When Do I Need to Report Rental Income?

Renting property seems like a lucrative entrepreneurial opportunity as more and more individuals are renting out portions of their home and even offering space through popular accommodation services such as Airbnb.

Acquiring rental income is a great way to offset the cost of a mortgage or justify an investment in a secondary property.

However, if you are renting your property to a third party, you are required to report your rental income on your tax return.

While it may be tempting to not disclose this income to the CRA (Canada Revenue Agency), not doing so can lead not only to penalties but also missed opportunities for some tax savings.

What is Rental Income?

When it comes to claiming rental income on your taxes, rental income is considered to be any earned income from a rental property you own. This includes houses, apartments, rooms, office space and other real or movable property.

Rental income from Airbnb, income suits and any short term rentals must be claimed as well.

The duration of the rental, whether it be for one night, a week or a month, does not exempt the income from having to be claimed on your income taxes.

Exceptions to Claiming Rental Income

There is one exception to having to claim rental income on your income taxes – if you are renting a space below fair market value.

Renting below fair market value means that you are charging a rent significantly lower than rents charged for other properties that are similar to your property in your area.

Typically, home owners will charge family members below fair market value rent for allowing them to stay in their home.

If this is the case, you do not need to claim the income. However, you cannot claim any rental expenses or rental loss on your taxes.

The government considers this situation to be a “cost-sharing arrangement”.

Claiming Rental Income at Tax Time

If you are in a situation where you rent a property, or a portion of your property, at or above fair market value, the CRA requires that you pay taxes on the income earned.

In order to claim rental income on your tax return, you must declare the net income on line 160 of form T1. From there, you can subtract any qualifying expenses as well as capital expenditure depreciation expenses. The difference is your reported rental income.

Here are some common rental expenses that can be deducted against your rental income:

  • Advertising
  • Insurance
  • Mortgage interest
  • Repairs and maintenance
  • Property management
  • Utilities

To ensure that you are claiming the appropriate expenses for your rental property, contact the expert accountants at Liu & Associates for more information.

What Happens If I Don’t Claim Rental Income?

When the CRA expects you to claim any sort of income on your tax return, not doing so can lead to unpleasant consequences:

  • Interest accrual. If you owe taxes on rental income, and fail to report it, the amount can be subject to interest.
  • Penalties and fines. The CRA is within their rights to implement penalties for filing your taxes late. This amount is backdated to the time when the rental income should have been reported. Interest is also charged on the penalty amount.

Withholding your rental income from the CRA not only leads to financial consequences, but it also means that you miss out on the valuable deductions listed above.

Avoid the Confusion of Claiming Your Rental Income

Get in touch with the professional accountants at Liu & Associates to find out more information about how to properly claim your rental income as well as all of the tax benefits you can reap by renting out your property.

 

 

 

What Are Tuition Tax Credits? (And How You Can Claim Them)

books-1012088_960_720

In 2017, the Canadian government eliminated the federal educational and textbook tax credits. However, they did not eliminate the tuition tax credit, allowing students the opportunity to apply tuition costs toward owing taxes.

While it may not seem like a huge tax break, it can relieve a significant financial burden on students who balance post-secondary studies with working and making an income.

If you are a student attending, or planning to attend, a post-secondary educational institution, you are going to want to make sure you take full advantage of this tax credit.

What is the Tuition Tax Credit?

The tuition tax credit is an education tax break offered to Canadians by the Canada Revenue Agency (CRA). It allows students 17 years of age and older who are enrolled in post-secondary education to use their tuition to reduce their taxable income.

The tuition amount, up to $5000, can also be transferred to a spouse, common law partner, parent or grandparent.

In order to be eligible for the tuition tax credit, students must attend a post-secondary level course at an accredited institution in Canada – although individuals may qualify at school abroad as well.

Student Loan Interest Deduction

In addition to the tuition tax credit, students may also be able to deduct interest from government issued student loans from their taxes. This only applies to government loans – interest from personal loans or lines of credit are not eligible.

