for building structures, etc.;
  • Specialized art supplies;
  • Games and puzzles;
  • Supplementary books (novels, non-fiction, and reference) for classrooms;
  • Supplementary technology for classrooms, such as tablets, laptops, graphing calculators, and projectors;
  • Stickers and motivational items;
  • Support software for teaching and learning purposes; and
  • Containers, such as plastic boxes or banker boxes for themes and kits.

Teachers must keep receipts to claim the tax credit.

To read more about the Teachers School Supply Tax Credit visits the Liberal website.

Tax implications of the 2016 budget

Tax implications of the 2016 budget

Tax implications of the 2016 budget

Tax implications of the 2016 budget

The 2016 federal budget included a number of measures that will impact Canadian taxpayers. Here are some of the tax aspects of the budget which will impact individuals and small business owners.

1. Reduction of middle-income tax bracket

The middle-class income tax bracket would be cut from 22% to 20.5%, starting this year. That means if your taxable income is between $45,282 and $90,563, you’ll pay less tax.

2. New High Net worth (HNW) tax bracket

The Liberals introduce a new 33% tax bracket for high net worth people who earn more than $200,000 each year.

3. Increasing the attention on tax evasion

The Liberals will invest $444.4 million over five years to help the Canada Revenue Agency ensure tax evasion is difficult. This money will go to hiring more tax auditors and specialists, developing robust business intelligence infrastructure, increasing verification activities and investigating criminal tax evaders.
The Liberals will also spend $351.6 million over the next five years to help the Canada Revenue Agency improve its ability to collect outstanding tax debts.

4. Closing tax loopholes for HNW

For those private corporation business owners, this Budget will close loopholes that allow them to use a life insurance policy to make distributions tax free.

5. Retirement age rolled-back to 65

The retirement age will stay at 65. This reverses the Conservatives’ decision to raise it to 67 beginning in 2023.

6. Low-income seniors get 10% more in GIS benefits

Starting in July 2016, low-income seniors who rely almost exclusively on Old Age Security and Guaranteed Income Supplement (GIS) benefits can expect a 10% increase to their total maximum GIS benefits.

7. Introduction of the Canada Child Benefit

Starting in July, the Universal Child Care Benefit (UCCB) and Canada Child Care Benefit (CCTB) will be replaced with one non-taxable Canada Child Benefit (CCB).
Under the current system, families with one child and with annual earnings of $30,000 would receive $4,852, after tax, if their child was under age 6, or $3,916 if their child is aged 6 to 17.
Under the new Canada Child Benefit, these low-income families could see $6,400 per child under age 6 and up to $5,400 per child per year for children aged 6 to 17. As a result, most Canadian families will see an average increase in child benefits of almost $2,300 starting this year.

8. Increased Child Disability Benefits

An additional amount of up to $2,730 for each child who is eligible for the Disability Tax Credit will be added to the existing Child Disability Benefit.

9. Elimination of income splitting for couples with kids

The prior Conservative government’s introduction of the Family Tax Cut allowed couples to income split and save up to $2,000 in taxes each year. This income splitting for couples with children under age 18 will be eliminated.

10. Elimination of fitness or arts tax credit for kids

Currently, families can get a tax credit of $150 and $75 per child through Children’s Fitness and Arts Tax Credits (up to $1,000 and $500 in eligible expenses, respectively).
There will be a 50% reduction of the maximum eligible expenses for the Children’s Fitness and Arts Tax Credits in 2016, and a complete elimination of both credits by 2017.

11. Elimination of education and textbook tax credit

This Budget eliminates the Education and Textbook tax credits, effective Jan. 1, 2017.

12. Introduction of School Supply Tax Credit

Budget 2016 has introduced a new credit for the cost of educational supplies. The credit is available to teachers and early childhood educators who incur the cost of supplies for the purpose of teaching or otherwise enhancing students’ learning in the classroom or learning environment. This new credit will allow an employee who is an “eligible educator” to claim a 15% refundable tax credit based on up to $1,000 in expenditures made by the employee for “eligible supplies.”

Teachers will qualify as eligible educators if they hold a teacher’s certificate that is valid in the province or territory in which they are employed. Similarly, early childhood educators must hold a certificate or diploma in early childhood education.

