It is raining money Canada!!

It’s July! It’s the month when Canada celebrates its independence and it’s also the month when Canadians receive their first payment for all benefits. This happens every year but this year it will seriously be raining money.

Enhanced UCCB- Extra cash for your child’s summer: The Universal Child Care Benefit has increased from $100 to $160 for each child under 6 years of age and from $0 to 6 for children above 6 years of age effective Jan 2015. Therefore a lump sum payment of $420 per child will be given out on 20th July. The UCCB as the name suggests is universal in nature and every Canadian Resident with Children is eligible for the benefit irrespective of their income. So every family with children gets $420 per child in July. Now that’s called raining money!

A lot of families that otherwise do not qualify for Child Tax Benefit and have children above 6 years of age may need to apply for this benefit. If you have not filed your 2014 taxes or want to apply for the UCCB benefit, rush to your near Softron location and we will be happy to help.

GST/HST Credit- Time for shopping allowance: The first of four payments will be given out on July 5th for GST/HST credit. It’s time that you get back a little tax money on all that you have spent during the past year. Please ensure that you have filed your taxes as this benefit would be available if the taxes have not been filed for 2014 tax year.

Ontario Trillium Benefit- When the rent pays you back: The monthly payments of OTB will start on 10th July, 2015 and you will be receiving the money if you have filed your taxes and claimed your rent while doing your taxes. If an individual is single and did not have any rent to claim, he may be getting a lump sum payment of $287 in July as the Sales Credit.

So all in all, the month of July is going to be great as we enjoy the money and celebrate our independence. So if you have not filed your taxes or need to apply for the UCCB, do visit one of office locations and we will be happy to help!! Happy Canada Day!!!

Foreign Property: If you hold it, Taxman wants to know it

The CRA has taken several steps over past few years to strengthen the tax reporting standards and increase transparency. This is in-line with the international movement to curtail tax avoidance which is being spear headed by the G20 nations.

Foreign Property Reporting is one such area where CRA has introduced new reporting requirements in 2013-2014 budget and has been following it up with stringent action against the defaulters.

Who needs to be worried? – Investors and Immigrants

It is very often the case that the first generation immigrants that moved to Canada have properties like land and building, bank accounts and shares in the country of origin. A lot of times the income generated by these properties will not make significant difference to your income tax return but if the assets in total are valued above $100,000, the CRA needs to know. Whether you have that vacation home in Florida that you have been renting out or your farm in India, if it is valued at more than 100,000 and you have not been reporting it to CRA, it is a cause of worry.

 CRA means Business:

The CRA has set the penalty for not reporting the foreign property at $25 a day and upto a maximum of $2500 per year plus interest cost. The numbers can multiply quickly if you have not reported a property for a few years. Also, CRA has made it mandatory for all the banks and financial intermediaries to report all Electronic Funds Transfers of $ 10,000 or more and they have recently introduced a new whistle blower bill too. CRA is taking strong steps and individuals involved in tax evasion will have to face tough times ahead.

What needs to be reported?

Any “ Specified Foreign Property” that was valued more that $100, 000 at any time of the year needs to be reported using form 1135.

Specified Foreign Property includes money held in foreign bank accounts, shares of foreign corporations, land and buildings and all tangible and intangible properties located outside Canada. However, a property is exempt from reporting if its is a vacation home, a car or any other property that is held only for personal use or or in the course of carrying an active business,

What if you have not reported foreign property for a few years ?

 Do not worry !

 If you hold assets outside Canada and have not reported them, you should seek expert advise from professionals such as Softron Tax who can represent you with the CRA and declare your past information in programs like Voluntary Disclosure Program to minimize your risk of being penalized. Also expert advise should be sought when filing taxes to avoid any unpleasant situation in the future.

5 Tax Tricks: Saving Big from Small Businesses

Small Businesses have a chance to save big! When you are self-employed or own a small business, it presents some unique and significant opportunities to save big bucks on taxes and keep the taxman at a distance from your money

Here is how you can cut on your taxes and increase your wealth:

Share Half the Income with your better half :

Canada has a progressive tax system. Higher your income, higher your marginal tax rate. The income splitting can be an exceptional strategy to significantly lower your taxes. Income splitting can be done in the following ways:

  • Employing Family members: Small business owners have the opportunity to employ a family member like their spouse or child to help with the daily operations of their business. This allows them to split the income among family members which in turn reduces the marginal tax rate for the small business owner while the family members are taxed at lower tax rate too.
  • Family Tax Cut: Starting 2015, if a self-employed individual is married with a child under 18 years of age , he may be able to save up to $2000 in taxes by splitting income with the spouse, referred to as the Family Tax Cut

Filing on Time is the Right Time:

When is the right time to file your taxes? The simple answer is “before the deadline”. A lot of people do not file their taxes because they know they would owe to the government upon filing their taxes. The truth is that you can always make an arrangement with the government for your tax owing but by not filing taxes on time, you are attracting heavy penalties. Every year thousands of taxpayers pay millions of dollars in penalties and interest for not filing taxes on time.

Healthy Insurance Saves you Tax Dollars !:

A self-employed individual may be able to deduct for personal and family health and dental insurance premiums. Deducting these premiums as a business expense usually delivers a better tax benefit than claiming them as a medical expense. The reimbursement of medical and dental expenses would still be received tax-free

Nothing Beats Perfection:

The expenses that are claimed by a self-employed individual is the trickiest part of the whole process. It should be ensured that all claims are fully backed with receipts and proof of payments. It is always recommended to take professional bookkeeping and accounting help to accurately keep track of the claimable expenses.

The Capital Cost Allowance should be fully claimed on all the existing capital assets as well as new additions. A self-employed individual should always confirm if an expense is claimable or not before making a claim.

Save Tax while you Insure your future earnings:

Starting 2011, self-employed Canadians have the option to access EI benefits in four categories – maternity, parental, sickness, and compassionate care benefits. Twelve months of EI premiums must be made in order to qualify for any benefits. EI premiums paid are tax deductible and give the self-employed individuals especially contractors an exceptional opportunity to ensure a regular flow of income and minimize their risks in case they are unable to work at some time in the future.

The 2015 tax deadline is 15th June and it is highly recommended that self-employed individuals and small business owners should seek advice from professionals such as Softron Tax before they finalize their taxes. Let’s file it on time, let’s do it right!!

Let’s not prepare but plan our taxes. Let’s do it right !!

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