Other School-related Deductions

Although Canada has done away with claiming textbooks and other school-related costs as tax deductions, students can take advantage of tax breaks related to moving costs.

The moving expenses deduction applies to individuals who move more than 40 kms away from home to attend an accredited educational institute on a full-time basis. This deduction may cover the costs of moving, airfare and the connection and transfer of utilities.

However, there are restrictions. A student can only apply relocation costs against the tax they are required to pay on scholarships, bursaries, fellowships, prizes and research grants.

How to Claim Tuition Tax Credits

The tuition tax credit is a non-refundable credit, meaning that if the tuition amount is greater than the tax owed, you won’t get a refund from the claimed amount. It works by decreasing or eliminating any amounts owed to the government.

Unused tuition amounts can be carried forward to the next year or transferred to a spouse, common law partner, parent or grandparent.

For example, if you claim $4500 worth of tuition but your owing tax bill is only $1000, you can transfer the remaining $3500 or carry forward to a future tax year. Because it is a non-refundable tax credit, you cannot receive that $3500 as a refund.

Calculating the Tax Tuition Credit

The Tax Tuition Credit is calculated by combining all eligible tuition fees then multiplying the total by the lowest federal tax rate percentage for the current tax. The federal tax rate percentage depends on your income bracket, which depends on which province you live in and how much income you declare.

Claiming the Tax Tuition Credit

Post-secondary institutions issue form T2202A (Tuition and Enrolment Certificate) to students, certifying that you have taken the eligible courses of necessary duration in order to qualify for the tax credit.

The form indicates in Box A the total eligible tuition fees paid as well as the months you were enrolled in school either part-time (Box B) or full-time (Box C).

Take Full Advantage of Tax Relief

If you are eligible for tax breaks because you are a student, be sure to take full advantage of these opportunities.

Our accountants at Liu & Associates can answer any questions you have related to your tuition costs and tax claims.

Contact us today for more information!

5 Things You Didn’t Know Were Tax Deductible

calculator-428294_960_720

Each year many Canadians loathe the approach of tax time and worry about receiving a hefty tax bill after everything is submitted and filed.

Fortunately, there are many tax deductions available to Canadians – most you probably haven’t even heard about.

The accountants at Liu & Associates know taxes and want to help you save money every year. Here are 5 costs you didn’t know were tax-deductible:

1. Child Care Expenses

Most Canadians know that childcare expenses can be claimed on income tax, but that deduction extends beyond just daycares and in-home sitters.

Hired caregivers, day nursery schools and centers, educational institutes that provide childcare services, day and overnight camps and boarding schools are all considered tax-deductible.

As long as the primary purpose of any of these services is to provide childcare, they can be claimed on your taxes.

2. Moving Expenses

If you are required to move because of your work, business, or for school, you may be able to claim costs associated with relocating to a home at least 40 km closer to the new workplace, business, or school.

You may also be able to claim travel costs such as accommodations, meals and vehicle expenses as well as additional expenses related to selling your home and purchasing a new one and connecting and disconnecting utilities.

When you are moving for a job or business, eligible moving expenses are deducted from the income earned at that location. Any excess can be carried forward to the next year’s tax return.

Tax credits for moving are non-refundable, meaning that they only count against taxes owing and you will not receive a refund from any unused amounts.

3. Dependents

Dependants are family members, and not just immediate ones, with mental or physical disabilities that depend on you for care.

If you have dependent family members, you are eligible for two tax credits:

Home Accessibility Tax Credit (HATC)

This non-refundable tax credit covers goods or renovations related to an individual who is eligible to claim a disability tax credit or is over the age of 65. For example, if you were responsible for the care of an elderly parent in a wheelchair, you could claim the cost of installing a wheelchair ramp.

Canada Caregiver Credit (CCC)

If you taking care of a family member or eligible relative outside of the national health care system who depends on you due to a mental or physical disability, you can claim this credit on your taxes.

