We are pleased to provide a variety of resources on accounting, taxation and other related subjects that we hope will be helpful to both individuals and businesses.

Browse through our Quick Tools resource menu then, if you have a question that isn’t answered, we can help. Simply contact us by email or give us a call at 289-926-9371. We would be happy to meet with you for a free, no-obligation consultation.

Renting Out Part of your Home: The New Rules

Hello everyone, in today’s market of record high real estate prices many home owners are electing to rent out a portion of their homes. Whether this is to lessen the financial burden of their mortgages, place an alternative revenue stream in savings, supplement their income, or all of the above, the practice is extremely common. 

Unfortunately, the recent changes to principle resident rules have effected the rules regarding renting a portion of a home. Currently, if you change part of your home into a rental or business operation you are deemed to have sold (as far as taxation is concerned) it at a fair market value and to have reacquired it at the same amount. Furthermore, any income or loss generated by the change must be reported in the year the change occurs.

This means for homeowners who rent out part of their home that any income realized through renting part of the property in years after the change of use must be reported and will be taxable upon the sale of property. Interestingly enough, it is possible to seek exemption for the change of use rules if no structural change to the property is made to make it more suitable for rental or business or if the rental or business area is very small. These exemptions fall entirely to the discretion of the CRA and what they consider to be “reasonable.”

With these changes and more likely to follow, it is more important than ever to have an experienced tax representative at your disposal.

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The Principle Residence, the Home Office, and the Taxpayer

Hello everyone, as has been discussed previously there are new rules in place governing what constitutes a principle residence and the reporting of such for tax purposes. In addition to tightening the definition of what constitutes a principal residence, stating that to claim such someone must reside there at least 50% of the time. The CRA has also changed their language regarding home offices. The CRA 2016 tax planning guide rigidly defines the home office as a section of a principle residence “used on a regular and continuous basis for meeting customers, clients, or patients.”

If you are self-employed and utilize a home office, you can deduct a portion of the operating cost of your home. For example, if your home office takes up 15% of the total square footage of your home you can claim as a deduction from your business income 15% of property taxes, hydro, heat, home insurance, maintenance costs, and even 15% of your mortgage interest (but not principle). These expenses cannot exceed $5000 in a fiscal year but can be carried forward and claimed against income in the next year.

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The Tuition Tax Credit: Not Just for University

Hello everyone, September is not far off and many are entering post-secondary education in the hopes of starting a career or bolstering their credentials. What many are not aware of however, is that program costs outside of university or college tuition are often eligible for tax deduction. For example, examinations that are for  trade, occupation, or professional credentials and paid to an institution with the intention of acquiring professional status recognized by the provincial and federal government, as well as those that allow applicants who pass to be licensed and certified as a trade person allowed to practice in Canada may be eligible for a tuition tax credit. Be sure to save receipts from any such examination to ensure you or your loved ones receive every break you are entitled to.   

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RRSP vs CPP: Utilizing the Best Tools Available

Hello everyone, we’ve previously discussed the usefulness of RRSP contributions both to prepare for one’s retirement and for tax relief. Recently, a Statistics Canada study was completed that found RRSP contributions actually decrease when mandatory work-place Registered Pension Plans are increased. The Canadian Pension Plan is slated to require increased contribution by 2019. Statistically speaking, citizens are more likely to decrease their RRSP contributions after that, and while the logic seems sound; why would someone increase their RRSP contributions if they’re effectively being forced to save for their retirement? Well CPP contributions do not have the same benefits as RRSP contributions, RRSP contributions can be used to lower your income bracket and potentially save you thousands of dollars in taxes. Don’t let mandatory increases to CPP contributions steer you away from the best tools available, and talk to your tax professional.

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Budgeting and Your Financial Future

Budgeting is not an enjoyable task but it is frequently key to your long-term success and happiness. The number one stressor within relationships in Canada is, you guessed it, finances; A survey among 3000 couples found that for 82% the number one issue is money, a very good reason to have an agreed upon financial strategy with your partner. As a first step, it is vital to record your income and expenses for a broader picture of your finances, this can be daunting as you realize just how expensive simple indulgences can be, if you purchase a fifteen-dollar lunch everyday at work, five times per week, that is $300 per month or $3600 per year! 

With this in mind, it can be enormously beneficial to seek the consultation of professionals certified in Real Wealth Management, able to analyze your finances both objectively and thoroughly to better assist you with your short and long term financial goals which brings us to our next step, creating a wish list. 

What are your long term financial goals? Do you want to send your children to college? Be debt free? Pay off your mortgage five years early? Whatever your goals are it is important to reconcile them with your budget. What expenses can be trimmed and the money saved contributed to your goals? It is fundamental to ask yourself what you want for your future, and determine which funds  you can allocate to these goals per month. 

Here are some tips to keep in mind for reducing expenses, do not use credit cards wherever possible, use cash. When you shop for essential items bring no more than $10 or $20 more than you think you’ll need so that you’re not tempted to spend more than you’ve budgeted.  Use coupons regularly, even small discounts on regular purchases can add up to thousands of dollars saved over the course of a year, and be sure to keep these in accessible place where you will not forget them. If you still have cable or a landline phone, they have effectively become obsolete, there are plenty of streaming services via the internet that can get your favorite shows and events at a fraction of the price of a cable package, while landlines have been made largely irrelevant by cell phones. These are just a few basic tips that can help you manage your own finances, if however in the past you have tried and failed to stay on course to achieve your own goals, it may be time to seek certified professional assistance, especially when it comes to budgeting and negotiating CRA debt. For more information on budgeting strategies check out “The Only Budgeting Book You’ll Ever Need” by Tere Stouffer or Gail’s Guide to Building a Budget online here: http://www.gailvazoxlade.com/resources/guide_to_building_budget.html 


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