$1400 average refund for 2007 tax season

Canadians are getting $200 more refund from last year.

With the filing season now complete for most Canadians, the CRA would like to remind self-employed individuals, and their spouses or common-law partners, that they have until midnight on Monday, June 16, 2008, to file their income tax returns. If they had an outstanding balance for 2007, it had to be paid on or before April 30, 2008, to avoid interest. A late-filing penalty on amounts owing will apply to returns received or postmarked after June 16, 2008.

2008 Tax Filing Season Statistics as of May 28, 2008

	2008	2007	Change
Total received	23,687,417	23,099,964	+2.5%
NETFILE	4,150,737	3,957,938	+4.9%
TELEFILE	478,023	505,966	-5.5%
EFILE	9,014,295	8,259,416	+9.1%
Paper	10,044,362	10,376,644	-3.2%

CRA: EFile system outage

DOS attack by the tax payers :-)

From CRA:

We are currently experiencing intermittent technical difficulties that are affecting electronic filers.

However, many transactions are successful. We recommend that you continue trying to access our systems on a periodic basis.

We apologize for the inconvenience and assure you we are doing what we can to remedy the situation as soon as possible. Electronic filing continues to be the fastest method of processing tax returns. Further updates to follow.

Please note: All returns accepted by midnight (local time) on Tuesday, May 6, 2008 will be considered on time, and no filing penalty will be assessed.

For clients with self-employment income and their spouses or common-law partners, you have until midnight Monday, June 16, 2008 (filing due date) to file their tax return.

Please remember, to avoid interest charges the balance owing must be paid or post marked April 30, 2008. A nice a little break for the efilers :-)

British Columbia Training Tax Credit

CRA Tax Tips:

Did you know...

That the Government of British Columbia has introduced the British Columbia Training Tax Credit to attract people to apprenticeship programs, and to encourage those already enrolled to complete their program. This tax credit is available to both apprentices who were residents of British Columbia at the end of the year and employers of apprentices enrolled in a Red Seal or other program recognized by the Industry Training Authority who carried on a business in British Columbia during the year.

Apprentices

As an apprentice, you may qualify for up to $9,000 in tax credits as you progress through your training, and additional funding is available to qualified apprentices under the Enhanced Tax Credit. To claim the training tax credit, complete Form T1014 and include it when filing your personal income tax return.

Employers

By employing an apprentice, you may qualify for up to $12,500 in tax credits as the apprentice progresses through training. Additional tax credits are available to employers through the Enhanced Tax Credit if the apprentice is eligible for the federal disability tax credit or is registered as an Indian under the Indian Act.

Proprietors can claim the credit by completing Form T1014-1 and including it when filing their personal income tax return. Corporations claiming the credit must complete Schedule T2SCH428 and include it with their corporate income tax return.

If you need help on your tax return or have questions on BC training tax credit, please contact a tax professional. As always, staff from YY Consulting Tax Services would love to hear from you.

Good to be a student

Tips from CRA:

That as a student, you may be able to claim a tax credit for the tuition fees you paid for post-secondary level courses you attended during the year? You may also be able to claim an education amount of $400 as a full-time student and $120 as a part-time student for each whole or part month you were enrolled in a qualifying program. In addition, you may be able to claim the non-refundable textbook credit to help with the cost of your textbooks.

You may also be eligible to claim moving expenses, child care expenses, and a tax credit for interest paid on your student loans, as well as the non-refundable tax credit for public transit passes.

Remember, a professional accountant can help you with this and other tax issues you may encounter. Just give us a call or email us at tax@yyconsulting.com. As a student, you may be eligible for $10 off our regular fee.

Do Your Tax Today and Save!

YY Consulting Tax Service is offering an exclusive discount for tax tips blog readers. Use coupon blog08 to get 10% discount off our standard rate. This offer ends on March 27, 2008.

Please give us a call at 604-764-9456 or email us at tax@yyconsulting.com.

Tax Tips from CRA

Take it to the limit!

Did you know…

That February 29, 2008, is the deadline for making a contribution to a registered retirement savings plan (RRSP) for the 2007 tax year? With RRSPs, you can start saving now for your retirement, education, or the purchase of a home.

Beginning in 2007, RRSP must mature before the end of the year in which the annuitant turns 71 years of age (previously 69 years of age). Similarly, registered pension plans and deferred profit sharing plans will generally be required to commence the payment of benefits to members by the end of the year in which the members turn 71 years of age.

Begin the New Year with a clean slate and a clear conscience!

Ottawa, Ontario, January 3, 2008… Did you fail to file an accurate tax return or not file at all, but should have? The Canada Revenue Agency's (CRA) Voluntary Disclosures Program may be able to help. The program allows people to come forward and correct their tax information and avoid being penalized, criminally investigated and prosecuted.

Last year the CRA processed 8,244 disclosures for taxpayers who used the Voluntary Disclosures Program and got a second chance to comply with their tax obligations. Coming clean saved these taxpayers from an audit or a criminal investigation, which can result in penalties, fines, and even jail time. Their valid disclosures involved more than $525 million in taxes.

