544 University Park Drive
Regina, SK S4V 2Z3

Phone: 306-757-3261
Fax: 306-347-0823
sandraj@sandrajacksoncga.com

544 University Park Drive, Regina, SK S4V 2Z3
Phone: 306-757-3261 | Fax: 306-347-0823 | sandraj@sandrajacksoncga.com

Our Newsletters

Administrative measures - COVID-19 (September 2020)
The Government temporarily suspended some programs and services, including many collection and compliance activities, to support Canadians through the COVID-19 pandemic.
In a commitment to resuming business activities, some of the CRA’s programs and services will return as of September 2020. Click here to get details on CRA’s resuming business activities.
Business measures - COVID-19 (September 2020)

Canada Emergency Wage Subsidy (CEWS)
CEWS updated for July through November 2020
Eligible employers who had any drop in revenue can now qualify for the wage subsidy, starting with the claim periods that began July 5.
Changes to CEWS as of claim period 5:

  • the subsidy rate varies, depending on how much your revenue dropped
  • if your revenue drop was less than 30% you can still qualify, and keep getting the subsidy as employees return to work and your revenue recovers
  • employers who were hardest hit over a period of three months get a higher amount
  • employees who were unpaid for 14 or more days can now be included in your calculation
  • use the current period’s revenue drop or the previous period’s, whichever works in your favour
  • for periods 5 and 6, if your revenue dropped at least 30%, your subsidy rate will be at least 75%
  • even if your revenue has not dropped for the claim period, you can still qualify if your average revenue over the previous three months dropped more than 50%
  • the maximum base subsidy rate is 60% in claim periods 5 and 6
  • the maximum base subsidy rate will begin to decline in claim period 7, gradually reducing to 20% in period 9

For more details on how to calculate the CEWS click here

Income tax filing and payment deadlines: (August 19, 2020)
Corporations

  • Filing date for the current tax year
  • June 1, 2020 – Applies to corporations that would otherwise have a filing deadline after March 18 and before May 31, 2020 (September-October 2019 year-ends)
  • September 1, 2020 – Applies to corporations that would otherwise have a filing deadline on May 31, or in June, July, or August 2020 (November 2019 – February 2020 year ends)
  • Payment date for taxes owing and installments
  • September 30, 2020 – Applies to balances and instalments due on or after March 18 and before September 30, 2020. Penalties and interest will not be applied if returns are filed and payments are made by September 30, 2020.

For further information re: deadlines for registered charities, trusts and interest and penalty relieve click here

Canada Emergency Commercial Rent Assistance (CECRA)
CECRA provides relief for small businesses experiencing financial hardship due to COVID-19.
Over the course of the program, property owners will reduce rent by at least 75 % for the months of April, May, June, July, August and September for their small business tenants. CECRA will cover 50 % of the rent, with the tenant paying up to 25 % and the property owner forgiving at least 25 %.
To apply for CECRA click here

Individual tax measures - COVID-19 (September 2020)

The Canada Emergency Response Benefit (CERB) gives financial support to employed and self-employed Canadians who are directly affected by COVID-19.
If you are eligible, you can receive $2,000 for a 4-week period (the same as $500 a week).
If your situation continues past 4 weeks, you will need to apply for the CERB again. You may re-apply for up to a total of 28 weeks. For detailed information and to check your eligibility click here

Income tax filing and payment deadlines: (August 19, 2020)
Individual Income Tax

  • Filing date for 2019 tax year – June 1, 2020
  • Payment date for 2019 tax year – September 30, 2020 (further extended as of July 27th)

Self-employed and their spouse or common law partner

  • Filing date for 2019 tax year – June 15, 2020
  • Payment date for 2019 tax year – September 30, 2020 (further extended as of July 27th)
COVID-19 tax measures - overview (April 2020)

The current pandemic has changed the lives of Canadians in innumerable ways, and the tax system has not been exempt from those changes. In fact, since we are currently in what would in normal circumstances be the peak of the filing, payment and return processing season, the usual tax-related obligations which apply to both individuals and businesses have been altered or extended in a number of ways to accommodate current realities.

In addition to providing extensions of time with respect to filing and payment obligations, the federal government has increased a number of benefits which are delivered, at least in part, through the tax system. As well, new benefits intended to mitigate the economic impact of the pandemic have been created.

This issue of the Newsletter summarizes the changes and new programs which affect both individuals and businesses in Canada. As is the case with most things right now, each of these is subject to change as the federal government determines what is needed as the situation evolves. The information below is current to April 1, 2020 and more information on these changes and any future ones can be found on the government of Canada website at https://www.canada.ca/en/department-finance/economic-response-plan.html.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

What to do when you can't pay your tax bill (March 2020)

Most taxpayers sit down to do their annual tax return, or wait to hear from their tax return preparer, with some degree of trepidation. In most cases taxpayers don’t know, until their return is completed, what the “bottom line” will be, and it’s usually a case of fearing the worst while hoping for the best.

