Alastair Murdoch Accounting Group Ltd
(formerly McIntyre Accounting Group)
Chartered Professional Accountant Firm in Kamloops, British Columbia
Newsletters
Tax Alerts

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


Although the filing deadline for individual income tax returns for the 2019 tax year has been extended to June 1, 2020, millions of Canadians have nonetheless already filed those returns. Specifically, by May 19, 2020, the Canada Revenue Agency (CRA) had processed just over 20 million individual income tax returns filed for the 2019 tax year. Just over 13 million of those returns resulted in a refund to the taxpayer, while just over 3 million resulted in a tax balance owed by the taxpayer.


Although we’re not even halfway through the calendar, 2020 has already been a year of significant financial upheaval and stress for millions of Canadians. The number of employed Canadians fell by one million during the month of March 2020 — and then by another two million during the month of April.


Since mid-March, the federal and provincial governments have announced the creation of numerous programs to help both individuals and Canadian businesses with the financial fallout of the current pandemic. Of those programs, none has had a more direct impact on the lives of Canadians than the Canada Emergency Response Benefit, or CERB. As of mid-May, more than 8 million Canadians have applied for the benefit, and more than $40 billion has been paid out under the CERB program.


Working from home isn’t really a new phenomenon — employees have been doing so for more than 25 years, ever since changes in technology made such remote work arrangements feasible. Over the past two months or so, however, millions of Canadian employees have had to adapt to working from home for the first time. And it seems that an increasing number of companies are deciding that such arrangements can and should be maintained for the longer term, even after they are no longer required for reasons of public health.


The Old Age Security program is the only aspect of Canada’s retirement income system which does not require a direct contribution from recipients of program benefits. Rather, the OAS program is funded through general tax revenues, and eligibility to receive OAS is based solely on Canadian residency. Anyone who is 65 years of age or older and has lived in Canada for at least 40 years after the age of 18 is eligible to receive the maximum benefit. For the second quarter of 2020 (April to June 2020), that maximum monthly benefit is $613.53.


By the time most Canadians sit down to organize their various tax slips and receipts and undertake to complete their tax return for 2019, the most significant opportunities to minimize the tax bill for the year are no longer available. Most such tax planning or saving strategies, in order to be effective for 2019, must have been implemented by the end of that calendar year. The major exception to that is, of course, the making of registered retirement savings plan (RRSP) contributions, but even that had to be done on or before March 2, 2020 in order to be deducted on the return for 2019.


The past few months have been an almost perfect storm of bad financial news for Canadian retirees. The historic stock market downturn which occurred in mid-March resulted in a significant loss of value for many retirement savings portfolios, whether those savings were held in registered retirement savings plans (RRSPs) or registered retirement income funds (RRIFs). That downturn was accompanied by three consecutive interest rate cuts by the Bank of Canada, meaning that rates of return on such safe investment vehicles as guaranteed investment certificates, which were already low, became negligible.


There have been so many announcements over the past couple of months with respect to temporary changes to individual and business tax obligations that keeping up with all of the new rules and altered deadlines isn’t easy. The good news is that, in all cases, individual taxpayers (both employees and the self-employed) are being provided with extended time to pay any income tax amounts for both 2019 and 2020. And, in most cases, taxpayers also have more time to file returns for the 2019 tax year.


Suspension of review, audit and collection activities

The Canada Revenue Agency regularly carries out review activities in which taxpayers are asked to provide documentation or other information with respect to their entitlement to claimed benefits or credits.


Wage subsidy program for employers

The federal government will be providing eligible employers who have experienced a significant decline in revenues with a wage subsidy. For purposes of the subsidy, eligible employers include individuals, taxable corporations, and partnerships consisting of eligible employers, as well as non‑profit organizations and registered charities.


Changes to filing and payment deadlines for 2019 returns

Individual Canadians are generally required to file their tax returns for the 2019 tax year on or before April 30, 2020. Self-employed Canadians (and their spouses) have until June 15, 2020 to file such returns. All individual Canadians, regardless of their filing deadline, must usually pay all taxes owed for 2019 by April 30, 2020.


The current pandemic has changed the lives of Canadians in innumerable ways, and the tax system has not been exempt from those changes. In fact, since we are currently in what would in normal circumstances be the peak of the filing, payment and return processing season, the usual tax-related obligations which apply to both individuals and businesses have been altered or extended in a number of ways to accommodate current realities.


