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Personal Tax Services
The preparation of personal income tax is an important concern for all Canadian residents, whether you are an employed individual, small business owner or an executive officer of a large company.
It is vital to engage tax professionals at all stages of your tax planning phases as tax legislation, rules and regulations can and do change rapidly leaving even the most astute business person questioning their tax plan and ability to comply. James Stafford Chartered Accountants ("James Stafford Professionals") main high levels of intuitive expertise and regularly monitor their tax strategies to ensure compliance with the ever-changing tax legislation. Our goal is to achieve the optimum tax approach for all our clients while complying with all tax laws.
James Stafford Professionals can help you achieve your tax planning goals while assisting you to complete your tax returns, elections and notices of appeal using the latest technologies available. Our assessment of your ever evolving tax situations will consider all aspects of your past, current and future tax situation taking into consideration your goals to ensure that your taxation burden is minimized and your wealth and asset growth is maximized.
The tax professionals at James Stafford are also available to advise you in all aspects of your financial plan, including buying and selling businesses, real property, equipment and other material assets.
We enjoy working with clients to assist them in improving and maintaining their personal financial goals by developing and implementing innovative tax compliance strategies.
Tax Tips
Last Updated February 2012
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Employment Expenses
- You may be eligible for a deduction on your personal income tax return if you incur costs to earn employment income and are not reimbursed by your employer. Examples include: advertising, automobile, office supplies, telephone and internet and travel.
- A portion of home office expenses may be eligible for deduction if you work primarily from home. Examples include: electricity, heating and maintenance.
- To be eligible, you must obtain a signed and completed Form T2200 from your employer.
Unincorporated Businesses
- If you operate an unincorporated business,you may deduct the costs incurred to earn income, including advertising, automobile, insurance, legal and accounting, office supplies, rent, salaries, telephone and internet and travel expenses.
- A portion of home office expenses may be eligible for deduction if the workspace is your principal place of business, including electricity, heating, maintenance, mortgage interest and property taxes.
- Harmonized Sales Tax ("HST") registration is required in most cases if annual sales exceed $30,000. However, you may reduce HST collected by HST paid on qualifying expenses.
Notice of Assessment ("NOA")
- Canada Revenue Agency ("CRA") will mail you a NOA after your tax return has been assessed.
- Retain a copy of your NOA as banks are increasingly requesting copies for loan and mortgage approvals.
Medical Expenses
- Amounts paid for you, your spouse, common law partner and dependants can be claimed for a tax credit. Examples include: dental, orthodontic services, private health services plans, prescription drugs and vision care.
- Premiums paid to Medical Services Plan of British Columbia ("MSP") are not tax deductible.
Tuition & Education
- Tuition paid for post-secondary education can be claimed for a tax credit.
- Additional tax credits are available based on the number of months of part-time or full-time study.
- Up to $5,000 per year can be transferred to the student's spouse, common law partner, parent or grandparent.
- Unused amounts can be carried forward indefinitely.
- Obtain and retain a copy of the Form T2202/T2202A issued by the post-secondary institution.
Automobile - Lease or Buy?
- A purchased automobile for business use is eligible for capital cost allowance deductions based on a maximum value of $30,000.
- Interest paid related to the purchase is tax deductible up to $300 per month.
- Lease payments are tax deductible up to $800 per month.
Computer Purchase
- Computers purchased in 2011 for business use are 100% tax deductible.
Child Fitness
- Registration, membership, instruction and facility rental fees paid for children under 16 for physical activities can be claimed for a tax credit of up to $500 per child.
Registered Retirement Savings Plan ("RRSP")
- RRSPs provide a deferral of tax on income earned and a tax deduction for amounts contributed.
- Withdrawals and payments from RRSPs are subject to tax.
- Over contributions to RRSPs are subject to tax.
- RRSP deduction limits are based on earned income and unused contributions from the prior year.
- Your RRSP deduction limit is indicated on your NOA from CRA.
Tax Free Savings Account ("TFSA")
- TFSAs allow for tax-free interest income, capital gains and withdrawals.
- Individuals 18 years or older with a Social Insurance Number may open a TFSA.
- The TFSA contribution limit is $5,000 per year, regardless of whether a TFSA is opened. Any unused contribution limits from previous years carry foward.
- TFSA withdrawals in one year are added to the contribution limit in the next year.
- Contributions to and capital losses realized in TFSAs are not tax deductible.