Most taxpayers are, of course, hoping for a refund – the bigger the better. A lot would be happy to find that at least nothing is owed to the Canada Revenue Agency (CRA), or that an amount owing is not significant.

The worst-case scenario, for all taxpayers, is to find out that they are faced with a large tax bill and an imminent payment deadline, and that they just don’t have the money to make the required payment by that deadline. For those who don’t have the means to pay a tax bill out of existing resources, that likely means borrowing the needed funds. And, while that will mean paying interest on the borrowing, the interest cost incurred will likely be less than that which would be levied by the CRA on the unpaid tax bill.

If a tax bill can’t be paid in full out of either current resources or available credit, the CRA is open to making a payment arrangement with the taxpayer. While, like most creditors, the CRA would rather get paid on time and in full, its ultimate goal is to collect the full amount of taxes owed. Consequently, the CRA provides taxpayers who simply can’t pay their bill for the year on time and in full with the option of paying an amount owed over time, through a payment arrangement.

There are two avenues available to taxpayers who want to propose such a payment arrangement. The first is a call to the CRA’s automated TeleArrangement service at 1-866-256-1147. When making such a call, it is necessary for the taxpayer to provide his or her social insurance number, date of birth and the amount entered on line 150 of the last tax return for which the taxpayer received a Notice of Assessment. (For taxpayers who are up to date on their tax filings, that will be the Notice of Assessment for the return for the 2018 tax year). The TeleArrangement Service is available Monday to Friday, from 7 a.m. to 10 p.m., Eastern time.

Taxpayers who would rather speak directly to a CRA employee can call the CRA’s debt management call centre at 1-888-863-8657 or can complete an online form (available at https://apps.cra-arc.gc.ca/ebci/iesl/showClickToTalkForm.action) requesting a callback from a CRA agent.

The CRA also provides on online tool, in the form of a Payment arrangement calculator (available at https://apps.cra-arc.gc.ca/ebci/recc/pac/prot/welcome), which allows the taxpayer to calculate different payment proposals, depending on his or her circumstances). That calculator includes interest charges since, no matter what payment arrangement is made, the CRA will levy interest charges on any amount of tax owed for the 2019 tax year which is not paid on or before April 30, 2020. Interest charges levied by the CRA tend to add up quickly, for two reasons. First, the interest charged by the CRA on outstanding tax amounts is, by law, higher than current commercial rates. The rate charged is currently 6%. Second, interest charges levied by the CRA are compounded daily, meaning that each day interest is levied on the previous day’s interest charges. It is for these reasons that a taxpayer is, where at all possible, likely better off arranging private borrowing in order to pay any taxes owing by the April 30 deadline.

Finally, there is one strategy which is, in all circumstances, a bad one. Taxpayers who can’t pay their tax bill by the deadline sometimes conclude that there is no point in filing if payment can’t be made. Those taxpayers are wrong. Where an amount of tax is owed and the return isn’t filed on time, there is an immediate tax penalty imposed of 5% of the outstanding tax amount – and interest charges start accruing on that penalty amount (as well as on the outstanding tax balance) immediately. For each month that the return isn’t filed, a further penalty of 1% of the outstanding tax amount is charged, to a maximum of 12 months. Higher penalty amounts are charged, for a longer period, where the taxpayer has incurred a late-filing penalty within the past three years. In a worst-case scenario, the total penalty charges can be 50% of the tax amount owed – and that doesn’t count the compound interest which is levied on all penalty amounts, as well as on all unpaid taxes. In all cases, no matter what the circumstances, the right answer is to file one’s tax return on time. This year, for most taxpayers, that means filing on or before Thursday April 30, 2020. For self-employed taxpayers (and their spouses) the filing deadline is Monday June 15, 2020. However, for all taxpayers the payment deadline for all 2019 income tax owed is Thursday April 30, 2020.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

Claiming medical expenses for 2019 (March 2020)

The Canadian tax system provides individual taxpayers with a tax credit for out-of-pocket medical and para-medical expenses incurred during the year. Given that such expenses must be incurred at some time by virtually every Canadian, that credit is among the most frequently claimed on the annual return. Unfortunately, however, the rules governing such claims are detailed, somewhat complex and frequently confusing.

Taxpayers who wish to make a claim for the cost of medical expenses must make the following determinations. Which, if any, of the medical expenses incurred qualify for the medical expense tax credit? For what time period should the claim be made? What documentation, if any, is required to support the claim(s) being made? And, finally, which family member should make the claim?

Even the basic “formula” with respect to the amount of medical expenses which may be claimed is not straightforward. That basic rule is that a taxpayer can make a claim for qualifying medical expenses incurred in any 12-month period which ends during the taxation year, to the extent that the amount of such expenses exceeds 3% of net income or $2,352, whichever is less. Each component of that formula clearly requires some explanation.

