Back in 2009 when the Tax Free Savings Accounts were first introduced, the annual contribution limit was $5,000.  We were promised that this would increase gradually to keep up with inflation.  For 2013 the first increase takes effect, to the tune of $500.  So effective next year, you will be allowed to contribute $5,500 per year.

Want to learn more about the TFSA?  Start here.

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Do you own foreign assets?


November 24th, 2012

Are you a Canadian resident (an individual, corporation, or trust) and you own foreign property with a worth of more than $100,000?  If so, you may be required to file the T1135 Foreign Income Verification Statement each year.

Don’t let the word property fool you…..it’s more than just land and buildings. ¬†Items that must be listed include:

  • amounts in foreign bank accounts
  • shares in foreign companies
  • interests in non-resident trusts
  • bonds or debentures issued by foreign governments or foreign companies
  • interests or units in offshore mutual funds
  • real estate situated outside Canada
  • other income-earning foreign property.

Items that don’t need to be listed include:

  • property used mainly for personal use and enjoyment, such as a vehicle, vacation property, jewellery, artwork, or any other such property
  • assets used only in an active business, such as a business inventory or the equipment and building used in a business.

It’s important that this form gets filed. ¬†The penalty for failing to do so is $2,500 per year. ¬†If you are an immigrant from outside Canada, and you retain your assets from countries outside Canada, be sure not to miss this.

Here is a list of FAQs from the CRA.

 

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Most people probably already know you can claim travel to medical appointments, as a medical expense on your tax return. ¬†What was less clear, was what about if you were travelling to take care of a family member that was hospitalized? ¬†I’ve had clients who travel back and forth to a medical centre, to assist with a family member who is either critically ill or maybe going through rehab. ¬† Since these people weren’t transporting the actual patient, it was far from clear whether these “visits” could be claimed as a medical expense.

A court case that was released yesterday brought some clarification.  A certain gentleman named Bill Jordan made frequent trips to care for his wife in the hospital, and also a rehab center.  He claimed these trips as a medical expense on his tax return.  The Canada Revenue Agency denied these costs, and it ended up in Tax Court.

In the Tax Court, Justice Woods ruled that these costs should be allowed, as he felt that Mr. Jordan’s visits significantly contributed to his wife’s recovery.

I would still urge caution in claiming hospital “visits” as a medical expense. ¬†First, you need to remember that these costs must meet the normal medical travel criteria. ¬†Second, you need to be able to prove that these trips were of significant important to the patient’s recovery. ¬†Nevertheless it is always nice to see a taxpayer win like this, especially since this will help clear up the medical travel rules somewhat.

 

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Audit


November 14th, 2012

Back in the old days, if you were selected for a business audit, you’d typically get audited for both income tax and GST/HST (assuming you were a registrant, of course.) ¬†The word is that this is changing – now, you’ll either get audited for one or the either. ¬†Naturally, I would fully expect the auditor to do a cursory review of whichever one is not being audited.

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