13. Elimination of capital gains tax exemption on donations

Budget 2015 included a proposal to provide an income tax exemption on capital gains of donated private corporation shares or real estate beginning in 2017. To qualify, the cash proceeds from the disposition would need to be donated to a registered charity or other qualified done within 30 days. This is now eliminated in 2016 Budget.


Budget 2016: How budget could affect Canadian communities


What the Liberal budget means for high-income Canadians

 

2016 Income Tax Deadlines

Important dates for 2016 (Individuals)

2016 Income Tax Deadline

2016 Income Tax Deadline

Individuals should make note of the below key dates impacting 2016 tax season:

2016 Income Tax Deadlines

Generally, your return for 2015 has to be filed on or before April 30, 2016. Since April 30, 2016 falls on a Saturday, individuals have until Monday May 2, 2016 to file.

Balance owing

Your balance is due no later than April 30, 2016. When a due date falls on a Saturday, a Sunday, or a holiday recognized by the CRA, your payment is considered to be made on time if it is received or it is postmarked on the next business day.

Registered Retirement Savings Plan (RRSP)

Deadline to contribute to an RRSP for the 2015 tax year is February 29, 2016.

GST/HST credit payments

If you qualify for GST/HST credit, the payments are generally issued on the 5th day of each quarter.

  • GST/HST credit payment dates
    • July 3, 2015
    • October 5, 2015
    • January 5, 2016
    • April 3, 2016
RESP contributions, 2016 charitable contributions and 2016 TFSA contributions

Deadline for RESP contributions, 2016 charitable contributions and 2016 TFSA contributions is December 31, 2016.


For more dates and other information visit the CRA website. For more information on the above dates that may impact you, contact Cheema CPA Professional Corporation. We are a Brampton and Mississauga based accounting firm. We can help you prepare your 2015 income taxes. Contact us for all your 2015 income tax and accounting needs. 


 

Canada Revenue Agency (CRA) HST Audit

Canada Revenue Agency (CRA) HST Audit

CRA HST Audit

CRA HST Audit

Canada Revenue Agency CRA HST Audit

The Canada Revenue Agency (CRA) frequently conducts HST audits and reviews to make sure Canadians are complying with the regulations. CRA HST Audits can also be referred to as GST Audits or GST/HST Audits. GST/HST audits focus on GST/HST filing errors and omissions. The CRA does have the right to examine records of the organization that are relevant to determining its tax liabilities.

What causes a CRA HST audit?

The CRA has a complex computer system that allows it to select returns to be audited by sorting them into various groups. There are four common ways the CRA selects files for audit:

  1. Computer-generated lists – In order to select specific returns for audit, the CRA often compares selected financial information for current and previous years of taxpayers engaged in similar businesses or occupations.
  2. Audit projects – The CRA often tests the compliance of a particular group of taxpayers, particularly if there is reason to believe that there is significant non-compliance within a group.
  3. Leads – Leads for audits often are the result of other audits or investigations, as well as information from outside sources.
  4. Secondary files – A business may be selected for audit if it is associated with another file that is being reviewed for audit, since the CRA often finds it convenient to look at all the records at the same time.

What is the CRA’s new approach?

The way the CRA conducts its audits has changed over the years. The CRA has switched from a combined audit approach to a detailed approach. In the past, most audits of smaller businesses have been done as combined audits – one audit covering both income tax and GST/HST. Combined audits have now been discontinued. Therefore, businesses are now subject to an income tax or GST/HST audit, leading the CRA to request more detailed information.

What can you do to prepare for a CRA HST audit?

Before you release any information to the CRA, make sure you seek professional advice. Once the information has been released the CRA can use it against you to assess penalties and interest. This requires you to be well prepared and know your rights as a business owner. In case of an audit remember the following:

  • Maintain good records: Organize the receipts and documentation to support your claims. You are required to keep your records and supporting documents and financial information for at least six years. Well-kept records will likely reduce the time required to complete the audit. some tips on good record keeping include:
    • Ensure you have copies of any GST/HST elections you have been relying on.
    • Ensure your documentation is neatly organized and in order. The CRA will likely request a copy of your electronic books and records.
    • If you have a combination of exempt and taxable supplies, ensure your ITC allocation methodology is documented and explained.
  • Be knowledgeable: Before the auditor begins the audit, confirm what taxation years are under review and what records he or she will require. This will ensure you have the required information ready for the auditor upon arrival.
  • Know your rights: Don’t give the auditor full accessibility to your files. Understand your rights as a taxpayer and exercise them when necessary.
  • Understand the information you are providing: Carefully review all information provided to the CRA and ensure that you are not providing more information than required.
  • Be courteous and professional: It is important to cooperate with the CRA and provide them with the information they request. However, always remember your rights as a business owner. Responding promptly and professionally to all correspondence received from the CRA may help complete the process faster and smoother.