The Canadian tax system provides individual taxpayers with a tax credit for out-of-pocket medical and para-medical expenses incurred during the year. Given that such expenses must be incurred at some time by virtually every Canadian, that credit is among the most frequently claimed on the annual return. Unfortunately, however, the rules governing such claims are detailed, somewhat complex and frequently confusing.


The one constant in income tax is change and consequently, while Canadian taxpayers must prepare and file the same form – the T1 Income Tax and Benefit Return – every spring, that return form is never the same from one year to the next.


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


Sometime during the month of February, millions of Canadians will receive mail from the Canada Revenue Agency. That mail, a “Tax Instalment Reminder”, will set out the amount of instalment payments of income tax to be paid by the recipient taxpayer by March 16 and June 15 of this year.


Income tax is a big-ticket item for most retired Canadians. Especially for those who are no longer paying a mortgage, the annual tax bill may be the single biggest expenditure they are required to make each year. Fortunately, the Canadian tax system provides a number of tax deductions and credits available only to those over the age of 65 (like the age credit) or only to those receiving the kinds of income usually received by retirees (like the pension income credit), in order to help minimize that tax burden. And, in most cases, the availability of those credits is flagged, either on the income tax form which must be completed each spring or on the accompanying income tax guide.


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.


There’s no denying that the Canadian tax system is complex, even for individuals with relatively straightforward tax and financial circumstances. As well, significant costs can follow if a taxpayer gets it wrong when filing the annual tax return. Sometimes those costs are measured in the amount of time needed to straighten out the consequences of mistakes made on the annual return; in a worst-case scenario, they can involve financial costs in the form of interest charges or even penalties levied for a failure to remit taxes payable on time or in the right amount. Whatever the reason, fewer and fewer individuals are willing to brave the annual trip through the 8 pages (as of 2019) of the federal tax return (plus a seemingly innumerable related federal schedules and provincial tax forms), and that means that the percentage of Canadians who have their return prepared by someone who has, presumably, more expertise, has continued to rise.


The Employment Insurance premium rate for 2020 is decreased to 1.58%.


The Quebec Pension Plan contribution rate for employees and employers for 2020 is 5.7%, and maximum pensionable earnings are $58,700. The basic exemption is $3,500.


The Canada Pension Plan contribution rate for 2020 is increased to 5.25% of pensionable earnings for the year.


Dollar amounts on which individual non-refundable federal tax credits for 2020 are based, and the actual tax credit claimable, will be as follows:


The indexing factor for federal tax credits and brackets for 2019 is 1.9%. The following federal tax rates and brackets will be in effect for individuals for the 2020 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 2020 are listed below.


Between now and the end of February 2020, Canadians will receive a variety of receipts for expenditures made during the 2019 taxation year. Some of those expenditure receipts will support a tax deduction or credit claim to be made by the recipient on his or her 2019 tax return, while others will not. And, it’s not always easy for a taxpayer to know when such a credit or deduction is or is not available to be claimed. While the Canadian individual income tax return is only four pages long, the information on those four pages is supported by 13 supplementary federal schedules, dealing with everything from the calculation of capital gains to determining required Canada Pension Plan contributions by self-employed taxpayers.


While Canadians benefit from a publicly funded health care system, there are nonetheless a large, and increasing, number of medical expenses which are not covered by provincial health care plans. As well, with the rise in part-time positions and contract work — the “gig” economy — an increasing number of Canadians do not enjoy coverage for such costs through employer-sponsored private insurance. In those situations, Canadians have to pay for such unavoidable expenditures, including dental care, prescription drugs, ambulance trips, and many other para-medical services, like physiotherapy, on an out-of-pocket basis.


For most Canadians, registered retirement savings plans (RRSPs) don’t become top of mind until near the end of February, as the annual contribution deadline (which, for 2019 contributions, will be March 2, 2020) approaches. When it comes to tax-free savings accounts (TFSAs), most Canadians are aware that there is no contribution deadline for such plans, so that contributions can be made at any time or even carried forward to a subsequent taxation year. Consequently, neither RRSPs nor TFSAs tend to be a priority when it comes to year-end tax planning.


During the month of December, it is customary for employers to provide something “extra” for their employees, by way of a holiday gift, a year-end bonus or an employer-sponsored social event. And it is certainly the case that employers who provide such extras don’t intend to create a tax headache for their employees. Unfortunately, a failure to properly structure such gifts or other extras can result in unintended and unwelcome tax consequences to those employees.


