Around tax time, the exaggerations are everywhere– from TV to comic strips, there are many depictions of a hapless taxpayer poring over a mess of documents. It’s fun to have a laugh, but the true nature of a tax return should not require a mountain of receipts and invoices. Read on for Liu & Associates summarized list of which documents you should be saving for your yearly income tax return.

 

The basics: With any return, it is essential you have easy access to the SIN numbers and income amounts (T4 slips) of you and your family. Educational expenses and tax receipts should also be handy, as well as any business income records.

 

Investments: Keep all documents pertaining to rental property income, retirement fund contributions and any capital earned due to savings or investments. All of these can affect both your income tax owed and the deductible.

 

Receipts: The most commonly cited item to save, but what receipts are actually eligible for tax deductions? Medical and childcare expenses often qualify as deductibles. If you have expenses through work and you are either unreimbursed by your employer or self-employed: you may be sitting on a goldmine of tax credits.

 

Past returns: It is always smart to keep your personal tax records for up to three years. At tax time, you or a Liu & Associates tax expert can review your past returns for accuracy and any overlooked or carried-over deductibles.

 

Charitable donations: Any tax receipts for any eligible charitable donations are an easy way to claim a tax credit. Be aware of the minimum and maximum amounts.

 

The above list is just a brief overview of the necessary documents for filing a tax return. Work, household and lifestyle variations can all impact the details of your yearly return. Consult CRA guidelines or Liu & Associates to ensure you meet all of your requirements. Our experts can ensure your complex financial realities are taken care of completely at tax time.

It is widely believed the tips and gratuities are “tax-free,” but this is not the case. Directly from Canada Revenue Agency’s (CRA) website:

“Tips and gratuities… represent taxable income and must be reported on annual income tax and benefit returns. Restaurant servers, hairdressers, valets, taxi drivers, and others who earn tips may not have all of their income recorded by their employers, which means that their T4 slips may not include all of their income.”

If you earn any tips or gratuities through your job, read on for a guide to reporting them and their eligibility for pensionable or insurable earnings.

NOTE: Pensionable means the earnings will require a Canadian Pension Plan (CPP) contribution; insurable means the earnings will require an Employment Insurance contribution.

 

REPORTING TIPS & GRATUITIES

First, determine if your employer reports all or any of your tips on your T4 slip. If not, it falls to you to track and log any and all gratuities earned through your job. These must be then reported on your tax return. All earned tips and gratuities are taxable and failure to report them is considered illegal in Canada.

TIP: CRA provides a Voluntary Disclosure Program (VDP) for anyone who is aware that they failed to report tips or gratuities in the past. Disclosing this way can help avoid fines, penalties or even jail time.

 

DIRECT VS. CONTROLLED

As the CRA outlines, there are two types of gratuities: direct and controlled. Direct tips are paid directly to the employee and are not controlled or altered by the employer. Controlled tips are instigated, paid out or redistributed by the employer, no matter how they are received from the client. So what is the essential difference?

• Direct tips are not subject to CPP or EI contributions;
• Controlled tips are subject to CPP and EI deductions.

 

So, no matter how you are tipped– remember: all earnings must be reported! Don’t risk serious financial or criminal consequences by overlooking your tips and gratuities at tax time. If you have any questions or concerns, visit or contact Liu & Associates today for a professional income tax assessment.

Canada Revenue Agency (CRA) has many provisions in place for contractors, small business and the self-employed– but if you are considered an employee, it may be more difficult to qualify. Luckily for commission-based employees, there are conditions that ensure they can claim similar deductions against their income tax. Read the guide below for a summary of the requirements and benefits for commission-based employees.

 

AM I ELIGIBLE?

The following is directly quoted from the CRA website:

“To deduct employment expenses you paid to earn commission income, you have to meet all of the following conditions:

• Under your contract of employment, you had to pay for your own expenses.
• You were normally required to work away from your employer’s place of business.
• You were paid in whole or in part by commissions or similar amounts. These payments were based on the volume of sales made or the contracts negotiated.
• You did not receive a non-taxable allowance for travelling expenses. Generally, an allowance is non-taxable as long as it is a reasonable amount. For example, an allowance for the use of a motor vehicle is usually non-taxable when it is based solely on a reasonable per-kilometre rate.
• You keep a copy of Form T2200, Declaration of Conditions of Employment, which has been completed and signed by your employer.”

If you do not fit the criteria above, you do not qualify for any additional tax benefit.

 

WHAT CAN I CLAIM?