A CRA audit can be time consuming and costly when you don’t have the right resources. For assistance, contact Cheema CPA Prof. Corp. and we will work with you through this process.

What are your rights GST/HST CRA audit?

Your rights are outlined in the Taxpayer Bill of Rights, which states the 16 rights that apply to all taxpayers and registrants. This video, will mention three of the 16 rights that we want to highlight for you as you go through the audit process.

 

  • Right number three says you have the right to privacy and confidentiality. Auditors must respect the confidentiality of tax information and are obliged to take safeguards to protect your information.
  • Right number five says you have the right to be treated professionally, courteously, and fairly. You should expect this treatment from an auditor.
  • And right number six says you have the right to complete, accurate, clear, and timely information. You should expect to be kept informed throughout the audit.

If you need to learn more about your rights as a taxpayer please refer to the Taxpayer Bill of Rights. 

Who can help during a GST/HST CRA audit?

Having the right team of professionals handling your HST audit is the key to success. As a taxpayer and a business owner you have rights. Before you release any information to the CRA make sure you seek professional advice. Once the information has been released, the CRA can use it against you to assess penalties and interest. Our firm is specialized in CRA HST Audits and Reviews. We can help you achieve a favorable result. Our team of lawyers and tax accountants can professionally handle your CRA HST Audit or Review.

Brampton Accountant: 2015 Income Tax Checklist

Brampton Accountant: 2015 Income Tax Checklist

Brampton Accountant: 2015 Income Tax Checklist. Cheema CPA Professional Corporation is a Chartered Professional Accountant firm located in Brampton, Ontario. We provide professional tax and accounting services. Each year we put together a checklist to help our clients assemble all the information required for personal taxes. This checklist will help you get more organized and help us minimize your taxes. To download: Tax Checklist.

General Items

  • A copy of last year’s return
  • 2009 Notice of Assessment
  • Other years reassessments
  • Details of changes to your personal status such as dates of marriage, separation, divorce or widowed, births and deaths
  • Note consenting to provide your income tax information to Elections Canada
  • Installment payments
  • Details of foreign property holdings (if any*) including cost of property held

Income

  • Universal child care benefit (RC62)
  • Employment income (T4)
  • Pension income (T4A, T4A(P), T4RIF, T4RSP)
  • US social security
  • Old age security (T4OAS)
  • Investment income (T5)
  • Income from trusts such as mutual fund investments (T3)
  • Income from employment insurance (T4E)
  • Income from partnerships (T5013)
  • Workers compensation/social assistance payments (T5007)
  • Details of the sale of securities such as stocks and bonds (eg. trading summary from your broker)
  • Income from foreign investments
  • Spousal support payments received

Deductions General

  • RRSP contributions
  • Medical, dental, prescription drugs, nursing home expenses
  • Payments to a private health insurance plan
  • Charitable donations
  • Tuition fees/education amount (T2202A) for yourself or transferred from a dependent such as a child or grandchild
  • Interest paid on student loans c Professional dues, union dues c Public transit passes
  • Childrens participation in programs related to physical activity
  • Interest on loans assumed to purchase investments
  • Safety deposit box fees
  • Professional consultant fees
  • Legal fees paid to establish child or spousal support or to enforce a pre-existing agreement
  • Legal fees paid to recover wages from your employer
  • Details of people you support and their medical status
  • Child care receipts (for camp, list dates attended)
  • Moving expenses if you moved 40km or closer to work or school
  • Property taxes or residential rent paid and to whom
  • Political contributions receipts
  • Disability tax credit claim form completed by authorized health practitioner (T2201)
  • Spousal support payments paid
  • Adoption expenses