- Over contributions to TFSAs are subject to tax.
- Your TFSA contribution limit is indicated on your NOA from CRA.
- Generally, it is better to withdraw from a TFSA rather than a RRSP.
Important Dates & Deadlines
- RRSP contributions: 1 March 2012
- Personal income tax return: 30 April 2012
Rental Property & Income
- Rental income can be reduced by rental expenses, including advertising, insurance, mortgage interest, maintenance, property tax and utilities.
- Mortgage principal payments are not tax deductible.
- Capital cost allowance can be claimed to reduce rental income, but cannot create or increase a rental loss.
- A rental loss can be deducted against other sources of income.
Capital Losses
- Capital losses can only be used to reduce or eliminate capital gains.
- Unused capital losses can be carried back three years or carried forward indefinitely.
- Capital losses which arise on transfer to RRSPs or TFSAs are not tax deductible.
Child Care Expenses
- You can deduct amounts paid for nursery schools, daycare, day camps, and day sports schools for children under 16 while you are working or attending school.
- Up to $7,000 is available for each child under the age of 7 and $4,000 for each child age 7 to 16.
- For individual providers, obtain their Social Insurance Number.
- Generally, child care expenses are claimed by the spouse with lower income.
Retention of Records
- All slips, receipts and supporting documentation must be kept for at least six years.
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Dealing with Canada Revenue Agency
Canada Revenue Agency (CRA) continues to become increasingly aggressive with taxpayers and it is important that your dealings with CRA are carefully monitored. We provide you with a list of common issues and recommendations when dealing with CRA:
1)CRA will regularly contact the taxpayer for the purpose of information gathering or clarification of your previously filed Canadian Form T1 - Personal Income Tax Return (Form T1 Return) such as performing pre-assessment reviews as part of the self-assessment tax system. We recommend that you contact our Firm. We will gather the appropriate information from you and forward them to CRA on your behalf.
2)Systematic CRA errors:
a.Misappropriated or lost payments. We will contact CRA on your behalf to make a request to transfer your payment to the appropriate account and reporting period or track your lost payment to minimize any additional penalty and interest charges.
b.Misappropriated or lost tax returns. Contact our Firm to obtain an additional copy of your previously filed Form T1 Return at no extra cost.
3)Receiving a Notice of Assessment from CRA in relation to your previously filed Form T1 Return. We recommend the following factors to consider:
a.When claiming automotive expenses, maintain a detailed automobile log book to keep track of business travel during the entire year which consists of each business trip, destination, reason for the trip and distance covered.
b.All sources of income must be reported on your Form T1 Return even though you may not have received an information slip from the issuer.
c.Keep the original receipts and supporting documentation for at least 6 years. We note that photocopies of the receipts and Visa/Mastercard receipts are not adequate.
d.Harmonized Sales Tax (HST) must be charged when your worldwide taxable supplies of goods and services are greater than $30,000.
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Taxpayer Bill of Rights
- You have the right to receive entitlements and to pay no more and no less than what is required by law.
- You have the right to service in both official languages.
- You have the right to privacy and confidentiality.
- You have the right to a formal review and a subsequent appeal.
- You have the right to be treated professionally, courteously, and fairly.
- You have the right to complete, accurate, clear, and timely information.
- You have the right, as an individual, not to pay income tax amounts in dispute before you have had an impartial review.
- You have the right to have the law applied consistently.
- You have the right to lodge a service complaint and to be provided with an explanation of our findings.
- You have the right to have the costs of compliance taken into account when administering tax legislation.
- You have the right to expect Canada Revenue Agency to be accountable.
- You have the right to relief from penalties and interest under tax legislation because of extraordinary circumstances.
- You have the right to expect Canada Revenue Agency to publish service standards and report annually.
- You have the right to expect Canada Revenue Agency to warn you about questionable tax schemes in a timely manner.
- You have the right to be represented by a person of your choice.
Commitment to Small Business
- Canada Revenue Agency is committed to administering the tax system in a way that minimizes the costs of compliance for small businesses.
- Canada Revenue Agency is committed to working with all governments to streamline service, minimize cost, and reduce the compliance burden.
- Canada Revenue Agency is committed to providing service offerings that meet the needs of small businesses.
- Canada Revenue Agency is committed to conducting outreach activities that help small businesses comply with the legislation we administer.
- Canada Revenue Agency is committed to explaining how they conduct their business with small businesses.