4. First Time Home Buyers

In order to encourage young Canadians to purchase homes, the Canada Revenue Agency (CRA) offers a tax credit when buying your first house.

The First Time Home Buyers’ (FTHB) tax credit can be used to claim legal fees, disbursements and land transfer taxes. Up to $5000 can be claimed as a non-refundable tax credit.

There are also grants available from provincial governments such as a property transfer tax grant and property tax grants.

If you are interested in seeing what grants are available for you, please contact our expert accountants at Liu and Associates for more information!

5. Medical Expenses

There are many medical expenses beyond prescriptions that can be claimed on your taxes.

For example, travel costs for medical procedures greater than 40 km from your home can be claimed – as long as the necessary medical services are not available near you.

The cost of service animals trained for individuals who are blind, deaf or have Autism, epilepsy or diabetes can be claimed on taxes, as long as the animal is procured through a recognized provider. The claimable costs include the cost of the animals as well as veterinary bills and food. This deduction does not apply to emotional support animals.

Medical marijuana is also a claimable deduction on your taxes, as long as it is authorized for medical purposes and purchased from a designated producer.

Click here for more medical expenses that are tax-deductible.

And There’s More!

These are just a few of the lesser known costs that can be claimed on your yearly tax return.

Contact us today to learn more about tax-deductible costs that can save you money!

Taxes After 65

a-retired-woman-in-a-park

Turning 65 is a significant milestone in every Canadian’s life. With the changes in health and lifestyle also comes changes in financial income and taxes.

Understanding what these changes are and how to prepare for them is important in ensuring your taxes are done properly and without error.

Liu & Associates is here to help you understand exactly what changes tax-wise when you reach the age of 65.

What Changes After 65?

Once you turn 65, you are eligible for more tax benefits than younger taxpayers. These include a claimable age amount, pension income amount, medical expenses and other federal credits.

Because you will be receiving age-specific incomes, these payments must be in your yearly tax return.

The following payments are considered taxable income:

  • OAS (Old Age Security)
  • Retiring Allowance
  • Other pensions and superannuation
  • RRSP (Registered Retirement Savings Plan)
  • Annuity payments
  • PPRP (Pooled Registered Pension Plan)
  • Retroactive lump sum payments
  • Income from trust or a retirement compensation agreement
  • RRIF (Registered Retirement Income Fund)
  • CPP (Canada Pension Plan)
  • QPP (Quebec Pension Plan)

Income Sources for Seniors

Being 65 years old and being retired are not mutually exclusive. Many senior Canadians work beyond the age of 65 and, in doing so, can still take advantage of supplemented incomes based on their age.

There are income programs, however, that focus specifically on retired individuals. That being said, income supplements such as OAS can be affected if additional income is made through part-time work.

These are various income sources for Canadian seniors that consider age as well as retirement:

Old Age Security (OAS)

OAS is an income supplement financed by Canadian tax dollars for individuals over the age of 65. It provided benefits to individuals over 65 and is considered taxable income.

Canada Pension Plan (CPP)

CCP is an income funded by payroll deductions and is available as early as 60 years of age. CPP is also taxed income source.

Guaranteed Income Supplement (GIS)

The GIS is available to low-income Canadians and is a non-taxed income.

Annuity Payments

Annuities are a financial product sold by an annuity provider, usually a life insurance company. They will pay a guaranteed regular income during retirement but the money received is taxable.

Superannuation

A superannuation is a company plan created by a company for the benefit of its employers to use during retirement. The funds deposited will grow until retirement is reached or the funds are withdrawn. This is a taxable income.

PPRP (Pooled Registered Pension Plan)

This retirement income option is geared toward individuals and self-employed individuals. This plan will move with you from job to job and is considered taxable income. However, it is only considered a “pension income” when you are 65 or older.