Deductions Employees

  • Declaration of conditions of employment form (T2200)
  • Details of expenses not reimbursed by your employer including travel expenses (eg. parking, taxis, bus fare), supplies and assistant salaries
  • Office rent if required as a condition of employment
  • Home office expenses if it is your principal workplace or used exclusively, on
  • a regular or continuous basis for activities such as business-related meetings; include details of rent paid, repairs and maintenance costs, utilities and if you are
  • a commissioned salesperson also property taxes and home insurance. Also indicate the total area of your home and the area used for your work-space
  • If you are a commissioned sales-person, details supporting advertising expenses, promotion, meals and entertainment
  • Motor vehicle expenses

Deductions Motor Vehicles

  • Total kilometers driven and kilometers driven just for work
  • Details of total expenses incurred for gas, maintenance and repairs, insurance, license and registration, loan interest and lease payments
  • New vehicle, purchase invoice/agreement

Unincorporated Businesses

  • Total sales revenue for the year
  • Total expenses listed by category for the year
  • Capital assets acquired (eg. computers and peripherals, furniture and equipment)
  • Home office expenses include details of rent paid or if you own your home, details of repairs and maintenance, utilities, property taxes, insurance, mortgage interest
  • Motor vehicle expenses

Unincorporated Businesses

  • Total sales revenue for the year
  • Total expenses listed by category for the year
  • Capital assets acquired (eg. computers and peripherals, furniture and equipment)
  • Home office expenses include details of rent paid or if you own your home, details of repairs and maintenance, utilities, property taxes, insurance, mortgage interest
  • Motor vehicle expenses

Download (PDF, 30KB)

2015 INCOME TAX

2015 INCOME TAX

 

Personal Tax Changes 2016 Tax Season

Personal Tax Changes 2016 Tax Season

Personal Tax Changes for 2016 Tax Season

Personal Tax Changes for 2016 Tax Season

Changes and Updates for 2016 Tax season

We will discuss the personal tax changes 2016 tax season in this article. Following key changes to existing services, credits, and amounts impact individual taxpayers in the 2016 tax-filing season:

  • Updated notice of assessment – The Canada Revenue Agency (CRA) has updated the format of the notice of assessment to be simpler. Taxpayers can now find the most important information about the assessment on the first page.
  • Universal child care benefit (UCCB) – For the 2015 tax year, the UCCB was expanded to children aged 6 through 17. Also, payments that parents receive for children under the age of 6 increased to $160 per month for each child. To learn more about the UCCB read our full blog post here. This Personal Tax Changes 2016 Tax Season was implemented before 2016.
  • Disability Tax Credit – This year, Canadians claiming the Disability Tax Credit (DTC) will be able to file their T1 return online regardless of whether or not their Form T2201, Disability Tax Credit Certificate has been submitted to the CRA for that tax year.
  • Children’s fitness amount – As of January 1, 2015, this is now a refundable tax credit available to families with children enrolled in a prescribed program of physical activity. For tax years prior to 2015, this credit was non-refundable. The Children’s Fitness Tax Credit allows you to claim eligible fees paid in the year up to a maximum of $500 per child (an additional amount of $500 is available if the child is eligible for the Disability Tax Credit and a minimum of $100 has been paid for eligible fees in the year). The child must have been under 16 years of age (or under 18 years of age if eligible for the disability tax credit) at the beginning of the year in which an eligible fitness expense was paid.
  • Child Care Expense Deduction limits – As of the 2015 tax year, the Child Care Expense Deduction dollar limits have increased by $1,000. The maximum amounts that can be claimed have increased to $8,000 for children under age seven, to $5,000 for children aged seven through 16, and to $11,000 for children who are eligible for the Disability Tax Credit.

For more information on the above key changes that may impact you, contact Cheema CPA Professional Corporation. Cheema CPA can help you understand personal tax changes 2016 tax season.  Visit the CRA website for more personal tax changes and updates 2016 tax season.

Review of child and family benefits and credits

Child and Family Benefits

Child and Family Benefits

 Review of child and family benefits and credits

What the Canada Revenue Agency is looking for?

