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- Do you want to save on your taxes? Be charitable! If you give more than $200 in the year to registered charities, the percentage of your credit increases for those donations. For this reason, it is also generally best for couples to combine their charitable donations on a single return for the best tax refund.
- Increase your tax refund. Claim medical expenses for any 12-month period ending in the tax year. For example, if you are paying for medical or dental treatments that started last year, and continue this year, you may take advantage of claiming them all next year.
- New pension splitting rules can mean substantial tax savings! If you or your spouse are receiving an income from an annuity or other pension plan, you may be eligible to split some of your pension income on your tax return. UFile calculates the most beneficial income split for you and you spouse.
- Did you buy your first home after January 27th, 2009? Don't forget to claim the Home Buyers' Amount, a new non-refundable tax credit of up to $5000. Keep in mind, this amount can be split between you and your spouse or partner for maximum benefit.
- Do you own your home or cottage? The Home Renovation Tax Credit is a valuable tax break. You can apply up to $10,000 in eligible expenses for improvements to your home done by February 1st, 2010 and you may split this credit with your spouse or partner to optimize your tax savings.
- Are you a Public Transit user? Hold on to your weekly or monthly passes and receipts and be sure to claim the Public Transit amount. Remember, this amount may be claimed for transit used by yourself, your spouse or children under the age of 19.
- Are your kids in Hockey or Soccer? You may be entitled to a non-refundable tax credit of up to $500.00 per child if you have children under 16 or a disabled child under 18 years of age enrolled in physical activities. Be sure to take advantage of this valuable credit
Proprietorship A sole proprietorship is one person operating a business, without forming a corporation. The income of the business is then taxed in the hands of the owner (the proprietor), at personal income tax rates. The income is considered income from self-employment, and is included on the personal income tax return of the owner. Advantages of proprietorship:
Disadvantages of a proprietorship:
Partnership A partnership is also an unincorporated business. It is similar to a proprietorship, except two or more entities are partners in the business. For partners who are individuals, the income from the partnership is taxed at personal income tax rates, and a percentage of the income is included on the personal income tax return of each owner. |
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Disadvantages of a partnership:
A corporation is a separate legal entity, which is formed by application to either the federal government, or one of the provincial/territorial governments. The corporation issues shares to the owners, or shareholders. The funding of the corporation can be done through the issue of shares, or by borrowing. Instead of investing a large amount in shares, shareholders can lend money to the corporation, and invest only a minimal amount in the shares. This way, when the corporation has available cash, the shareholder loans can be repaid without attracting personal income tax. Being a separate legal entity, a corporation pays corporate income tax, which is calculated completely separately from the owners' personal income tax. If the corporation pays wages to the shareholders, income tax and Canada Pension Plan contributions, and sometimes Employment Insurance premiums, must be deducted and remitted to Canada Revenue Agency. Advantages of incorporation:
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Generally, the higher the net income of your small business, the more advantageous it is to incorporate instead of remaining as a proprietorship. No matter what the type of business structure, spouses and children can be employed by the business, thus effectively splitting income. However, amounts expensed must be reasonable amounts based on services provided, and must actually be paid to the spouse and/or children. |
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GST/HST July 1, 2010
New Electronic Filing Requirements for GST/HST Registrants and QST Registrants
There is one more item to take care of by July 1, 2010: electronic filing requirements for GST/HST registrants. In January 2010, Revenu Québec announced that it will harmonize with the federal government's new electronic filing requirements and provide support to registrants with respect to these requirements. This change is in addition to all the new rules surrounding the adoption of the Harmonized Sales Tax (HST) by Ontario and British Columbia that come into effect July 1, 2010.
Are you required to file electronically?
For reporting periods ending on or after July 1, 2010, all GST/HST registrants will be eligible to file electronically. However, you will be required to file GST/HST returns electronically if you are a registrant in one of the following circumstances:
- your threshold amount for your GST/HST reporting period is over $1.5 million (except for charities);
- you are required to report input tax credits (ITCs) for the provincial part of the HST paid or payable on certain taxable supplies acquired in Ontario and British Columbia;
- you are a builder who sells:
- grandfathered housing, where the purchaser is not entitled to claim a GST/HST new housing rebate or new residential rental property rebate, or
- housing that is subject to the HST, where you purchased the housing on a grandfathered basis;
- you are a builder who:
- is required to report a transitional tax adjustment amount, or
- is reporting a provincial transitional new housing rebate.