RRIF (Registered Retirement Income Fund)

RRIF’s are arranged between an individual and a carrier such as an insurance company, trust or bank. The fund is registered with the federal government and is taxable income.

Tax Benefits for Seniors

As mentioned above, there are tax benefits once you reach the age of 65. To take full advantage of potential tax benefits, speak to a full-service accounting practice such as Liu & Associates LLP to seek out all qualifying tax credits.

Age Amount

Once you reach the age of 65, you may be eligible to claim an age amount on your taxes. If your net income is less than $83,353, you are able to claim this tax credit.

Pension Income Amount

With the pension income amount, you can claim up to $2000 in credit on eligible pension income. These incomes include a pension or annuity income received as payment for a pension or superannuation plan or payments from an RRSP.

Medical Expenses

If you have any medical expenses that are not reimbursed and equal more than 3% of your income, you can claim them on your taxes.

These include more than prescription medication. As long as the medical necessities you are claiming are prescribed, you can claim items such as:

  • Air conditioners
  • Bathroom aids
  • Chairs
  • Hospital bed
  • Orthopedic shoes, boots, and inserts
  • Page-turner devices
  • Walking aids

In order to claim these expenses, you need to keep your receipts.

Other Federal Credits

The CRA (Canada Revenue Agency) offers a Home Accessibility Tax Credit (HATC). This non-refundable tax credit is available for any home improvements that help to better your quality of life such as walk-in tubs, wheelchair ramps, and hands-free faucets.

Because this is a non-refundable tax credit, it can only be applied to reduce any tax owing and not put toward any refunded taxes.

Tax Tips for Seniors

While not much changes when it comes to filing taxes after the age of 65, there are some considerations worth noting to ensure the procedure is done properly and without error.

For more information regarding any changes to your tax return, please contact our accountants.

1. Stay Organized

Keep track of all your expenses on a monthly or bi-monthly basis. Try to keep all your paperwork, including receipts, in one place.

2. OAS and Part-time Income

If you work part-time while claiming OAS, the government will reduce your OAS payment if you make over $75,910 a year. This is called the “OAS clawback” and typically reduces your OAS by 15 cents for every dollar you earn over that amount.

3. Pension Splitting

When you are married or common law, the higher-earning partner can split up to half their pension income with the lower-earning partner. This spreads taxable income so that one partner is not taxed in a higher tax bracket.

4. RRSP’s

Your RRSP contributions provide tax breaks but any money withdrawn is considered taxable income. By the end of the year that your turn 71 you will have to withdraw the funds, convert the funds to a RRIF or use them to purchase an annuity.

Have Questions About Filing Taxes?

If you’re confused about how to file your taxes after the age of 65, please do not hesitate to contact our professional and experienced accountants today.

Maximizing Your Charitable Donation Credits

american-coins-sitting-in-a-jar

The Canadian government encourages its population to give generously by offering a Charitable Donations Tax Credit (CDTC). This tax credit is in existence for those who donate to registered charities.

A donation is anything considered to be a gift in which nothing is given in return. These include money, assets or objects of value.

The CRA (Canada Revenue Agency) allows all Canadians to claim up to 29% of all donated amounts. Depending on your province of residence, you may be eligible for up to an additional 24% of all donated amounts.

The CDTC is a non-refundable tax credit. This means that you can only apply any claimable amounts to taxes owing, not taxes refunded.

Qualifying for the Charitable Donations Tax Credit

In order to qualify for the CDTC, you must donate to a registered charity or any public organization that can issue a tax receipt.

The Canadian government’s website offers a searchable online database of registered charities. You can always check with the database to ensure that your donations qualify for the CDTC.

If you donate to a charity or organization that gives you something in return, such an event ticket, you must deduct the value from the donation. The difference can then be claimed.

Claiming Donations on Your Tax Return

Claiming donations on your tax return is one of the least complicated form procedures. Yet, it is still important to understand what information you need and where it goes.