The Canada Revenue Agency (CRA) continuously conducts reviews and audits of child tax benefits and other family benefits. The process usually starts off with a questionnaire or a phone call. Taxpayers get confused and don’t really know which documents the CRA is looking for. This results in Universal Child Care Benefits (UCCB) and Canada Child Tax Benefit (CCTB) payments being stopped or delayed.

To support your residential address you will be required to provide the following documents:

 

Part 1: Information about your residential address


Property Owner:

If you are the owner of your residence, a copy of your property tax bill for each year under review. The property tax bill should include all your personal details such as your full name, address of the property, and the year of the bill.

In addition you will be required to provide one of the following documents:

  • Mortgage papers
  • insurance policies
  • household bills (gas, electricity, cable, or telephone)
  • Drivers license and vehicle registration
  • Registered Retirements Savings Plan or Pension Plan documents showing your address

 Tenant:

If you are a tenant, a copy of your rental/lease agreement or letter fro the landlord. Documentation must cover the entire period under review. The letter from the landlord should include the following details:

  • The date the rent was paid
  • The address of the property you rented
  • The name of the person or business who received the payments
  • the signature of the landlord

In addition you will be required to provide one of the following documents:

  • Mortgage papers
  • insurance policies
  • household bills (gas, electricity, cable, or telephone)
  • Drivers license and vehicle registration
  • Registered Retirements Savings Plan or Pension Plan documents showing your address

Part 2: Information about your residency status


You will be required to provide any two of the following documents to support that the child was living with you and you were the primary caregiver for the entire time under review.

Any two of the following documents:

  • A copy of the child’s school registration/enrollment document or information/emergency contact sheet. It must be signed and certified by the school to be a true copy.
  • A letter from the daycare or school authority which includes the following information from their files:
    • Name and home address of the parent/guardian for each child
    • attendance records of the child
    • name and contact number of the person completing the letter
  • Copies of the Report cards for each year under review. The report card can only be used if it states the home address, attendance record and parent’s/guardian name
  • A letter from your family doctor or dentist confirming how long the child has been under the doctor or dentist’s care and indicating the home address and parent or guardian information as indicated on their files, for the period under review. The letter must be on letterhead and must be singe by the doctor or dentist.

In the event the CRA has disallowed your claim please contact our office for assistance. We can professional handle your CRA audit or review. Our tax accounting firm can professionally prepare and submit all documents and make sure everything gets resolved in a timely manor. Contact our accounting firm for all your personal, corporate, and small business needs. .

CRA Arbitrary Tax Assessment

Arbitrary Tax Assessment

Arbitrary Tax Assessment

CRA Arbitrary Tax Assessment

What happens when you don’t file income tax returns, HST returns, or corporate tax return? The CRA files your taxes for you. That’s right, they calculate your income based on past years income and assess you an arbitrary tax amount. The arbitrary assessment amount usually does not take into account any of the tax credits or breaks that could apply. The CRA will apply interest and penalties on the arbitrary amounts and send out a notice of assessment.

The process usually starts with few letters and followed by phone calls. If the CRA does not receive an answer, the next step is the arbitrary assessment. This is usually when clients call and need our assistance. We have the expertise to file your back taxes and get the arbitrary amounts corrected through appeals and amendments. We prepare and file the returns with great detail to avoid unwanted audits and future re-assessments.

The best way to avoid this hassle is to file your back taxes even if you are not able to pay off the taxes owing. We have the expertise to negotiate with the Canada Revenue Agency to setup a payment plan until the amounts are paid off.

Contact our tax accounting firm located in Brampton and Mississauga for all your back tax needs. 

Interest and penalties

Interest

If you have a balance owing for 2014, the CRA will charge compound daily interest starting May 1, 2015, on any unpaid amounts owing for 2014. This includes any balance owing if we reassess your return. In addition, the CRA will charge you interest on the penalties starting the day after your return is due. The rate of interest we charge can change every three months. See Prescribed interest rates.

Late-filing penalty

If you owe tax for 2014 and do not file your return for 2014 on time, the CRA will charge you a late-filing penalty. The penalty is 5% of your 2014 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.

If the CRA charged a late-filing penalty on your return for 2011, 2012, or 2013 your late-filing penalty for 2014 may be 10% of your 2014 balance owing, plus 2% of your 2014 balance owing for each full month your return is late, to a maximum of 20 months.