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


Planning for – or even thinking about – 2020 taxes when it’s not even December 2019 may seem more than a little premature. However, most Canadians will start paying their taxes for 2020 with the first paycheque they receive in January, and it’s worth taking a bit of time to make sure that things start off – and stay – on the right foot.


The start of fall marks a lot of things, among them a number of runs, walks and other similar events held to raise money for a broad range of Canadian charities. And, within the next month, as the holiday season approaches, charities will launch their year-end marketing campaigns.


Most Canadians expend a considerable amount of time and effort in order to put money aside for retirement. Especially in an era in which the majority of workers can’t look forward to receiving an employer-sponsored pension plan, Canadians are well aware that the bulk of their income during retirement will have to come from government sources and from their own savings efforts.


To win elections, politicians need votes. And to run the election campaigns needed to garner those votes, those politicians need an organization, volunteers, and money — a lot of money. To wage the most recent federal election, the major political parties raised and spent millions of dollars, and their task of raising that money was undoubtedly made somewhat easier by the fact that Canadian taxpayers who donated money to political parties or candidate can obtain some tax relief from doing so.


Tax-free savings accounts (TFSAs) have been around for a full decade now, having been introduced in 2009, and for most Canadians, a TFSA (along with a registered retirement savings plan (RRSP)) is now a regular part of their financial and tax planning.


In this year’s Budget, the federal government announced the creation of a program — the First-time Home Buyers’ Incentive, or FTHBI, to provide assistance to individuals seeking to enter the housing market. Under that FTHBI, the Canada Mortgage and Housing Corporation (CMHC) (an agency of the federal government) will add a specified amount to the down payment made on a home purchase by a qualifying buyer, with the effect of reducing the amount of the monthly mortgage payment required of the new home owner.


Raising children is expensive and, in recognition of that fact, the federal government has, for more than half a century, provided financial assistance to parents to help with those costs. That assistance has ranged from monthly Family Allowance payments received by families during the 1960s to its current iteration, the Canada Child Benefit.


An increasing number of Canada’s baby boomers are moving into retirement with each passing year and, for most of those baby boomers, retirement looks a lot different than it did for their parents. First of all, as life expectancy continues to increase, baby boomers can expect to spend a greater proportion of their life in retirement than their parents did. Second, the financial picture for baby boomers is likely to be different. Many of their parents benefitted, in retirement, from an employer sponsored pension plan, which ensured a monthly payment of income for the remainder of their lives. Now, such pension plans and the dependable monthly income they provide are, especially for boomers who spent their working lives in the private sector, more the exception than the rule. Where, however, baby boomers have the “advantage” over their parents in retirement, it’s in the value of their homes. Increases in residential property values over the past quarter century in nearly every market in Canada have meant that for many Canadians who are retired or approaching retirement, their homes – or more specifically, the equity they have built up in those homes – represents their single most valuable asset.


While most Canadians turn their mind to taxes only in the spring when the annual return must be filed (and then only reluctantly), taxes are a year-round business for the Canada Revenue Agency (CRA). The CRA is busy processing and issuing Notices of Assessment for individual tax returns during the February to June filing season - this year the Agency had, by the third week of July, received and processed just under 30 million individual income tax returns filed for the 2018 tax year.


As the summer starts to wind down, both students returning to their colleges and universities and those just starting their post-secondary education must focus on the details of the upcoming school year – finding a place to live, choosing courses, and perhaps most important, arranging payment of tuition and other education-related bills.


Sometime during the month of July several thousand Canadians will receive an unexpected, unfamiliar, and probably unwelcome piece of correspondence from the Canada Revenue Agency. That correspondence will be an Instalment Reminder advising the recipient of tax payments to be made in September and December of this year.


A generation ago, retirement was an event. Typically, an individual would leave the work force completely at age 65 and begin collecting Canada Pension Plan and Old Age Security benefits along with, in many cases, a pension from an employer-sponsored registered pension plan.


The most recent estimate issued by the Canadian Real Estate Association (CREA) is that close to half a million homes will be sold in Canada during 2019. Since that number doesn’t include moves from one rental accommodation to another, or the twice-a-year post-secondary student migration from home to school (and back again), it’s safe to say that well over a half a million Canadians and Canadian families will be faced with the need to plan, organize and pay for some kind of move at least once this year.