Income tax credits for eligible commission-based employees are very wide-ranging. Here are just a few of the deductible expenses that may be available to those types of employees:

• Legal & accounting fees
• Promo & advertisements
• Vehicle expenses
• Meals & entertainment
• Travel costs
• Supplies, gear & equipment
• Staff, office space & training
• Licenses & permits

 

Depending on your line of work, some or all of these items may be entitled to a full or partial tax credit. Examine your expenses closely and you will enjoy the best possible tax return.

The above guidelines only address a portion of the requirements and credits for those whose income is commission-based. For more details, consult the CRA website or your Liu & Associates financial expert. We can help ensure that even though you qualify as an employee, you will still have a maximized tax return every year.

 

First of all, just what is the Working Income Tax Benefit (WITB) and who does it affect? Canada Revenue Agency (CRA) defines the WITB as “a refundable tax credit intended to provide tax relief for eligible working low-income individuals and families who are already in the workforce and to encourage other Canadians to enter the workforce.”

AM I ELIGIBLE FOR THE WORKING INCOME TAX BENEFIT (WITB)?

From CRA’s Frequently Asked Questions–

“You are eligible for the WITB if:

• You are 19 years of age or older on December 31^st; and
• You are a resident of Canada for income tax purposes throughout the year.

You are not eligible for the WITB if:

• You do not have an eligible dependant and are enrolled as a full-time student at a designated educational institution for more than 13 weeks in the year;
• You are confined to a prison or similar institution for a period of 90 days or more in the year; or
• You do not have to pay tax in Canada because you are an officer or servant of another country, such as a diplomat, or a family member or employee of such person.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

WHAT IS AN ELIGIBLE DEPENDANT IN REGARDS TO THE WITB?

From CRA’s Frequently Asked Questions–

“For WITB purposes, you have an eligible dependant if you have a child who, at the end of the year:

• Lives with you;
• Is under 19 years of age; and
• Is not eligible for the WITB.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

HOW IS THE WITB CALCULATED?

From CRA’s Frequently Asked Questions–

“The WITB is calculated using the following information:

• Marital status;
• Province or territory of residence;
• Working income;
• Net income;
• Eligible dependant; and
• Eligibility for the WITB disability supplement.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

As the WITB is based on family structure and net income, it is vital you provide the CRA with yearly tax returns and report your eligibility to ensure you receive any benefit. Incomplete or unfiled returns can delay your approval, so follow CRA regulations to the letter to receive your credited amount in a timely fashion– or take the pressure off and have an accounting professional at Liu & Associates handle your finances and complicated family accounting.

We all pay Goods and Services Taxes (GST) and, depending on your province, you may pay for it as part of a Harmonized Sales Tax (HST). These taxes are federal “consumption” taxes– meaning they represent a percentage collected by merchants on all sales of consumer goods and services payable to the Government of Canada. Many Canadian citizens are entitled to credits or rebates for GST and HST, but don’t know what they are or why they receive them.

CRA defines GST/HST credit as “a tax-free quarterly payment that helps individuals and families with low or modest incomes offset all or part of the GST or HST that they pay.” Read on for Liu & Associates’ brief summary of how GST and HST credits work and discover if you are eligible!

 

AM I ELIGIBLE FOR THE GST/HST CREDIT?

From CRA’s Frequently Asked Questions–

“You are eligible for this credit if, you are a resident of Canada for income tax purposes in the month prior to and at the beginning of the month in which the GST/HST credit is issued and at least one of the following applies:

• You are 19 years of age or older before the month in which the CRA issues a quarterly payment;
• You have (or previously had) a spouse or common-law partner; or
• You are (or previously were) a parent and live (or previously lived) with your child.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

 

HOW DO I APPLY FOR THE GST/HST CREDIT?

From CRA’s Frequently Asked Questions–

“Starting with the filing of your 2014 income tax and benefit return, you no longer have to apply for the GST/HST credit. The CRA will determine your eligibility and will issue the GST/HST credit to all entitled individuals. An application is still required to receive the GST/HST credit based on your 2013 and prior returns. To apply, you have to file the applicable income tax and benefit return, even if you have not received income in the year.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

As the GST/HST credit is based on family structure and net income, it is vital you provide the CRA with yearly tax returns to ensure you receive any credit for which you are eligible. Incomplete or unfiled returns can delay your approval, so follow CRA regulations to the letter to receive your credited amount in a timely fashion– or take the pressure off and have an accounting professional at Liu & Associates handle your finances and complicated family accounting.

Newly expecting, the experienced parent, or just curious– you may have questions about the Universal Child Care Benefit (UCCB).  First things first, just what is the benefit and who does it affect? Canada Revenue Agency (CRA) defines Universal Child Care Benefit as a taxable monthly payment “designed to help all Canadian families with children under 18 as they try to balance work and family life.”

