News & Updates in the Accounting/Tax World

NEW AS OF JUNE 2024

Canada Carbon Rebate for Small Businesses

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​The Canada Carbon Rebate for Small Businesses is a refundable tax credit announced in Budget 2024 to return a portion of Federal fuel charge proceeds to eligible Canadian Controlled Private Corporations (CCPCs).

To be eligible for the retroactive payment with respect to the 2019 through 2024 fuel charge years (a fuel charge year rounds from April 1 to March 31), a CCPC must:

• Have employed one or more persons in a designated province in the calendar year in which the fuel charge year begins;

• Have had 499 or fewer employees throughout Canada in that calendar year;

• File a tax return for its tax year ending in 2023 no later than July 15, 2024.

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NEW AS OF APRIL 2024

Bare Trusts and Informal Trusts

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1. An informal Trust Account is an account for your child or grandchild at a financial institution or brokerage.  The trust account is that the funds automatically become the property of the child when the child reaches the age of majority.  Any interest and dividends on the account are taxed in the hands of the contributor, but capital gains are taxed in the hands of the child (beneficiary).

2. Filing for informal trust accounts (in-trust accounts for your minor child or grandchild) applies for the following main categories (others may be applicable);

a. Have you set up an ‘in-trust’ account for a grandchild? (held $50,000 or more at any time during the tax year)
b. Are you named/listed on account for an elderly parent and manage their financial investments (held $50,000 or more at any time during the tax year)
c. Are you named/listed on the land title of an adult child’s home but your child is the owner of the home?
d. Or is your child listed on title of your property but you are the beneficiary of that property?

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NEW AS OF APRIL 2023:

First Home Savings Account (FHSA) – Tax-Free

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• Help Canadians over 18 years old save for a first-time home

• Tax free when the funds are withdrawn to buy a home – contribution carries forward to next year if it hasn’t been used

• Maximum participation period is 15 years

• Up to $8000 a year - the lifetime contribution limit is $40,000

• 2 people can each use their FHSA as well as their RRSP Home Buyers Plan to jointly purchase their home

• Contributions that you make to your first home savings accounts (FHSAs) are generally deductible on your income tax and benefit return. It is important to note that transfers from your registered retirement saving plans (RRSPs)  to your FHSAs are not deductible.

• If you are not quite sure you won't be able to purchase a home within 15 years you should probably delay opening an FHSA

• If you do not buy a home, and unused savings in your FHSA may be transferred to RRSP or can be withdrawn as taxable income

• FHSA may be available through your financial institution to get started 

• For more information see link below:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html

 

NEW AS OF OCTOBER 2016:

Selling of Principal Residence Requirement to Report to Canada Revenue Agency

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• Income Tax Amendments came in effect, whereby reporting of principal residence sales was mandatory in Alberta and all of Canada.

• The principal residence exemption allows Canadian homeowners to avoid paying taxes on capital gains (profits) from the sale of their primary residence.  According to the Income Tax Act, homeowners are now required to report every property sold (including the property where the tax payer lives) on their tax return.  Even through reporting principal residence sales is required, any profits fall under the principal residence exemption.  Previously, the CRA allowed taxpayers to not report the sale at all.  In an effort to ensure only eligible home owners take advantage of this exemption, new tax reporting laws are now in effect.  Mandatory reporting of principal residence sales ensures that the government can track how many such sales any person makes.

• Reporting of any such transaction must be completed, on either a modified Form T2091 Designation of a Property as a Principal Residence By An Individual or on a Schedule 3, Capital Gains of the T1 Income Tax and Benefit Return.  This law applies, even if the gain falls exclusively under the principal residence exemption.