In this year’s Budget, the federal government introduced a new program – the First-Time Home Buyer Incentive (FTHBI), to help qualifying first-time home buyers get into the housing market. Under that program the Canada Mortgage and Housing Corporation (CMHC) (an agency of the federal government) will add a specified amount to the down payment made on a home purchase by a qualifying buyer, with the effect of reducing the amount of the monthly mortgage payment required of the new home owner.


Most Canadians have now filed their individual income tax return for the 2018 tax year and received a Notice of Assessment outlining their tax position for that year. Those who receive a refund will celebrate that fact or, less happily, those who receive a tax bill will pay up the tax amount owed. Both groups of taxpayers are then likely to forget about taxes until it’s tax filing time again in the spring of 2020. The fact is, however, that mid-year is very good time to assess one’s tax position for the current year and is particularly a good idea for taxpayers who have received a large refund or a bill for tax owing.


It’s the financial “achievement” no one wants to have, but Canadians keep setting new records when it comes to the size of their household debt. And, as of the last quarter of 2018, they did so again.

The most recent release of “Mortgage and Consumer Credit Trends” issued by the Canada Mortgage and Housing Corporation shows that the debt-to-income ratio of Canadians reached 178.5% as of the fourth quarter of 2018. In other words, Canadian households were carrying, on average, $1.78 in debt for every $1 of household income. Just fifteen years previously, in 2005, Canadians held less than $1 of debt for every dollar of household income — the debt to household income ratio was then 93%.


It would be entirely reasonable for Canadians seeking to buy their first home to feel that the odds are very much against them, for a number of reasons. Many of them, especially those in their twenties and thirties, must put together an income from short-term contracts and/or multiple part-time jobs, making it almost impossible to have any certainty of income, over either the short or the long term. Mortgage lenders are understandably reluctant to lend to those who don’t know what their income will be for the current year, much less for future years. As well, increases in home prices over the last decade mean that the average home price in Canada is now $470,000, meaning that a minimum 5% downpayment is just under $25,000, and those who can put together such a down payment will be carrying a mortgage of just under $450,000. The interest rate levied on that mortgage has steadily increased over the past 18 months, with changes in the bank rate. Finally, as of April 2018, the federal government imposed a new mortgage “stress test”, which requires prospective borrowers to qualify for a mortgage at rates in excess of current rates. All in all, there is a “perfect storm” of factors in place which keep younger Canadians from attaining that elusive first step on the property ladder.


By May 20, 2019, the Canada Revenue Agency (CRA) had processed just over 27 million individual income tax returns filed for the 2018 tax year. Just under 17 million of those returns resulted in a refund to the taxpayer, while about 5.5 million resulted in the required payment of a tax balance by the taxpayer.


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


Although virtually no one looks forward to the task, the vast majority of Canadians do file their tax returns, and pay any taxes owed, by the applicable tax payment and filing deadlines each spring. There is, however, a significant minority of Canadians who do not file or pay on a timely basis and, for some, that’s a situation which can go on for years.


As every Canadian driver knows, gas prices seem to rise every spring, seemingly in lockstep with the warmer weather. This year, that annual trend has been given an extra push by the implementation of federal and provincial carbon taxes. As of the end of April, gas prices ranged from $1.19 to $1.56 per litre, depending on the province, and most forecasts call for those prices to increase over the summer.


The deadline for payment of all individual income taxes owed for the 2018 tax year was April 30, 2019. For all individuals except the self-employed and their spouses, that date was also the filing deadline for tax returns for the 2018 tax year. (The self-employed and their spouses have until June 17, 2019 to file.)


For the majority of Canadians, the due date for filing of an individual tax return for the 2018 tax year was Tuesday April 30, 2019. (Self-employed Canadians and their spouses have until Monday June 17, 2019 to get their return filed.) In the best of all possible worlds, the taxpayer, or his or her representative, will have prepared a return that is complete and correct, and filed it on time, and the Canada Revenue Agency (CRA) will issue a Notice of Assessment indicating that the return is “assessed as filed”, meaning that the CRA agrees with the information filed and tax result obtained by the taxpayer. While that’s the outcome everyone is hoping for, it’s a result which can go “off the rails” in any number of ways.


Both changes in the job market and increases in real estate prices over at least the past decade have made the goal of home ownership an elusive or even impossible one for many Canadians, especially younger Canadians.


