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.

 

Filed under: Personal Tax by David Boese 2 Comments »




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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This article was originally written for the Business First publication.

You can’t avoid it any longer.  The year 2012 is drawing to a close.  I was startled to see Christmas decorations on the store shelves in early October, before Thanksgiving had even had a chance to finish making its appearance.  That means that Christmas shopping will need to be done.  This year I plan to avoid repeating the mistake of buying my wife the same gift two years in a row.  Lucky for me, she has a good sense of humour!

As each year draws to a close, people often start to think a bit more about their taxes.  You know, how to avoid paying the government too much more, and how to maximize their tax refunds.  A common question often heard is: “What are some of the best tax deductions?”

Did you know that one of the best tax deductions is charitable donations?  If you live in Nova Scotia, you can recover up to 50% of your donations in tax savings.  Because of the unique way tax credits are calculated for donations, even taxpayers in lower tax brackets can enjoy this level of savings.  On the first $200 of donations, you save 24%.  On anything over $200, your savings goes up to a full 50%.

That’s an impressive reason to donate right there.  If you still aren’t convinced, remember that when we pay taxes, a sizeable chunk of what we pay goes to fund social programs.  Wouldn’t you prefer to choose for yourself which causes you want to support?  And then have the government reimburse you up to one-half of what you donate?

There are a number of schemes that claim to get you back more in tax savings than your donation amount.  Please don’t fall for these schemes.  They are aggressively audited by the Canada Revenue Agency, and you’ll almost certainly end up losing your entire tax savings, as well as your original donation.  Rather, choose a registered charity that you trust and believe in, and support it.  Give from the heart.  You’ll enjoy the satisfaction of helping someone else, and then you’ll enjoy the satisfaction of the tax savings.

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GST / HST Place of Supply Rules


November 3rd, 2012

Over the last couple of years, the Place of Supply rules for GST/HST have been evolving.  What was relatively easy several years ago, is less so now.

The Place of Supply rules govern what rate of GST/HST to charge, when doing business between provinces.  If you are a business owner in Canada, you absolutely need to become familiar with these rules.

I’m going to post a couple of useful links here.

1.   Tax Tips has a fairly brief description of these rules (note that this link deals with Services)

2.   The Canada Revenue Agency has a very extensive (137 page!) bulletin, the B103.  It has a ton of examples, as well as a couple of flow charts at the back.   Everyone loves a good flow chart.

The G/HST rates across Canada vary widely.  An error or a series or errors could prove costly, so take a few minutes to brush up on these rules.

Filed under: Business tax by David Boese No Comments »