Calculating Charitable Tax Credits

The first step in calculating your charitable tax credit is to determine your eligible amount.

This amount can be claimed for the current applicable tax year but can also be claimed from the previous 5 years (as long as those amounts have never been claimed).

You can calculate your CDTC rate by using the CRA’s charitable donation tax credit calculator.

Necessary Documents

In order to properly file your charitable donations, you need an accurate record of the donations made. Be sure to keep all receipts from your charitable donations.

Just to be safe, you should hang on to additional documentation in case of a review or audit. These documents include pledge forms, cancelled cheques, credit card statements, stubs and/or bank statements.

Once you have the necessary documents, you will need to fill out a Schedule 9 when you file your taxes.

Filling Out the Schedule 9 Form

Filling out the Schedule 9 form is an easy and straightforward process.

Simply claim your eligible donation amount on line 340 of the Schedule 9 form. Work down through the rest of the form in order to calculate your claimable amount on line 34.

You will then transfer the amount of line 34 to line 349 of your Schedule 1 form.

If you’re confused about tax filing and forms, contact Liu & Associates. We can help you make sense of your filing needs.

Maximizing Your Charitable Donation Credits

We know the spirit of giving donations is to support the causes that need them and we know that those who donate do so out of care and kindness.

However, there’s no denying that there are tax benefits for donating and there’s no reason that those who give should not maximize their charitable donation credits.

Set Up Pre-authorized Donations or Payroll Deductions

Setting up pre-authorized donations or payroll deductions is a quick and easy way to make regular donations. It also helps to make donations trackable.

If you set up a payroll deduction to donate toward a registered charity, you will be provided your total donation amount in box 46 of your T4 slip. That way, there is no need to add up receipts or records of donations.

Combine Your Donations With Your Spouse or Partner

When the total of donations claimed on your taxes exceeds $200, they are eligible for bigger deduction benefits.

You can take advantage of those benefits by combining your donations with your spouse or partner. Claim those pooled donations under the spouse or partner who will receive the larger tax benefit.

Because the CDTC is a non-refundable tax credit, it would be beneficial to claim donations under the spouse who will be owing on their taxes. The donation tax credit can reduce that amount.

Carry Forward Your Donations

You can hold onto unclaimed donation receipts for up to 5 years. It may be worth your while to hang on to them and claim them in a single tax year.

You may want to do this if you are claiming other tax credits, such as tuition or education credits, that will contribute to a refund.

Much like the benefits of pooling donations with your spouse or partner, carrying forward your donations is beneficial if you are expecting to owe on your taxes.

Again, the CDTC will not apply to any refunded amounts.

Consider Giving “Gifts in Kind”

Not all claimable donations have to be monetary.

Donations eligible for the CDTC can also be in the form of physical items. These are “Gifts in Kind” and can include items such as artwork or jewelry and even real estate.

When it comes to claiming Gifts in Kind on your taxes, the objects or property value is at fair market value and are used as the tax credit amount.

Take Advantage of the Charitable Donations Tax Credit

If you regularly make donations, or are looking to start, we can help you organize your CDTC tax information. Contact one of our experienced accountants for more information.

Is it Ever TOO Late to File Taxes?

a-business-owner-checker-her-watch-while-on-her-way-to-fule-taxes

Whether you owe money to the government, or are expected a refund on your taxes, it can be too late to file your taxes.

The deadline for filing taxes in Canada is April 30th. If that date falls on the weekend it is then moved to the next business day. While you can file your taxes any time throughout the year, there are certain consequences for filing late.

These consequences depend entirely on whether or not you owe taxes to the CRA (Canada Revenue Agency) or if the CRA owes you a refund. Either way, filing late can cause serious disruptions in your finances.

If You Owe Money

If you owe money, and do not file your taxes or file them late, you can face a hefty penalty on the amount owing.

When you file late, or not at all, the CRA charges compound daily interest starting on the day after the due date (usually May 1st) on any unpaid amount. This includes any unpaid amounts from previous years.