Most taxpayers sit down to do their annual tax return, or wait to hear from their tax return preparer, with some degree of trepidation. In most cases taxpayers don’t know, until their return is completed, what the “bottom line” will be, and it’s usually a case of hoping for the best and fearing the worst.


Our tax system is, for the most part, a mystery to individual Canadians. 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, and of which most Canadians are aware. 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 2018 must be remitted to the Canada Revenue Agency (CRA) on or before Tuesday, April 30, 2019 — no exceptions and, absent extraordinary circumstances, no extensions.


By the time most Canadians sit down to organize their various tax slips and receipts and undertake to complete their tax return for 2018, the most significant opportunities to minimize the tax bill for the year are no longer available. Most such tax planning or saving strategies, in order to be effective for 2018, must have been implemented by the end of that calendar year. The major exception to that is, of course, the making of registered retirement savings plan (RRSP) contributions, but even that had to be done on or before March 1, 2019 in order to be deducted on the return for 2018.


The Old Age Security program is the only aspect of Canada’s retirement income system which does not require a direct contribution from recipients of program benefits. Rather, the OAS program is funded through general tax revenues, and eligibility to receive OAS is based solely on Canadian residency. Anyone who is 65 years of age or older and has lived in Canada for at least 40 years after the age of 18 is eligible to receive the maximum benefit. For the first quarter of 2019 (January to March 2019), that maximum monthly benefit is $601.45. 


Each year, the Canada Revenue Agency (CRA) publishes a statistical summary of the tax filing patterns of Canadians during the previous filing season. Those statistics for the 2018 show that the vast majority of Canadian individual income tax returns — nearly 87%, or almost 26 million returns — were filed online, using one or the other of the CRA’s web-based filing methods. The remaining 13% of returns were, for the most part, paper-filed, and a very small percentage (0.1%) were filed using the File My Return service, in which returns are filed by telephone.


For many years now, there has been a persistent tax scam operating in Canada in which Canadians are contacted, usually by phone, by someone who falsely identifies himself or herself as being a representative of the Canada Revenue Agency (CRA). The taxpayer is told that money — sometimes a substantial amount of money — is owed to the government. The identifier for this particular scam is that the caller insists that the money owed must be paid immediately (usually by wire transfer or pre-paid credit card) and, if payment is not made right away, significant negative consequences will follow, including immediate arrest or seizure of assets, confiscation of the taxpayer’s Canadian passport, or deportation.


While Canadian taxpayers must prepare and file the same form – the T1 Income Tax and Benefit Return – every spring, that return form is never the same from one year to the next. The one constant in tax is change, and every year taxpayers sit down to face a different tax return form than they dealt with the previous year.


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


The fact that debt levels of Canadian households have been increasing over the past decade and a half can’t really be called news anymore. In particular, the ratio of debt-to-household-income, which stood at 93% in 2005, has risen steadily since then and, as of the third quarter of 2018, reached (another) new record of 177.5%. In other words, the average Canadian household owed $1.78 for every dollar of disposable (after-tax) income. (The Statistics Canada publication reporting those findings can be found on the StatsCan website at https://www150.statcan.gc.ca/n1/daily-quotidien/181214/dq181214a-eng.htm.)


Sometime during the month of February, millions of Canadians will receive mail from the Canada Revenue Agency (CRA). That mail, a “Tax Instalment Reminder”, will set out the amount of instalment payments of income tax to be paid by the recipient taxpayer by March 15 and June 17 of this year.


For most taxpayers, the annual deadline for making an RRSP contribution comes at a very inconvenient time. At the end of February, many Canadians are still trying to pay off the bills from holiday spending, the first income tax instalment payment is due two weeks later on March 15 and the need to pay any tax balance for the year just ended comes just 6 weeks after that, on April 30. And, while the best advice on how to avoid such a cash flow crunch is to make RRSP contributions on a regular basis throughout the year, that’s more of a goal than a reality for the majority of Canadians.


Income tax is a big-ticket item for most retired Canadians. Especially for those who are no longer paying a mortgage, the annual tax bill may be the single biggest expenditure they are required to make each year. Fortunately, the Canadian tax system provides a number of tax deductions and credits available only to those over the age of 65 (like the age credit) or only to those receiving the kinds of income usually received by retirees (like the pension income credit), in order to help minimize that tax burden. And, in most cases, the availability of those credits is flagged, either on the income tax form which must be completed each spring or on the accompanying income tax guide.