Neepawa Income Tax (1997)
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|Posted on March 3, 2013 at 11:52 AM||comments (148)|
Jamie Golombek | 13/03/02
With RRSP season now behind us, this weekend marks the unofficial start oftax season, which can be a source of pain and frustration for many Canadiansbut, apparently, not for everyone.
Believe it or not, some Canadians enjoy filing their tax returns accordingto a new national survey commissioned by Thomson Reuters, the makers of the taxsoftware program UFile. The survey found that 41% of Canadians enjoy filingtheir tax returns, but the majority still do not.
Of those who dread the process, Canadians surveyed cited “confusion, timerestrictions and too many receipts to keep track of” as the top three reasonsthey dislike tax time.
The survey also asked Canadians how they will do their 2012 returns. While49% said they would use an accountant or professional tax-preparation service,31% said they would do it themselves using a tax software package on theircomputer or via the Internet. Only 14% said they would do it the old-fashionedway, “by hand.”
But even if you ultimately plan to go to an accountant ortax preparer to file your return, taking a stab at your own tax returnpreparation can prove to be a very useful educational exercise, whether you usethe software or try to do it by hand.
In fact, each year I have my Schulich MBA students who take my PersonalFinancial Management course prepare a simple tax return by hand, using only apencil and calculator. By walking through the forms, from the Schedule 4 toreport investment income to the Schedule 1 to calculate federal tax owing,students gain an appreciation for how different types of income, such asCanadian dividends, capital gains and employment income, are taxed as well asan understanding of our graduated federal tax brackets and non-refundable taxcredits.
For instance, have you ever tried working through the calculation of taxesowing on Canadian eligible dividends? Well, you first have to gross them up by38% such that you report 138% of the dividends actually received on your Schedule4. Then you calculate your federal tax on your taxable income, which includesthose taxable dividends, before deducting the federal non-refundable dividendtax credit, which is equal to 15.0198% of your taxable dividends.
By going through this exercise, it then becomes obvious why, to cite anexample, your federal marginal tax rate on dividends can be zero for lowerincome earners with no other source of income. For example, if your only incomein 2012 was $30,000 of Canadian eligible dividends, when you gross them up by38% to $41,400 and calculate federal tax of $6,210 (at 15% for income in thelowest federal bracket), once you subtract your non-refundable federal dividendtax credit of $6,218 (15.0198% X $41,400), your federal tax owing is zero.
Confusing? Perhaps, but that’s where the software or professional taxpreparer comes in to make sure your calculations are up to snuff.
Jamie Golombek, CA, CPA, CFP, CLU, TEP is the Managing Director, Tax& Estate Planning with CIBC Private Wealth Management in Toronto
|Posted on February 18, 2013 at 11:50 AM||comments (54)|
Annually, many of us have to sit down and ponder over our prior year’s income tax filing. It could have very frustrating, upsetting, sleepless moments, but it doesn’t need to be. Tax rules are both simple and complex depending on one’s situation.
Yearly, the Canada Customs and Revenue Agency (CCRA), commonly called Revenue Canada, is adding more and more rules to the already huge volume of tax regulations. With proper planning, understanding and paperwork, your tax filing could be an easier task than you think it’s supposed to be. The aim is to maximize tax benefits and minimize tax liability.
Who should file? This is an annual question, but easily understood. Anybody expecting to receive a tax credit such as Child Tax Benefit, Property Tax Credit, GST Credit and others need to file with CCRA to receive these benefits. Anybody receiving any kind of income must report it.
Most tax filing do not result in taxes owed, as there are many factors that can result in a net return to the tax filer.
Each year at this time many of us start searching through drawers, envelopes or even the bottom of bags stuck in the corner of the closet that must have the ONE receipt that will solve our tax dilemma. Where did I put that letter/receipt/cancelled cheque? Is it clinging to the fridge under the “art” or, heaven forbid, in the deep recesses of someone’s purse of most would prefer to the more unpopular chores before starting the “find the paper” scavenger hunt. Is it any wonder bathroom floors and closets are their cleanest during this time of year?
To prevent this type of scramble, I often recommend an accordion file folder. These can be arranged by month or category and can help to organize receipts as they come in during the year. When cashiers give you a receipt don't put it in the bag but keep it to be placed in the folder when you get home. In circumstances where there is an automatic withdrawal, a record should be printed then added to the folder.
Now is the time our clients can begin planning to get to get their taxes done. You can begin figuring out if you need to purchase RRSPs. If you have a business or employment expenses, you can gather and tally your receipts to lower your income.
We have designed a free Microsoft Excel macro that can help manage these numbers.
Call us if you have any questions about this new tax season and what you can do to lower your tax bill. It may be too late for this year, but you can always get started on saving for next year.