By encouraging taxpayers to come forward and correct the information they filed with the CRA, the Voluntary Disclosures Program helps protect the tax base and makes tax administration fair for all Canadians.

If you make a full disclosure before we start any compliance action or investigation, you may only have to pay the taxes owing, plus interest. If we come to you first, you could end up paying penalties and fines, and even face jail time.

For more information about the Voluntary Disclosures Program or need to file your tax returns, contact your tax accountant for advise.

Tax Savings for Canadians

Average Canadian taxpayer will see a reduction of $223 in 2007, a savings that will rise to an average of $272 in 2008.

"Due to retroactive tax changes announced in the fall, coupled with changes that take effect in the new year, almost all taxpaying Canadians will pay the tax man less in 2007 and 2008," said John Williamson, Canadian Taxpayers Federation federal director.

Families will save even more on average thanks to a new child credit worth $300 per child and a higher spousal exemption, which were also enacted for the '07 tax year, the organization added.

And that doesn't include the savings in 2008 from the one-point reduction in the GST, which will save the typical Canadian family anywhere from $150 to $200 a year.

Staff from YY Consulting Tax Division want to thank our friends, clients and blog readers who have supported and contributed to our success in Year 2007! Happy new year, everyone!

Canadian Tax Cut Updates

Tax Cut highlights:

• The Goods and Services Tax will be cut an additional 1 per cent as of Jan. 1, leaving the federal consumption tax at 5 per cent. The GST cut will cost the government about $5.5-billion. But the GST credit for low-income Canadians will remain at its current level, said Mr. Flaherty

• The basic personal income-tax exemption will increase to $9,600 from the current $8,929, retroactive to 2007. And it will increase again to $10,100 as of Jan. 1, 2009.

• The government is reducing the lowest personal income-tax rate to 15 per cent from 15.5 per cent, a retroactive change that will also be felt at tax-time this coming year.

• There will be a cut to corporate taxes of 1 per cent in 2008 with on-going reductions that will see business taxes fall down to 15 per cent by 2012 from 22 per cent today. That will leave Canada with one of the lowest corporate tax rates among the industrialized economies.

• The government will still have $10-billion in surplus cash to apply to the national debt.

Canada Child Tax Benefit (CCTB)

The October payment is out today. If you are expecting a benefit payment and haven't received it by the end of the month, please contact CRA.

In order to receive CCTB payments, you and your spouse or common-law all need to file a tax return even if there is no income.

You can still file your 2006 tax return if you haven't done so. Contact us if you have questions about Child Tax Benefit (CCTB) or need help with your tax return.

Are you in the top 5?

An annual income of $89,000 was enough to place a Canadian among the top five per cent of individual tax-filers in 2004, according to the most recent data released Monday by Statistics Canada.


The top one per cent of earners was limited to those who raked in $181,000 a year, while membership in the super-elite club consisting of the richest 0.01 per cent of Canadians required an annual paycheque of $2.8 million.


Three-quarters of the top five per cent of earners were men, StatsCan reports, even though men comprise a minority (48 per cent) of individual income tax-filers. The group becomes even more male-heavy at the top end of the income spectrum: just one in nine of the top 0.01 per cent of earners was a woman.


Though their membership in the very highest-earning group hasn’t increased over the last two decades, women made gains among the top five per cent, with their ranks increasing by 10 per cent since 1982.


Almost half (48 per cent) of the top five per cent of taxpayers live in Ontario, followed distantly by Quebec (18 per cent), Alberta (15 per cent) and British Columbia (13). Three out of 10 families with incomes above $250,000 lived in Toronto, followed by Montreal (11 per cent), Vancouver and Calgary (both eight per cent).


Differences between Canada and the U.S. are most striking at the upper end of the income scale, StatsCan found. In Canada, the top five per cent of earners made at least $89,000 in 2004, while the cut-off for that group in the U.S. was $165,000. The threshold for the top 0.01 pr cent in Canada was $2.8 million, but an American would need to make $9.4 million to belong to that same club. With Canadian dollar reached parity with US dollar, the gap may be narrowed a little now.


The study used tax returns and survey data to trace the characteristics of the richest Canadians.

Reduce Tax By Donation

Do you know...

That you may be able to reduce your income tax by donating to a registered charity? You can verify whether a charity is registered by searching for it in the CRA Charities Listings.

In 2006, the first $200 you donate is eligible for a federal tax credit of 15.25% of the donation amount. After the first $200 of charitable donations, the federal tax credit increases to 29% of the amount donated over $200. You may also be eligible for provincial or territorial tax credits based on the applicable provincial or territorial rates.

You do not have to claim all of the donations you made this year on your current-year return. You can carry forward any donations you do not claim in the current year and claim them on your return for any of the next five years. Married couples or common-law partners can pool their donations and claim them on one return.

Please talk to your accountant if you need help on your income tax return.

