2012 mileage rates

December 29th, 2011

The 2012 mileage rates are increasing by 1 cent per kilometre.  The new maximum non-taxable rate that an employer can pay is rising to $0.53 / kilometre on the first 5,000 kms per year, and $0.47 for each additional kilometre.

Different rates apply if you live in a northern territory.  Read the full release here: http://www.fin.gc.ca/n11/11-146-eng.asp

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Children’s Art Tax Credit

December 28th, 2011

New for 2011, you may be able to claim the Children’s Arts Tax Credit.  Your child needs to be under the age of 16 at some point during the year (or 18 if disabled.)

Qualifying activities can include a wide variety of things, including activities that:

  • contributes to the development of creative skills or expertise in artistic or cultural activities;
  • provides a substantial focus on wilderness and the natural environment;
  • helps children develop and use particular intellectual skills;
  • includes structured interaction among children where supervisors teach or help children develop interpersonal skills; or
  • provides enrichment or tutoring in academic subjects.

That covers a huge range of activities.  If your child is more into sports, remember you may be able to claim the Fitness Tax Credit.

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Hiring Credit for Small Business

December 19th, 2011

Back in June 2011 in an effort to bolster the job market, the Canadian government announced the Hiring Credit. This is a one time payment of up to $1,000, that will be sent out 2012.  To qualify, your small business needs to:

  • pay less than $10,000 in total Employment Insurance (EI) premiums in 2010;
  • reflect an increase in EI premiums in 2011;
  • file a T4 return for 2011

The payment will be the increase in your EI premiums from 2010 to 2011.  Read more here.

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CRA – More scare tactics

December 16th, 2011

As I wrote in a previous post, from time to time the CRA sends out a mass mailing of letters to tens of thousands of taxpayers.  This letter basically asks you to review your records to ensure that you filed an accurate tax return, and if you feel you may have made an error, please correct it.

It is of course very important to file accurate tax returns, but if you receive this letter don’t assume that you will automatically be audited.  They are mailing out 47,000 letters over the next two months.  In 2010 and 2011 they sent out 37,000 and 29,000 letters respectively.

Personally I consider this letter to be more of an educational type letter.  This type of communication will obviously grab the recipient’s attention, and make them think twice before making a dubious claim on their next tax return.  I definitely think that is why they mail these letters out at the start of the tax season.  The recipient is going to read it, and in a month or two when he’s filing his tax return he’s going to be thinking about the chances of an audit 🙂

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