I have prepared a summary outlining what income sprinkling is and how it impacts the taxation of individuals in Canada and in particular Ontario. I am hopeful that this documents will be useful to you in understanding the issues and help separate fact from fiction that is currently being reported in the media.
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MP Letter Regarding Changes to the Taxation of Private Corporations
We have been provided with the following letter template that may be of assistance to you if you are interested in providing your thoughts to your Member of Parliament regarding the proposed changes to the Income Tax Act released on July 18, 2017.
2017_Aug_Proposed_New_Tax-Rules_Letter_to_Member_of_Parliament
The proposed changes will impact the ability to share income of a family business and significantly increase the personal income tax rate on income from a private corporation. The ability to transition a business among families in a tax efficient manner including impacting the ability to claim the lifetime capital gains exemption is also impacted.
Further details of the changes can be found in our previous blog entry;
2018 – Changes to income sprinkling and other rules – July 31, 2017
or in the Tax Tips & Traps Third Quarter – Issue 119;
Tax Tips & Traps Third Quarter – Issue 119
Highlights:
Tax Ticklers
Tax For Private Corporations: Major Changes Proposed
Employee Discounts On Merchandise: Change in CRA Policy
Death Benefits: Tax-Free Employment Benefit
Retirement Income Calculator: Ensure you are Financially Ready
Return of a Gifted Property: Charitable Organizations Beware
Voluntary Disclosure Program: Proposed Tightening
Withholdings On Remuneration To Non-Resident: Get your CRA Filings Correct
Professional’s Work In Progress Exclusion: Changes are Coming
Electronic T4 Slips: Now More Widely Available
Tax Planning using Private Corporations – July 18, 2017 Changes
2018 – Changes to income sprinkling and other rules – July 31, 2017
On July 18, 2017 Minister of Finance William Morneau released proposed changes to the Income Tax Act impacting virtually all Private Corporations. The attached document highlights these proposed changes.
Tax Tips & Traps Second Quarter – Issue 118
Highlights:
Tax Ticklers
Employment Insurance: Some Improvements
Sharing Economy: Know Your Tax Obligations
Uber Drivers: Registration for GST/HST
Personal Use Asset in a Corporation: GST/HST and Other Tax Issues
Donation of Publicly Traded Securities: Increase the Value of Charitable Giving
Investment Management Fees for RRSPs, RRIFs, and TFSAs: Are Changes Coming?
Website History: Finding What You Thought Was Lost on the Internet
Charities and For-Profits Working Together: Receipts for Cause-Related Marketing
Leave of Absence: There Are Tax Obligations
Federal Budget Commentary 2017
Tax Highlights of the 2017 Federal Budget Commentary Include:
A. Personal Income Tax
B. Business Income Tax
C. International Tax
D. Sales and Excise Tax
E. Other Measures
F. Previously Announced Measures
Read the full article below.
The 2017 Federal Budget Commentary
Tax, Tips & Traps First Quarter – Issue 117 & Personal Income Tax Return Checklist
Highlights:
Tax Ticklers
Principal Residence Exemption (PRE): Changes to Reporting
Employment Expenses: Requirements for Deduction
Meal Reimbursements: A Taxable Benefit?
Taxpayer Relief: Financial Hardship
Payroll Advances: Tax Consequence
Objections: Not so Fast
CRA Strategies on Offshore Tax Evasion: The World is Shrinking
2016PersonalIncomeTaxReturnChecklist
Tax, Tips & Traps – Special Year End Tax Planning & Personal Income Tax Return Checklist
Highlights:
2016 Year End Planning
2016 Remuneration
2016 Personal Income Tax Checklist
Proposed Income Tax Measures Impacting Your Home
If you sell your home, there is new income tax reporting to consider.
Under current income tax rules, when you sell your home for a profit there is no income tax and there is nothing reported in your income tax return for the year of sale assuming your home qualifies as a principal residence.
Beginning with the 2016 tax year under new proposed income tax measures, the Canada Revenue Agency will require a taxpayer to report the disposition of property that qualifies for the principal residence exemption.
The year of acquisition, proceeds of disposition and the description of the property are the information that will have to be reported. We will need this information in order to prepare your income tax return.
Further information can be found on the Canada Revenue Agency website as follows.
http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html
Other changes have been made to the principal residence exemption that would impact non-residents and trusts, however in general terms the good news is that in a situation where an individual (or couple) who were at all times resident in Canada own one or more residences there has been no additional income tax levied.
Where an individual (or a couple) owns more than one residence, such as a city home and a cottage, income tax continues to apply on any gain realized on the disposition of a property not designated as a principal residence. An individual (or a couple) can only designate one residence as their principal residence.
Should you have questions do not hesitate to contact you trusted advisor at Graham Scott Enns.
Tax Tips & Traps Fourth Quarter – Issue 116
Highlights:
Canadian Industry Statistics
Benefit Paid To Shareholder Employees
Mutual Funds
Transferring Property To A Family Member
Teachers
Charities
Registered Education Savings Plan (RESP)
Documents Required To Claim A U.S. Foreign Tax Credit