Capital gains

October 5th, 2009

Capital gains – one of the most frequently discussed areas of income tax.  And maybe one of the most misunderstood areas.  I’m often asked to clarify capital gains, so I’m going to share a few examples.  None of this is by any means all inclusive, since capital gains is a very general term.

Let’s use Ned and Charlene for an example (not a real couple as far as I know!)  Ned and Charlene are a retired couple.  He is 76 and she is 78.

Ned and Charlene have been living just outside the city of Dartmouth for the last 18 years.  They bought a lovely 4 bedroom house after retiring from their teaching careers, and have been living there ever since.  Lately they have been finding it too much work to take care of their large house, and have been talking seriously of selling their place and moving into an apartment somewhere in Halifax.

Ned and Charlene are worried about how much tax they may have to pay when they sell.  They have heard about capital gains tax, and over dinner one day some friends told them they might have to pay as much as 50% in tax.  This has them worried.  They’ve been counting on the sale price of their house to help pay for the Alaska cruise they have always talked of taking.

Let’s see if Ned and Charlene can afford the cruise.

Capital gain is defined, loosely, as the gain realized when as asset is sold.  OK, Ned and Charlene purchased their 4 bedroom house for $165,000.  This included 6 acres of land.  They are hoping to sell for $325,000.  Assuming they get what they are asking, we can calculate their capital gain as follows:  Selling price ($325,000) less the Purchase price ($165,000) equals Capital Gain of $160,000.

So the Capital Gain on the sale of Ned and Charlene’s house will be $160,000.  Note that they can also subtract the selling costs, which may include legal fees, and real estate commissions.

The next step is to determine how much income tax may be owing, to see if they can afford the Alaska cruise, or if they’ll just have to be content to go out on the Harbour Hopper.  Check back in a couple of days for the answer.

Filed under: Personal Tax by David Boese No Comments »

Just what you have been waiting for! – an easier way to pay your taxes.  Canada Revenue Agency announced that they were launching a new service, called My Payment, which allows instant payment of taxes, online.  My first impression was:  you can already do this through your online banking bill payments screen.  BUT, this new service is instant, whereas with the old service you have to make the payment one day in advance for it to arrive at CRA on time.  This is nice, as now you don’t have to remember the day before your taxes are due to schedule the payment.

Anyway, this new service won’t start until October 5, at which time you can begin enjoying instant tax payment by going to

Filed under: Personal Tax by David Boese No Comments »

A bit more information on that $5,000 lobster fishermen support payment:  the application process is surprisingly simple.   The application form doesn’t even ask for any financial information, leading some people to ask where the Department of Fisheries and Oceans is going to get their financial data from.  The answer is that they already have all the fishermen’s catch data.  DFO collects lobster landing data during lobster season, and apparently they have each fisherman’s catches summarized already.  So they can just compare your catch from this year to last year’s, to see if your landings have decreased enough to qualify.  This is what I was told by a representative from DFO.  Personally, if I was told I didn’t qualify, I would ask to see their data to make sure it jived with my own data.

Filed under: Business tax, Other tips by David Boese No Comments »

I’m frequently asked for my opinion as to which is the better accounting software:  Simply Accounting or QuickBooks.  This is a bit of a tough one, because both have their strong points.  I wish I could design my own, and put the best of both programs into one!  Also, one person’ s opinion about what’s best doesn’t automatically mean it’s right……

I find Simply Accounting a bit more user friendly than QuickBooks (but again, that’s just my opinion).  The reporting function in Simply is quite a bit easier to use.  The payroll feature is also a bit better to work with, and especially if you don’t care to subscribe to the annual payroll service.

QuickBook’s does a much better job of working with year end tasks.  Certain other tasks are also a bit more slick in QuickBooks, like the handling of bank deposits.

In the end, either one will serve you very well.  What tips the scales towards Simply Accounting, for me anyway, are two things.  One is that they are bit easier to use, AND secondly, the company attitude is just plain better.  Sage Software, the owner of Simply Accounting, strikes me as just plain friendlier all around.  And in today’s world, that means a lot to me.

Filed under: Other tips by David Boese No Comments »