The penalty for filing late is 5% on the total amount owing plus 1% for each month the return is late. This interest is calculated up to 12 months past the due date.

For example, if you owe $10 000 and file your taxes 5 months late, the CRA will charge 5% interest on the owing amount plus an additional 5% (1% for each month late). This means you will ultimately owe $11 000 on your taxes.

If You Are Owed Money

If you have money coming your way, you have up to 10 years to complete your return and receive your refund. Beyond that deadline, your refund is lost and cannot be claimed.

However, filing late even when you are receiving a refund may cause delays with your spouse or common-law partner if their refund depends on information from your return.

Another delay can occur if you receive benefit payments, such as the Canada Child Tax Benefit or the Working Income Tax Benefits, or a GST credit. Your payments may be interrupted since your eligibility is determined by your reported income.

Finding Out if You Owe Money or Not

In order to determine which set of consequences you could potentially face, you need to know whether or not you will be owing money to the government. You can do this one of 3 ways:

  • Calculate your taxes via government provided forms.
  • Use online software to calculate your taxes.
  • Have a company provide a free estimate.

However, if you are taking the time to fill out the necessary forms to determine whether or not you owe money, you may as well file the taxes. Even if you do owe, delaying the inevitable will only increase the interest on the amount owed.

Even If You Owe Money, You Should File As Soon As Possible

Despite whether or not you can pay the owing amount by the due date, you should file your taxes on time. Luckily, the CRA can work out a payment arrangement so you can make smaller payments over time until your debt is paid.

If you don’t, you are looking at that accruing interest on the unpaid amount beginning immediately after the tax filing deadline.

While ignoring the problem may seem like a good way to make it go away, letting your taxes sit in limbo will only make matters worse down the road – whether you end up paying large interest rates or lose out on GST credits and benefit payments.

Not Sure What to Do?

Contact us today to speak with a dedicated professional who will be more than happy to address your current situation and determine your tax-related needs.

Is There a Penalty for Filing Taxes Late if You Owe Nothing?

a-blue-mouse-sitting-on-a-stack-of-late-tax-return-documents

In Canada, there are no fees or penalties if you file your taxes late – as long as you don’t owe anything.

The main consequence of filing late when you owe nothing is a delay in receiving any returns you are owed. The CRA (Canada Revenue Agency) simply holds your refund until you do file. Filing late may also cause delays with spouses and common-law partners in which the calculation of a tax refund depends on information from your return.

Also, if you receive benefit payments, such as the Canada Child Tax Benefit or the Working Income Tax Benefit, your payments may be interrupted since your eligibility is determined by your reported income.

Alternatively, there are serious financial consequences to filing late, or not filing at all, if you owe money on your taxes.

Tax Filing Deadline

Canadian tax returns for any specific year must be filed by April 30th of the next year. The only exception are returns for self-employed individuals, who have until June 15th of the following year.

Late Filing Penalties

If you owe money on your tax return, and file late or not at all, the CRA will charge compound daily interest starting on May 1st on any unpaid amounts. This includes any unpaid amounts from previous years.

The penalty for late filing is 5% on the total amount owing plus 1% for each month the return is late up to 12 months.

For example, if you owe $10 000 and file your taxes 5 months late, the CRA will charge 5% interest on the owing amount plus an additional 5% (1% for each month late). This means you will ultimately owe $11 000 on your taxes.

Tax Payers Relief Provision

Life happens and filing previous tax returns, or paying any taxes owed, may be hindered by unfortunate life situations. The CRA administers legislation called the “Tax Payers Relief Provision” that gives the CRA discretion to:

  • cancel or waive penalties or interest,
  • accept late tax filing,
  • reduce the amount owed.

This provision can apply to taxpayers who have filed late due to extreme circumstances, the inability to pay or financial hardship. These exceptions are granted based on review of individual cases by a CRA agent.

