RMR Blog
We understand the topics and issues that most affect your business - here’s what we think about them.
ANYTHING TO DO PRE-JUNE 25, 2024 AS A RESULT OF CAPItAL GAINS TAX INCREASES?
This week the government announced significant changes to the taxation of capital gains. The government is giving taxpayers a 10-week window until June 25, 2024 to decide if they want to realize capital gains now at the “old inclusion rate” of 50% – or wait for the 66.67% inclusion rate applied. The purpose of this newsletter is to help clients think about this question: should I trigger gains prior to June 25 before the new rates apply?
2024 FEDERAL BUDGET HIGHLIGHTS
The 2024 federal budget announced tax measures that impact entrepreneurs and owners of investment holding companies. The mostsignificant measures increase the effective tax rate for capital gains tax for many taxpayers from roughly 26% to 35%. The capital gains increases are effective June 25th, providing taxpayers the opportunity to crystallize unrealized capital gains prior to the increase. An important exception to the increased rate is that individuals maintain the old rate for gains of up to $250,000 per year.
CLIENTS SHOULD CAREFULLY CONSIDER TRUST REPORTING AFTER NEW RULES AND SEVERE PENALTIES ANNOUNCED
Penalties now apply in scenarios where you hold assets on behalf of someone else and you don’t report this relationship to Canada Revenue Agency. A wide variety of trust agreements detailed below are now liable for penalties equal to the greater of $2,500 or 5% of the fair market value of property held by the trust.
Future First Time Home Buyers Should Register for Tax-Free First Home Savings Account (FHSA) by December 31
The FHSA was introduced early in 2023 and allows holders to save up to $40,000 tax-free over the lifetime of the account. Any potential first-time home buyers should be sure to register before December 31 because of the way the plan design permits carry over of unused room. Even if the contributor doesn’t make a contribution in 2023 the $8,000 annual contribution limit carriers over meaning that $16,000 can be contributed in 2024.
WELCOME CHANGES TO UNDERUSED HOUSING TAX ANNOUNCED IN FALL ECONOMIC STATEMENT
In yesterday’s fall economic statement, welcome changes were introduced to the underused housing tax for 2023 filings. The changes will not impact the 2022 UHT return but will impact filing obligations for 2023 onward. Additionally, the failure to file penalty is reduced for all UHT returns to $1,000 (from $5,000) for individuals and $2,000 (from $10,000) for non-individuals.
MANY HELPFUL SR&ED PROGRAMS ARE AVAILABLE FOR ENTREPRENEURS
There are some interesting tax credits that tend to fly under the radar for most of us. If your business is currently in a phase of exploratory research and development, innovation, expansion or growth, there are funding programs you may be eligible for.
NEW AMT RULES MUST BE CONSIDERED BY HIGH INCOME INDIVIDUALS WITH LOW TAX BILLS
New Alternative Minimum Tax (“AMT”) rules have been designed to increase tax paid by high income Canadians who currently shelter their taxable income through deductions. Although AMT has been around for many years, these new rules will be significantly more expensive for a small portion of high income earners.
NEW REPORTING REQUIREMENTS FOR BARE TRUSTS
If you, or entities that you manage, hold assets on behalf of others you must consider the new bare trustee filing requirements. Most commonly these arrangements exist in real estate ownership where bare trust corporations are formed to take title of real estate that is being held for the benefit of multiple owners.
HOW TO IDENTIFY AND MITIGATE BUSINESS FRAUD RISKS IN 2023
Many of our clients are business owner-managers, and part of being in that position requires them to place a significant amount of trust in the leaders that surround them.
Important news for developers in the apartment, nursing home and student housing sectors with projects commenCing after September 14, 2023 and until December 31, 2030
On September 14, the government of Canada announced a temporary elimination of the federal portion of the HST for all newly constructed rental housing, including apartments, student housing and senior residences. The government of Ontario followed suit with the announcement that it will also eliminate its share of HST.
