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While there weren’t a great number of tax measures included in the 2018 Fall Economic Statement brought down by the Minister of Finance on November 21, 2018, the tax changes that were announced represented good news for Canadian businesses.


Most Canadians know that the deadline for making contributions to one’s registered retirement savings plan (RRSP) comes after the end of the calendar year, around the end of February. There are, however, some instances an RRSP contribution must be (or should be) made by December 31st, in order to achieve the desired tax result, as follows.


For individual Canadian taxpayers, the tax year ends at the same time as the calendar year. And what that means for individual Canadians is that any steps taken to reduce their tax payable for 2018 must be completed by December 31, 2018. (For individual taxpayers, the only significant exception to that rule is registered retirement savings plan contributions, which can be made any time up to and including March 1, 2019, and claimed on the return for 2018.)


The holiday season is usually costly, but few Canadians are aware that those costs can include increased income tax liability resulting from holiday gifts and celebrations. It doesn’t seem entirely in the spirit of the season to have to consider possible tax consequences when attending holiday celebrations and receiving gifts; however, our tax system extends its reach into most areas of the lives of Canadians, and the holidays are no exception. Fortunately, the possible negative tax consequences are confined to a minority of fact situations and relationships, usually involving employers and employees, and are entirely avoidable with a little advance planning.


Two quarterly newsletters have been added—one dealing with personal issues, and one dealing with corporate issues.


Getting a post-secondary education – or professional training – isn’t inexpensive. Tuition costs can range from as little as $5,000 per year for undergraduate studies to as much as $40,000 in tuition for a year of professional education. And those costs don’t factor in necessary expenditures on textbooks and other ancillary costs, to say nothing of general living expenses, like rent, transportation and food.


When the Canada Pension Plan was launched in the mid-1960s, both the working lives and the retirements of Canadians looked a lot different than they do in 2018. Fifty years ago, most Canadians were able to work at a single full-time job, often held that job for most or all of their working lives and, in many cases, benefitted from an employer sponsored defined benefit pension plan which guaranteed a certain level of income in retirement.


Most Canadians deal with our tax system only once a year, when preparing the annual tax return. And, while that return – the T1 Individual Income Tax Return – may be only four pages long, the information on those four pages is supported by 13 supplementary federal schedules, dealing with everything from the calculation of the tax-free gain on the sale of a principal residence to the determination of required Canada Pension Plan contributions by self-employed taxpayers.


Anyone who has ever tried to reduce their overall personal or household debt knows that doing so, no matter how disciplined one’s approach, can seem like a one step forward, two steps back proposition. It sometimes seems that, just as measurable progress is achieved in one area (an extra payment is made on the mortgage), unexpected costs in another area (a significant car repair bill) push up the level of debt elsewhere (e.g., credit card debt).


Millions of Canadians receive payments each month from the federal government and for younger Canadians, especially families with children, such payments will often include the monthly Canada Child Benefit (CCB).


Achieving charitable registration status is a significant step, and a significant benefit, to any organization. The organization itself becomes exempt from income tax and, in addition, is able to issue tax receipts for donations made to it, which allow donors to claim a federal and provincial tax credit based on the amount of such donations. The ability to issue such tax receipts gives a charitable organization a measurable advantage when it comes to fundraising.


Sometime around the middle of August, millions of Canadians will receive unexpected mail from the Canada Revenue Agency (CRA), and that mail will contain unfamiliar and unwelcome news. Specifically, the enclosed form will advise the recipient that, in the view of the CRA, he or she should make instalment payments of income tax on September 15 and December 15 of 2018 — and will helpfully identify the amounts which should be paid on each date.


Between February and July 2018, the Canada Revenue Agency (CRA) received and processed just over 28 million individual income tax returns filed for the 2017 tax year. The CRA’s self-imposed processing turnaround goal for each of those returns is to complete its assessment and to issue a Notice of Assessment within two to six weeks, depending on the filing method.


The start of the calendar year also marks the beginning of the tax year for individuals and consequently most tax changes are scheduled to take effect as of January 1 of each year. However, the federal and provincial budgets are brought down in the late winter and spring, and those budgets can include announcements of tax changes which will take effect later in the year (often, but not exclusively, on July 1, being halfway through the tax year). As well, where a change in tax rates, credits, or income brackets announced in the budgets is made effective as from the beginning of the tax and calendar year, individuals will first notice that change when their payroll withholdings are adjusted starting in July.


It shouldn’t be news to anyone that severe weather events are becoming more and more common. And, although Canada is known for its winters, it’s usually spring and summer that bring the kinds of weather-related disasters that can force Canadians to leave (or even lose) their homes and which can upend their lives for days, weeks, or even months.

For the past few years, spring floods have been succeeded by summer droughts and forest fires, and the timing of those events unfortunately coincides with the time of year during which most individual tax filing and payment deadlines fall. The filing deadline for 2017 returns for most taxpayers fell on April 30, 2018, which was also the deadline for final payment of all individual taxes owed for 2017. Self-employed individuals and their spouses were required to file a return for 2017 by June 15, 2018. Finally, for taxpayers who pay individual income tax by instalment, the due date for the second instalment payment of income taxes for 2018 was also June 15.