This means that just because you are having a hard time filing or paying your taxes doesn’t mean you will automatically be granted this provision. You must prove your situation to the CRA.

What to do if Your Taxes are Late

Even if you’ve missed the filing deadlines, it is extremely important that you file your taxes anyway! Ignoring the problem does not make it go away and the sooner you file, the less you have to pay in interest penalties.

If you owe on your taxes but cannot pay by the due date, you can work out a payment arrangement with the CRA so that you can make smaller payments over time until your debt and interests are paid.

The CRA will grant a payment arrangement if you can show that you have tried to pay the debt by borrowing money or reducing your expenses. They may require proof of your income, expenses, assets and liabilities.

Should you miss a payment during the payment arrangement, the CRA may revoke the arrangement.

Have questions about filing your taxes late or on time? Contact us for more information!

How To Work With The CRA To File Tax Returns From Previous Years

Computer-chair-and-desk-full-of-filesWhatever the reason may be, sometimes people fail to file their tax returns on time, or in some extreme circumstances, ever! Failure to submit your tax return can have some nasty consequences, including hefty fines and penalties. If you find yourself in this situation know that not all hope is lost; the good news is that there is a way to file tax returns from previous years in Canada. However, how you handle the situation will depend on your circumstances. Read on to learn about what options you have if you need to file tax returns from previous years.

Scenario 1: You Think You Might Owe the CRA Some Money

If you believe that you will owe money to the Canada Revenue Agency (CRA), it’s best to file your late taxes sooner rather than later. As mentioned above, you risk facing sizable penalties and interest charges on any unpaid tax debt. The longer you wait to file, the more you’ll owe. Don’t think just because the CRA hasn’t contacted you that they’ve forgotten you – eventually they will come to collect. So what do you do?

  1. Speak to a professional. A tax accountant can help you through the process of sifting through paperwork and organizing it to submit to the CRA. They can also give you advice on any penalties that you might face.
  2. Ask about the Voluntary Disclosure Program. The CRA has created a program called the Voluntary Disclosure Program which provides Canadians a second chance to correct their taxes or submit any returns that were never filed. There are certain conditions that must apply, but if you qualify for the program, you can get relief from prosecution and certain penalties.

Scenario 2: You Don’t Think You Owe Any Money

Even if you are quite sure that you don’t owe the CRA any money, it’s still important to file your tax returns each year. Failure to do so could mean that you’re missing out on credits and benefits that could end up with the CRA giving you money! Examples of these include GST credits and child benefit payments.

Unless you are 100% sure you don’t owe any money, it’s still worth it to chat with a tax professional before filing to ensure you have a good understanding of your situation. Otherwise, it’s as simple as submitting the tax return late. The CRA allows you to use the same methods for filing that you would use to file your return on time. You can use a tax preparation software, mail in a return prepared by a professional, or complete the CRA’s General Income Tax and Benefit Package and mail it in. If you don’t owe any money, there are no penalties for late filing.

Searching For Tax Help?

Have you let your tax filings slip? Don’t worry! The team at Liu & Associates can help. Give us a call today to schedule an appointment to speak with one of our tax experts.

 

Photo by rawpixel on Unsplash

COMPANION CREDIT: Can Pet Expenses be Tax Deductible?

can pet expenses be tax deductibleEveryone thinks their pet is the best… and they are right! This is common knowledge for most animal lovers and owners, but can your animal companion actually earn you tax credits? The short answer is no: Bella, Fluffers or Mr. Pickles likely does not qualify, no matter how good they are at cuddling or looking cute. Still, there are some cases where a portion of buying, training or feeding an animal can be used as a deductible. Keep reading for Liu & Associates’ guide to some of these benefits!

ANIMAL THERAPY OR SERVICE ANIMALS

Usually listed under medical expenses on income tax forms, you may qualify for benefits or credits if you or a dependent requires the assistance of an animal. Consider submitting the necessary receipts if you pay for regular animal therapy or the purchase, training and upkeep of a service animal.