Foreign currency tax tips

Both businesses and individual taxpayers may find themselves in situations where foreign currency transactions are required to be converted into Canadian dollars. This may be an almost daily occurrence for businesses involved in cross-border work. Individual taxpayers may have to take into account foreign currency rates on such diverse situations as the calculation of a gain or loss on an investment or the receipt of regular payments, such as pensions, from a foreign country.

You need not use the Bank of Canada rate in determining the conversion rates. There is both a current and historic converter from scores of other currencies to Canadian dollars at http://www.bankofcanada.ca/en/ rates/converter.html.

There is nothing in the Income Tax Act or the CRA's published material that requires you to use the Bank of Canada annual average exchange rate to convert your pension and investment income to Canadian dollars.


Page 14 of the 2006 General Income Tax and Benefit Guide indicates that you may use the exchange rate that was in effect on the day you received the foreign income. Interpretation Bulletin IT-270R3, Foreign Tax Credit, also indicates that investment income may be converted at the exchange rate that applied on the date it was received. Pension income may also be converted at that exchange rate.

However, if the amounts were paid at various times throughout the year, you may use the Bank of Canada annual average exchange rate as a convenience.

Of course, as we have pointed out in the past, there is nothing to stop one from trying each rate on for size and only after determining what produces the best result, making a choice. In the worst-case scenario, all that can happen is that you might be called upon to justify that decision.

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On a different aspect of foreign exchange, we have been finding more foreign hotels have been asking us, when we tender our credit card, whether we would like to pay in local currency or Canadian dollars. This generally is a huge trap for the unwary.

In August in London, our hotel would have converted the bill to Canadian dollars at a rate of $2.40 to the pound. We insisted in paying in pounds sterling and the subsequent VISA statement showed the conversion by our bank at $2.19!

An offer of the convenience of having your credit card debited based on Canadian dollars is just one more way hotels can rip off unwary travellers.

Copied from: Arthur Drache, Financial Post

Beware of tax shelter gifting arrangements

Ottawa, Ontario, August 13, 2007…In support of the new Taxpayer Bill of Rights, Carol Skelton, Minister of National Revenue, is urging Canadian taxpayers to be wary of promotions of tax shelter gifting arrangements promising huge tax savings. Many of these arrangements are currently being aggressively promoted.

“If it sounds too good to be true, don’t fall for it. Taxpayers need to know that the Canada Revenue Agency (CRA) is auditing all tax shelter gifting arrangements,” said Minister Skelton. “Under the new Taxpayer Bill of Rights, you can expect the CRA to provide information to help you recognize the types of tax schemes that are out there, and to warn you about the consequences of participating in risky investments.”

The minister noted that people should read the fine print even if a promoter states repeatedly that the tax scheme is acceptable. “Ask questions, and when in doubt, seek advice from an independent tax professional who is not associated with the scheme.”

The CRA reviews all tax shelter gifting arrangements to ensure that the tax benefits being claimed meet the requirements of the Income Tax Act. New schemes are being marketed that claim to be different from those for which the CRA has previously issued warnings. Taxpayers should avoid all schemes that promise donation receipts equal to 3 or 4 times the cash payment.

So far, the CRA has audited over 26,000 individuals who have participated in these tax shelters and as a result, about $1.4 billion in claimed donations have been denied. The CRA will soon complete audits of another 20,000 taxpayers, involving close to $550 million in donations, and is about to begin auditing another 50,000 taxpayers who have participated in tax shelter gifting arrangements. To protect Canadian taxpayers and maintain fairness in the tax system, CRA will audit every tax shelter gifting arrangement.

How Canadians pay their taxes

Ottawa, Ontario, June 22, 2007... Canada Revenue Agency (CRA) announced today, that to date, it has received over 18.3 million payments. The vast majority of Canadians prefer to pay their taxes through their financial institutions, electronic banking, or by cheque. Cash payments continue to decline and make up only 0.3% of all payments.

Canadians have many options to choose from when they make a payment to the CRA. They can use telephone and Internet banking service, preauthorized debit, send payments by mail to CRA Tax Centres, or pay by cheque, money order or debit card at CRA payment counters. They can also make their payments in cash, free of charge, at financial institutions across Canada.

Total number of payments received as of June 15, 2007

Payment Method	2007	2006	Change
Cheque	8,399,499	8,071,721	4.06%
Financial institution	5,921,409	5,770,122	2.62%
Electronic Banking	3,666,037	3,009,212	21.83%
Pre-Authorized Debit	237,500	241,652	-1.72%
Interdepartmental Settlements	78,046	89,138	-12.44%
Cash	51,259	63,073	-18.73%
Debit Card	40,976	43,469	-5.74%
Total	18,394,726	17,288,387	6.40%

Canadian Self-Employed Tax Filing Deadline

Self-employed individuals and their spouses or common-law partners, have until midnight local time, on June 15, 2007 to file their 2006 income tax returns. For Efiles, for records that are returned for correction, you will have until midnight local time on June 21 to correct and retransmit electronically. Records that are retransmitted and accepted on or before June 21 will be considered as filed on time.