Most Canadians, understandably, think about taxes only when such thoughts can’t be avoided — once or twice a year. The first such time is, of course, when the annual return must be filed at the end of April (or mid-June for the self-employed). And some, but not all, taxpayers turn their minds to taxes when the annual RRSP contribution deadline rolls around.


By the end of June, all individual taxpayers have filed their 2017 income tax returns and most will have received a Notice of Assessment outlining the Canada Revenue Agency’s (CRA’s) conclusions with respect to their income and tax position for the year. In most cases, the Notice of Assessment won’t vary a great deal from the information provided by the taxpayer in his or her return. Where it does, and the change is to the taxpayer’s detriment — the amount of income assessed is greater than that reported by the taxpayer, or a deduction or credit is denied — then the taxpayer must decide whether to dispute the CRA’s assessment.


For several generations, reaching one’s 65th birthday marked the transition from working life to full retirement, and, usually, receipt of a monthly employee pension, along with government-sponsored retirement benefits. That is no longer the reality. The age at which Canadians retire can now span a decade or more, and retirement is more likely to be a gradual transition than a single event.


It’s something of an article of faith among Canadians that, as temperatures rise in the spring, gas prices rise along with them. Whether that’s the case every year or not, this year statistics certainly support that conclusion. In mid-May, Statistics Canada released its monthly Consumer Price Index, which showed that gasoline prices were up by 14.2%. As of the third week of May, the per-litre cost of gas across the country ranged from 125.2 cents per litre (in Manitoba) to 148.5 cents per litre (in British Columbia). On May 23, the average price across Canada was 135.2 cents per litre, an increase of more than 25 cents per litre from last year’s average on that date.


By the middle of May 2018, the Canada Revenue Agency (CRA) had processed just over 26 million individual income tax returns filed for the 2017 tax year. Just over 14 million of those returns resulted in a refund to the taxpayer, while about 5.5 million returns filed and processed required payment of a tax balance by the taxpayer. Finally, about 4.4 million returns were what are called “nil” returns — returns where no tax is owing and no refund claimed, but the taxpayer is filing in order to provide income information which will be used to determine his or her eligibility for tax credit payments (like the federal Canada Child Benefit or the HST credit )


While the Canadian real estate market seems, by all accounts, to have retreated from the record pace it was setting in 2017, there is still plenty of activity. According the statistics released by the Canadian Real Estate Association (CREA), more than 35,000 homes were sold across Canada in the month of April alone. And that means that an equal number of households will be moving in the upcoming months.


Two quarterly newsletters have been added—one dealing with personal issues, and one dealing with corporate issues.


For almost a decade now, Canadians have been living, and borrowing, in an ultra-low interest rate environment. As of the end of April 2018, the bank rate (from which commercial interest rates are derived) stood at 1.5%. The last time that the bank rate was over 1.5% was in December of 2008. Effectively, adult Canadians who are under the age of 30 have had no experience of managing their finances in high (or even, by historical standards, ordinary) interest rate environments.


The arrival of warmer weather signals both the start of spring and the approaching end of the school year. For many families, it also means the need to begin researching the availability of suitable child care or summer daytime or overnight camp arrangements for the summer months. There are many such options available to parents, but what each of those options have in common is a price tag – sometimes a steep one. Some options, like day camps provided by the local recreation authority or municipality can be relatively inexpensive, while the cost of others, like summer-long residential camps or elite level sports or arts camps, can run to the thousands of dollars.


There are a number of income sources available to Canadians in retirement. Those who participated in the work force during their adult life will have contributed to the Canada Pension Plan and will be able to receive CPP retirement benefits as early as age 60. Earning income from employment or self-employment will also have entitled those individuals to contribute to a registered retirement savings plan (RRSP). A shrinking minority of Canadians will be able to look forward to receiving benefits from an employer-sponsored pension plan.


By the end of April 2018, more than 20 million individual income tax returns for the 2017 tax year will have been filed with the Canada Revenue Agency (CRA). And, inevitably, some of those returns will contain errors or omissions that must be corrected – last year the CRA received about 2 million requests for adjustment(s) to an already-filed return.


Virtually no one looks forward to dealing with the need to file a tax return each spring, and while some of that reluctance is undoubtedly due to the complexity of our tax system, there’s another factor at work.

Many (even most) taxpayers don’t know, until they have actually completed their return for the year, whether additional taxes will be owed. And, no matter what the taxpayer’s financial circumstances, finding out that money is owed to the tax authorities is bad news.


The reach of Canada’s system is broad – residents of Canada are taxed on their world-wide income, and the income or capital amounts that escape the Canadian tax net are few and far between.

One of the most significant of those exceptions, particularly for individual Canadian taxpayers, is the “principal residence exemption”. Plainly put, when a Canadian taxpayer sells his or her home, the proceeds of sale are not included in his or her income for the year (and therefore not taxed), no matter how much that home has appreciated in value since it was acquired. And, of course, given the real estate market conditions that have prevailed in recent years, especially in some urban centers, the difference between the original cost of the family home and its later sale price can be very substantial.