AM I ELIGIBLE TO APPLY FOR THE UNIVERSAL CHILD CARE BENEFIT (UCCB)?

From CRA’s Frequently Asked Questions–

“To receive the UCCB, all the following conditions must be met.

1. You must live with the child, and the child must be under the age of 6;
2. You must be the person who is primarily responsible for the care and upbringing of the child;
3. You must be a resident of Canada;
4. You or your spouse or common-law partner must be:
   • Canadian citizen;
   • ‘permanent resident’;
   • ‘protected person’; or
   • ‘temporary resident.’”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional. 

WHEN SHOULD I APPLY FOR THE UCCB?

From CRA’s Frequently Asked Questions–

“Generally, you should apply for the UCCB as soon as possible after:

• Your child is born;
• A child starts to live with you; or
• You become a resident of Canada.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

HOW DO I APPLY FOR THE UCCB?

You or your accountant should fill out the required forms for application and submit them to CRA. Once submitted to your regional tax services centre, CRA attempts to advise you of all eligibility and entitlements to the UCCB (as well as the Canada Child Tax Benefit). Incomplete applications or missing documents can delay your approval, so follow CRA regulations to the letter– or take the pressure off and have an accounting professional at Liu & Associates handle your finances and complicated family accounting.

As recently as January 1, 2015– the Government of Canada has instituted increases in UCCB amounts. If you have any questions about this increase, contact CRA or your Liu & Associates accounting professional.

Need some help? Contact Liu & Associates today!

Newly expecting, the experienced parent, or just curious– you may have questions about the Canada Child Tax Benefit (CCTB).  First things first, just what is the benefit and who does it affect? Canada Revenue Agency (CRA) defines the Canada Child Tax Benefit as “a tax-free monthly payment made to eligible families to help them with the cost of raising children under age 18.” The CCTB can also include any Child Disability Benefit (CDB) and the National Child Benefit Supplement (NCBS) amounts owed to the eligible family.

AM I ELIGIBLE TO APPLY FOR THE CANADA CHILD TAX BENEFIT (CCTB)?

Directly from CRA’s Frequently Asked Questions–

“To be eligible, you must meet all the following conditions:

• You must live with the child, and the child must be under the age of 18;
• You must be primarily responsible for the care and upbringing of the child;
• You must be a resident of Canada; and
• You or your spouse or common-law partner must be a Canadian citizen, a permanent resident, a protected person, or a temporary resident who has lived in Canada for the previous 18 months, and who has a valid permit in the 19th month.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

WHEN SHOULD I APPLY FOR THE CCTB?

Directly from CRA’s Frequently Asked Questions–

“Generally, you should apply for the CCTB as soon as possible after

• Your child is born
• A child starts to live with you; or
• You and your spouse or common-law partner meet the eligibility conditions.

You should not delay applying as your application is considered late if it includes a period that started more than 11 months ago.”

*Late applications are subject to other requirements for approval– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

HOW DO I APPLY FOR THE CCTB?

You or your accountant should fill out the required forms for application and submit them to CRA. Once submitted to your regional tax services centre, CRA attempts to respond to all applications within three months with a Canada Child Tax Benefit Notice. Incomplete applications or missing documents can delay your approval, so follow CRA regulations to the letter– or take the pressure off and have an accounting professional at Liu & Associates handle your finances and complicated family accounting.

Need some help? Contact Liu & Associates today!

What’s The Best Way to Do My Taxes?

There are many different ways to do get your taxes done. You can do them on your own, use tax software, or have an accountant prepare your taxes for you. There are pros and cons to each method. Check out our informative blog posts on the subject to help decide what’s the best choice for you:

• Accountants vs Tax Software
• Choose the Right Tax Software for You
• How to Choose an Accountant

When Do I File My Taxes?

April 30 – Unless you are self-employed or the spouse/common-law partner of a someone who is self-employed, your paperwork and any amounts owing are due to Canada Revenue Agency

June 15 – Taxes for self-employed taxpayers and their spouses/common-law partners are due

Where Do I File My Taxes?

Doing your taxes can be complex enough without having to worry about submitting them. There are several ways to make sure your taxes get to the Canada Revenue Agency.

Online

By far the easiest and most popular way is to submit online. Last year, 80% of Canadians submitted their taxes online, which makes sense, considering how easy it is to do.

Mail

If you don’t want to file online, you can still file by mail. If you’re in Alberta, your tax return can be mailed to:

Canada Revenue Agency
Tax Centre
Post Office Box 14001, Station Main
Winnipeg MB R3C 3M3

If not, check out the CRA’s website for where to mail your tax returns.

Liu & Associates are your Tax Experts. Contact us today to find out how Liu can help you this tax season.