JAIKS BLOG

JAIKS BLOG

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.

Derek Bartlett has not set their biography yet

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.

Continue reading
23 Hits
0 Comments

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.

Continue reading
48 Hits
0 Comments

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.   

Continue reading
46 Hits
0 Comments

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.

Continue reading
67 Hits
0 Comments

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 

 

Continue reading
94 Hits
0 Comments

Frequently Unused Tax Credits and Deductions

With the April 30th filing deadline fast approaching and many people in a hurry to meet it, it can be easy to overlook tax credits and deductions that Canadian tax payers may be entitled to. The following is a brief list of a few deductions and credits that are frequently overlooked, the first are moving expenses. Provided the move is at least 40 kilometers closer to one’s job or business moving expenses are eligible for deduction, less commonly known is the fact that moving expenses for one’s children (provided they are full-time students) also can be claimed with the similar restrictions of the move being at least 40 kilometers closer to their school. In the event receipts from the travel are not saved, you may claim meal expenses at $51 per day and vehicle expenses at 43.5-59.0 cents per kilometer of travel depending on the province. Another commonly missed deduction comes from the fact that healthcare premiums unbeknownst to many, can be claimed as healthcare expenses if the total medical expenses for that year exceed $2237 or three percent of one’s income or that of their spouse, whichever is lower. Finally, if you or a loved one have claimed a disability tax credit for the 2016 year but have suffered the disability for years it is possible to seek adjustments on returns from up to 10 years ago.  

Continue reading
95 Hits
0 Comments

Important Changes to the Ontario Student Assistance Program

With the government's educational reforms taking effect this year there are some major changes to the Ontario Student Assistance Program that anyone interested in a post-secondary education should be aware of. For the first time in Canadian history OSAP now offers citizens without $50,000 of family income or an existing post-secondary degree, assistance up to and beyond, total tuition coverage for an eligible institution. provided that they don’t already possess a post-secondary degree.

 

The use of “citizen” (although there are also allowances for permanent residents and protected persons) instead of “student” is important, as this offer applies to "mature students" as well, there are no requirements that an applicant currently be a student.  “Eligibility for the new program will not depend on the numbers of years out of high-school or program level” assures Sean Greson issues manager for the Ministry of Advanced Education and Skills development. In addition to this, assistance to applicants with children are more accommodating; Childcare costs factored into assistance.

 

If you are interested in learning more, follow the link to the general information website and OSAP calculator here: https://www.ontario.ca/page/osap-ontario-student-assistance-program?_ga=1.209252434.1951252719.1489095943

Continue reading
124 Hits
0 Comments

Sale of Principle Residence

Hello Everyone, today I would like to inform you of an update regarding the sale of one’s principle residence. As you may already be aware, the sale of one’s principle residence in Canada is exempt from capital gain tax, because of this there generally hasn't been a reason to report the sale, but the rules have changed for the 2016 return and onward.

While the sale of one’s principle residence does remain free of capital gain tax for the years it was designated as the owner’s principle residence, the transaction is now required be to reported under the Capital Gains section of the T1 Income Tax and Benefit Return. Late designations of a property as a principle residence can be adjusted with a penalty of $100 per month (to a maximum of $8000). A principal residence does not have to be the house where the owner resides all the time, indeed according the CRA the property may qualify as a principle residence if the owner, the owner’s children, or the owner’s spouse reside there at some point during the year, although this can change if the property is rented out. It is also important to remember that an owner and spouse may only have one principle residence between them, this principle residence may even be outside of Canada. The above change also apply in the disposition of property even though the property has not actually been sold in such a case. 

Continue reading
117 Hits
0 Comments

Tax Changes for Your 2016 Return

Hello Everyone, April is approaching fast and there are several tax changes that will take effect this year and potentially alter your return. We here at JAIKS believe that just about everyone should be informed of shifts within the taxation landscape, and so have taken the time to talk about a few of the more broadly reaching changes. 

Among the more controversial changes is the elimination of the Family Tax Cut which allowed individuals to transfer up to $50,000 of income to a spouse lower income if they have a child under the age of 18, to a maximum benefit of $2000. While a bit of a blow to middle class families who had come to expect the benefit in the past, there are still a number of ways depending on circumstances, to split income.

Another set of important changes comes in the form of new rules for several child benefit tax breaks, fitness and arts credits for children under sixteen are being cut in half, $1000 to $500 and $500 to $250 respectively. Still, these changes may be more than made up for (depending on income status) with the Enhanced Universal Childcare Benefit with which parents of children under 18 can get up to $6400 per year for each child under the age of six, or a maximum of $5400 per year for each child aged six to seventeen.  

Finally, there have been adjustments to the federal tax brackets. If you make between $45,282 and $90,563 per year your tax rate will drop from 22% to 20.5% from the previous year.  Meanwhile another bracket has been created for those who earn more than $200,000 per year the rate has been adjusted to pay 33% on every dollar earned above that figure, an increase from 29% last year. 

 

Continue reading
122 Hits
0 Comments

RRSP Contributions

Hello Everyone, T4’s are right around the corner and with them information on your yearly gross income. It’s never too early to think of the future, especially if it’s been a particularly good year and you find yourself in a higher tax bracket. It may be time to sit down and discuss an RRSP. The contribution deadline is March 1st. It’s certainly worth considering, as strategic RRSP contributions could save you thousands of dollars.

Even if your income hasn’t changed from the previous year there can be a number benefits to making an RRSP contributions. Making an RRSP contribution could lower your income tax bracket. If for example you make 52,000 dollars per year, a 3000 dollar RRSP contribution that year will bring you from the 26% tax bracket to the 20.5% bracket. Furthermore, deferring a portion of taxable income until the money is withdrawn at retirement means that you may be in an even in a lower earning tax bracket at that time, in addition to collecting the interest that the RRSP will accumulate.

The maximum amount of RRSP contributions for the year 2017 is the lowest of 18% of your earned income from the previous year or $26,010. Income for the purposes of this measurement includes salary or wages, rental income, alimony, and other income sources that are not investment income. It’s important to remember that if you’re the member of a Company Pension Plan or Deferred Profit Sharing Plan, the amount that will be deducted from your RRSP limit is easy to see on your T4 as your Pension Adjustment.

Continue reading
141 Hits
0 Comments

European Pension

Were you or your parents born in Europe? Did you or your parents work in a European Country for several years? If you answered yes to either one of those questions, you or your parents may be entitled to a pension regardless of how long you’ve lived in Canada. At JAIKS Inc. We’re committed to using our knowledge and expertise to lend a helping hand to our clients. http://europa.eu/…/retir…/state-pensions-abroad/index_en.htm

Continue reading
148 Hits
1 Comment