While everyone knows that the best results are obtained when tax and financial planning take place on an ongoing basis, the reality is that most Canadians focus on their tax situation only once a year, at tax filing time. And the harsher reality is that, by then, the opportunity to take steps which will make a significant difference in one’s tax liability for 2017 is lost.


The rules surrounding income tax are complicated and it can seem that for every rule there is an equal number of exceptions or qualifications. There is, however, one rule which applies to every individual taxpayer in Canada, regardless of location, income, or circumstances. That rule is that income tax owed for a year must be paid, in full, on or before April 30 of the following year. This year, that means that individual income taxes owed for 2017 must be remitted to the Canada Revenue Agency (CRA) on or before Monday, April 30, 2018. No exceptions and, absent extraordinary circumstances, no extensions.


One of the smaller frustrations of dealing with the federal government is that personal information provided by an individual to any one government department is not shared with or communicated with other branches of the government. The intention behind that policy is a good one – it’s there to protect the privacy of the individual. However, it also means that a single individual must contact potentially several government departments, or log on to several websites in order to, for instance, arrange for direct deposit, or to provide updated information – like a change in bank account information.


The early months of the new calendar year can feel like a never-ending series of bills and other financial obligations, especially tax-related financial obligations. Credit card bills from holiday spending, or perhaps a mid-winter vacation, arrive in mid to late January. RRSP contributions to be claimed on the 2017 return must be made on or before March 1, 2018. And, finally, the April 30, 2018 deadline for payment of any final balance of 2017 income taxes looms.


Last year, 85 percent of individual income tax returns filed were prepared and submitted online using one or the other of the Canada Revenue Agency’s (CRA) web-based tax filing services. There’s every reason to expect that the same percentages will apply this year, but there are some other options available to Canadian taxpayers.


While the obligation to file a T1 tax return form is an annual one, the process of completing that form and calculating tax payable is never exactly the same year to year. Change is the one constant in tax, as the federal and provincial governments are continually in the process of “fine-tuning” the tax system by eliminating some existing deductions and credits, changing others and, sometimes, implementing new ones.


Two quarterly newsletters have been added—one dealing with personal issues, and one dealing with corporate issues.


If there is one invariable “rule” of financial and retirement planning of which most Canadians are aware, it is the unquestioned wisdom of making regular contributions to a registered retirement savings plan (RRSP). And it is true that for several decades the RRSP was only tax-sheltered savings and investment vehicle available to most individual Canadians.


One of the perennial New Year’s resolutions made by many individuals is a commitment to keep on a budget, spend less, save more, deal with any outstanding debt and, generally, to better manage their financial affairs. Fortunately, for those taxpayers (and for everyone else) the start of the new calendar year is also the start of a new tax year and with that, a fresh opportunity to contribute to one’s registered retirement savings plan (RRSP) and tax-free savings account (TFSA). What follows is an outline of the contribution limits and deadlines for both types of plans which will apply for the 2018 tax and calendar year.


Any taxpayer hearing of a tax planning opportunity that offered the possibility of saving hundreds or even thousands of dollars in tax while at the same time increasing his or her eligibility for government benefits, while requiring no advance planning, no expenditure of funds, and almost no expenditure of time could be forgiven for thinking that what was being proposed was an illegal tax scam. In fact, that description applies to pension income splitting which, far from being a tax scam, is a government-sanctioned strategy to allow married taxpayers over the age of 65 (or, in some cases, age 60) to minimize their combined tax bill by dividing their private pension income in a way which creates the best possible tax result.


Although it’s doubtful that anyone does so with any great degree of enthusiasm, each spring millions of Canadians sit down to complete their annual tax return for the previous calendar year or, more often, they pay someone else to do it for them. Although the rate of compliance among Canadian taxpayers is very high — for the last filing season, just under 30 million individual income tax returns were filed with the Canada Revenue Agency (CRA) — there are, inevitably, those who do not.


The Employment Insurance premium rate for 2018 is 1.66%.


The Quebec Pension Plan contribution rate for employees for 2018 is 5.4%.


The Canada Pension Plan contribution rate for 2018 is unchanged at 4.95% of pensionable earnings for the year.


Dollar amounts on which individual non-refundable federal tax credits for 2018 are based, and the actual tax credit claimable, will be as follows:


The indexing factor for federal tax credits and brackets for 2018 is 1.5%. The following federal tax rates and brackets will be in effect for individuals for the 2018 tax year.


Each new tax year brings with it a listing of tax payment and filing deadlines, as well as some changes with respect to tax planning strategies. Some of the more significant dates and changes for individual taxpayers for 2018 are listed below.


The federal government and each of the provinces (with the exception of Saskatchewan for 2018) and territories provide for indexing of individual income tax brackets and credit amounts. Changes other than indexation which will take effect for 2018 are listed below.