FARM ANIMALS

If you own livestock, herding animals or guard animals in order to operate a business, you very likely can claim a portion of their initial purchase as well as costs of caring for them. Optimizing your tax return is vital for the successful operation of ranches and farms of any size or scale, so do not overlook the benefits and credits available to you.

ANIMAL TRANSPORTATION

Moving residences is one of the rare cases where your family pet(s) could earn you an income tax credit. Since moving means your pet(s) and the necessary supplies need to come with you, there are some accommodations for reporting any related costs. Also: if your business relies on transporting your animals, a portion of your fuel and maintenance costs should always be claimed as deductible.

CHARITABLE DONATIONS

If you give to shelters, rescues or other non-profit animal welfare organizations, always request a tax receipt when eligible. A charitable donation is one of the easiest ways to express your love for domestic animals while earning income tax credit. Costs related to fostering and sponsoring animals for certified organizations may also qualify.

JOBS WITH DOGS

Not just limited to dogs, animal ownership is a multibillion-dollar, worldwide industry– there are countless industries and professions that thrive within it. Always claim any eligible expenses directly related to your job! For example: a dog walker can claim a portion of their fuel and maintenance costs, if they use their personal vehicle to transport dogs to and from their clients’ homes.

The five scenarios outlined above are only some of the ways owning or caring for an animal could lead to income tax deductions, credits or benefits. For a full understanding, contact or visit Liu & Associates today with any issues, complications or concerns!

7 Most Forgotten Tax Credits, Benefits and Deductions

7 most forgotten about tax credits and deductions

 

While freelancers and business owners may be quite familiar with tax credits, benefits and deductions– it is no guarantee that you are getting everything that could be owed to you. Also, these opportunities often apply to anyone filing taxes… even if they did not earn any professional income in a given year. Keep reading for our top seven most forgotten and overlooked tax credits, benefits and deductions!

 

#1: Income-related costs

No matter how you earn your living, if you make taxable income– you are eligible to claim certain costs incurred in pursuit of it. While self-employed taxpayers are familiar with the many ways to claim a tax credit, you should not overlook them if you work for an employer. Commuting costs, business lunches and qualified expenses are just some the more commonly claimed credits.

#2: Mandatory expenses

If your profession requires you to pay for certain privileges or qualifications, you may very well be able to claim all or a portion as an income tax credit. Examples of such expenses are union dues, licensing exam fees and professional certification payments.

#3: Interest paid on student loans

This one is easier to remember, as the national and provincial student finance authorities issue tax forms to anyone paying back student loans. To make sure you do not miss out on these deductions: always keep your current mailing address and contact information on record.

#4: Credits for parents

Parents are busy people! It is understandable why taxes are not at the front of your mind, but credits and benefits can mean more money to raise your family. Always file your taxes to qualify for annual benefits for dependent children and be sure to review eligible credits related to childcare expenses.

#5: Medical costs

Tax credits can be earned through your own disability, the disability of a dependent, injury or illness, dietary requirements and many other conditions. Your health should be your first priority, so make sure you file your income tax by the deadline every year. The burden of your medical costs can be reduced by keeping your information current and providing the required documents.

#6: Moving deductions

Have you moved this year? Did you hire movers, rent a truck or use your own vehicle to transport your belongings? You are likely eligible to claim income tax credits for a percentage of your expenses– businesses may also qualify!

#7: Homeowner credits

Owning a home means you have a lot of responsibility, but just like maintaining and up keeping the property: your finances should always be in order. This does not mean paying your mortgage in record time, but it does mean taking advantage of every credit and benefit available to you. There are government programs that reward first-time owners, as well as those renovating or upgrading their existing homes.

The seven tax credits, benefits and deductions above are just a few of the most commonly forgotten– contact or visit Liu & Associates today for a comprehensive review of your eligibility.