ONTARIO-MADE MANUFACTURING TAX CREDIT OFFERS UP TO $2 MILLION IN TAX RELIEF
The Ontario-made manufacturing investment tax credit, established in March 2023, enables the province’s manufacturers to receive up to $2 million annually to “grow, innovate, become more competitive and create jobs.”
Short CEBA loan extension announced, action required for those not intending to repay by January 18, 2024
Almost a year ago the government extended the small business pandemic loan program (CEBA), to December 31, 2023.
CRA LIKELY TO SEE PAST SIX YEARS OF SHOPIFY MERCHANT TAX RECORDS
The CRA has requested the past six years of merchant tax records from Shopify, with the Minister filing a Notice of Application in April.
TAX CHANGES FROM THE 2023 FEDERAL BUDGET
Let’s start with the big picture: no changes in personal tax rates, corporate tax rates, the capital gains inclusion rate or the use of the capital gains exemption. So, for many business owners the budget will cause little to no change in tax planning.
Canadian residential property owners must consider new underused housing tax filing requirements
A new underused housing tax (UHT) will result in a 1% tax on the value of certain vacant or underused residential property. Although these rules will only cause a tax liability for a small fraction of the owners, it will result in many more needing to file a UHT return.
CanExport program worth a look if interested in entering international markets
If you are interested in expanding your international business development opportunities, the CanExport Program may be worth a look. The government program provides funding to companies with 500 or fewer employees and between $100,000 and $100 million in revenue - frequently funded activities include trade show participation, creation of marketing tools, digital marketing, IP protection, and related consulting services.
A few tax efficient ways to compensate employees
In today’s competitive environment for attracting employees, employers are smart to find benefits that can be received tax free.
CANADA DIGITAL ADOPTION PROGRAM OFFERS SUPPORT FOR NEW MARKETING INITIATIVES
If your business would benefit from implementing or improving on a digital marketing plan, the governments newly introduced Canada Digital Adoption Program may be worth considering.
Focus on long-term results when assessing your investment PERFORMANCE
Short term investment performance generally gets most of the headlines, but it’s the long term that matters.
CONSIDERATIONS FOR TRUSTEES AS TRUSTS APPROACH THE 21ST YEAR
Family trusts are required to pay tax on unrealized capital gains that exist 21 years after the trust was created. Trustees may implement one of a few options to avoid this nasty result. Also, it’s sometimes a good idea to consider the issue a few years early if you think that the value of the assets is lower now than they might be in the 21st year.
TAX SMART CHARITABLE GIVING
Many of our clients donate to worthy causes throughout the year and should be sure to utilize the Charitable Donations Tax Credit.
Determining whether a business owner should purchase a vehicle personally or corporately
When it comes time to acquire your next vehicle careful consideration should be given to whether it should be purchased corporately or personally. Some general rules of thumb can help guide you to making the right big picture decision.
Toronto residents should be certain to file new Vacant Home Form by February 2
There is a new tax in the city of Toronto, the vacant home tax.
A FEW YEAR-END TAX REMINDERS
NOVEMBER 29, 2022
As the calendar year end approaches a few quick tax reminders.
FIRST TIME HOME BUYERS NOW ELIGIBLE FOR TAX-FREE FIRST HOME SAVINGS ACCOUNT
NOVEMBER 28, 2022
Good news for first-time home buyers and parents looking to help their kids - as of January 1, 2023 they are eligible for the newly introduced Tax-Free First Home Savings Account, which allows account holders to save up to $40,000 tax-free over the account’s lifetime.
NOTABLE ITEMS IN ONTARIO’S FALL ECONOMIC STATEMENT
The Ford government released their Fall Economic Statement on Monday, with a couple of notable items announced effecting entrepreneurs.
Snowbirds Should Beware of Penalty Risk for Not Filing Correct Forms with the IRS
If you spend more than four months a year in the U.S., it is very important to consider whether you should file forms with the US tax authorities. There is significant penalty risk associated with not filling out the correct form.