Threshold amount
Your threshold amount for a given GST/HST reporting period is your total taxable supplies, including zero-rated supplies, made in Canada in
your previous fiscal year, as well as those of your associated entities. However, this calculation excludes zero-rated exports, sales of capital real property and goodwill.
When will you be required to file electronically?
Mandatory electronic filing requirements will apply to all reporting periods ending on or after July 1, 2010.
Filing options
Based on your particular reporting circumstances, there are four electronic filing options that can be used to file GST/HST returns (except where returns are filed with Revenu Québec):
- GST/HST NETFILE is a free Internet-based filing service that allows registrants to file their returns directly with the CRA over the Internet. Registrants complete an online form, enter the required information and confirm that they want to file their return. Once the return has been electronically sent to CRA, registrants will immediately receive a confirmation number.
- GST/HST TELEFILE allows eligible registrants to file their GST/HST returns using their touch-tone telephone and a toll-free number.
- GST/HST Electronic Data Interchange (EDI) is a computer-to-computer exchange of information in a standard format. Eligible registrants can use EDI to file their GST/HST returns and remit their GST/HST payments electronically.
- GST/HST Internet File Transfer (GIFT) is a new option that allows eligible registrants to utilize third-party CRA-approved accounting software to file their returns electronically.
QST and GST/HST filers in Quebec
If you are filing electronically with Revenu Québec, whether voluntarily or otherwise, the following ways to file your GST/HST and QST returns will be accepted by Revenu Québec, effective July 1,
2010:
1. The current service, ClicSÉQUR Entreprises, which allows direct payments to be made, or
2. The new service, ClicSÉQUR Express, for which payments will need to be made through financial institutions
Please note that access codes to the new service ClicSÉQUR Express will be mailed soon to registrants by Revenu Québec. If you require any assistance with the registration for those services, you may also call Revenu Québec at 1.866.423.3234.
Our Commodity Tax team can inform you on the specific impact of these changes for
Effective July 1, 2010, all GST/HST registrants will have to collect HST on their taxable supplies in Ontario and British Columbia. At the same time, a new harmonized value-added tax system is being introduced. The following describes the main changes under the new system:
- The applicable GST/HST rates will now be as follows:
- British Columbia: 12%
- Ontario, New Brunswick, Newfoundland and Labrador: 13%
- Nova Scotia: 15%
- Elsewhere in Canada: 5%
- The point-of-sale rebate for HST will reduce the effective tax rate to 5% for certain products in the harmonized provinces.
Point-of-Sale Rebate |
British Columbia
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Ontario
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New
Brunswick |
Newfoundland & Labrador
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Nova
Scotia |
Printed books |
X
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X
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X
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X
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X
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Children's clothing / footwear |
X
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X
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X
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Diapers, feminine products |
X
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X
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X
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Car seats / booster seats |
X
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X
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Printed newspapers |
X
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Prepared food up to $4 per purchase |
X
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Gasoline and diesel motor fuel |
X
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- New place of supply rules for intangible personal property and services are in force as of May 1, 2010 to determine the applicable GST/HST tax rate and the application of QST in Québec.
- Electronic filing of GST/HST and QST returns will be mandatory for most registrants.
- Large businesses will now have to record and report input tax credit (ITC) amounts to be remitted in Ontario and British Columbia on specific products and services. This will generally apply to large businesses with taxable supplies higher than $10 million (including those of associated entities).
- Specific rules are already applicable to builders of new housing and to new housing rebates in Ontario and British Columbia.
- Transitional rules will be applicable to transactions straddling July 1, 2010.
In the last few months, the tax authorities have been issuing a steady stream of new guidelines with respect to these important changes. It is important to stay abreast of these latest developments and their impact on your activities.