If Considering Winding Up a Trust, Now is the Time
November 9, 2022
The Minister of Finance has tabled draft legislation that proposed new trust reporting rules requiring certain information on each trustee, beneficiary, settlor and protector of a trust. The upcoming changes will also require more trusts to file an annual income tax return, and bare trusts will also be subjected to the new reporting rules.
Methods of Tax Payment after CRA Changes Requirements over $10,000
NOVEMBER 4, 2022
Effective January 1, 2023 the CRA will charge a $100 penalty for each tax remittance over $10,000 paid by cheque or mail. To avoid penalties options 1 and 2 below should be used for all payments over $10,000. For payments under $10,000 all 4 options work.
TAX LOSS SELLING
NOVEMBER 2, 2022
As we approach the end of the year, investors should consider whether it makes sense to sell stocks at a loss and then use the loss to save tax otherwise payable. With the stock market down as much as it is this year, unrealized losses are plentiful and it may make sense to recover taxes paid from gains in the previous three years. Different considerations apply depending on whether you sell the stock personally or inside your corporation.
A few Simple Ways to Reduce the Interest Rate Squeeze
OCTOBER 21, 2022
There are plenty of complicated decisions to make in today’s environment of rising rates and its resulting impact on stock markets and investment decisions. But some adjustments are straight forward.
2022 Federal Budget Highlights
APRIL 8, 2022
The 2022 federal budget focuses on new spending in a wide variety of areas including housing, health care, job measures, and environmental programs. Corporate income tax increases were restricted to the banking and life insurance industries. There are no immediate increases in personal taxes, including no changes to the capital gains rates. However, the budget does mention potential future additional personal tax measures and possible changes in minimum taxes that could impact high income individuals currently paying low tax.
Covid Program Assistance for Business
January 20, 2022
The Canada Emergency Wage Subsidy (CEWS) ended effective October 23, 2021 and has been replaced by a myriad of new programs designed by the federal government to provide more targeted support to those most directly affected by shutdowns. There are now three separate programs in play and special ways to qualify for these programs that were added as a result of fresh government restrictions. The patchwork of targeted programs is aimed at relatively narrow segments and fact situations. For qualifying organizations, these programs provide significant reimbursement for wages and rent.
Employers that have increased payroll post April 10, 2021 should read this
SEPTEMBER 13, 2021
Many businesses are stepping up their growth plans. In providing help during this period of recovery, the Federal government has introduced The Canada Recovery Hiring Program (CRHP) which will aid some businesses with their employment costs.
2021 Ontario Budget Highlights and
Announcement of Federal Budget Date
MARCH 25, 2021
Yesterday Ontario presented their budget which did not include any major tax changes but instead focused heavily on spending, with projected deficits of $20 - $30 billion in each of the next three years.
Update on Government Assistance
MARCH 8, 2021
With some decent luck and hopefully a solid vaccine roll-out, we hope the government assistance will come to a close this summer. But for now, there is ongoing help for companies with declining revenue.
A few year-end items
DECEMBER 21, 2020
All the best to everyone for a great holiday season! It's been a challenging year and we have learned a lot about the entrepreneurial spirit in Canada through our amazing clients and friends.
2020 Federal Economic Update Highlights
DECEMBER 2, 2020
The federal economic update was released Monday. Surprisingly, there were no substantial personal or corporate tax measures introduced. The economic update extended some COVID-19 measures and touched upon a few corporate tax measures.
2020 Year-end Tax Planning
NOVEMBER 23, 2020
As 2020 draws to a close we wanted to remind you that some COVID programs are still available to support both you and your business. Included in these changes are welcome revisions to the rent subsidy and home office expense guidelines.
2020 Ontario Budget Highlights
NOVEMBER 6, 2020
The anticipated 2020 Ontario budget was released today. Surprisingly, there were no substantial personal or corporate tax measures introduced. The budget reiterated the COVID-19 measures the Ontario government has put in place to date and touched upon a couple of new ones.
New wage subsidy rules for July 5 and onward
JULY 20, 2020
Tax changes are coming and most of them won’t be good news! Therefore, it's important to take advantage of the last tax win for entrepreneurs that we may see for some time.