Qualifying medical expenses
While Canada has a publicly funded medical care system, there is nonetheless a large (and growing) number of medical and para-medical expenses which must be paid for by the individual on an out-of-pocket basis. The more common of these expenses include the costs of prescription drugs, dental care, physiotherapy, medical equipment, and ambulance transport.

However, it is not the case that all such expenses can be claimed for tax purposes, or can be claimed in all circumstances. Where an expense does qualify, additional requirements may be imposed before a claim for such expense can be made. Finally, the question of whether an expense is claimable for tax purposes, and the requirements which must be met, aren’t necessarily intuitive.

To assist taxpayers in that regard, the Canada Revenue Agency (CRA) publishes a very lengthy list of medical expenses which do qualify, together with information on any additional requirements (such as a doctor’s prescription) which must be met in order to make such claim. That listing can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html.

For what time period should the claim be made?
While it might seem logical that only medical expenses incurred during 2019 could be claimed on the return for that year, the rules are actually more flexible that that. Specifically, those rules allow a claim to be made on the return for 2019 for qualifying medical expenses which are incurred in any 12-.month period which ends during 2019.

Taking advantage of that rule requires the taxpayer to identify the 12 month period ending sometime in 2019 during which the greatest amount of qualifying medical expense were incurred.

It’s sometimes the case that it makes better sense, from a tax perspective, to not make a claim in the first year that that claim is available. Take, for instance a taxpayer who must incur significant costs for dental care, with such costs being incurred between October 2019 and March 2020. In order to maximize the claim to be made, it could make sense not to make a claim for the expenses incurred in the fall of 2019 on the 2019 return, but instead to wait and make a claim on the return for 2020 for all costs incurred between October 2019 and March 2020.

There is, unfortunately, no formula or rule of thumb which can be used to determine the optimal 12-month period for a medical expense claim in all circumstances. Rather, the taxpayer must determine, on a case-by-case basis, the optimal time period in their particular circumstances. Tax return preparation software can be helpful in this regard, by running what-if scenarios to determine the optimal tax result.

What documentation is required to support claims made?
It’s obvious that the number and kind of different medical expenses which might be incurred by individuals over the course of the year is virtually limitless. In all cases, the taxpayer must be prepared to support and document the nature and cost of each such expense, as well as the date on which it was incurred. For some expenses, taxpayers must meet additional requirements – most often the need for a doctor’s prescription. As well, in some cases, particular medical expenses can be claimed only by taxpayers who are also eligible for the disability tax credit. A very lengthy list of the expenses which qualify for the medical expense tax credit, and the documentation and other requirements which apply for each, can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html.

Who will make the claim?
Medical expenses incurred by either spouse or any of their minor children can be combined and claimed on a single return. In some circumstances, medical expenses paid by the taxpayer for other relatives may also combined and included in the taxpayer’s claim.

Since only the amount of medical expenses which exceeds 3% of net income or $2,352 (whichever is less) can be claimed, it usually makes the most sense to combine family medical expenses and for a single claim for those combined expenses to be made by the lower income spouse, as long as that spouse has tax payable equal to at least the amount of the credit to be claimed.

It is readily apparent that determining, calculating, and claiming the medical expense tax credit for a particular tax year isn’t an easy or straightforward process. The CRA does publish a separate guide to the rules which govern such claims, and that Guide — RC 4065, Medical Expenses — can be found on the CRA website at https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4065/rc4065-19e.pdf.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

Filing your tax return for 2019 - when & how (March 2020)

Between now and June 15, more than 26 million income tax returns for the 2019 tax year will be filed by individual Canadian taxpayers. The vast majority of those returns will be filed by electronic means, through the website of the Canada Revenue Agency (CRA). A minority will be filed in hard copy, using the paper return, and an even smaller number will be filed using a touch-tone telephone.

While Canadians have a choice of method when it comes to filing their annual return, the deadline by which those returns must be submitted to the CRA isn’t a matter of choice. For the vast majority of Canadian taxpayers, the income tax return for 2019 must be filed with the CRA on or before Thursday April 30, 2020. Self-employed taxpayers (and their spouses) have a little more time, as their returns must be filed with the CRA on or before Monday June 15, 2020,

Another deadline for which there is no leeway is the date by which all taxes payable for 2019 must be paid. That date, for all taxpayers (self-employed and otherwise) is Thursday April 30, 2020. Where payment isn’t made in full on or before that date, interest charges are levied beginning on May 1.

This year, there are five possible methods by which individual taxpayers can file a return for 2019 – EFILE, NETFILE, TELEFILE, paper filing or File My Return (telephone filing). While the filing and payment deadlines are the same, regardless of the filing method used, there are rules and requirements which apply to each such method, as follows.

E-FILE
Based on filing statistics compiled by the CRA, E-FILE is the filing method most often utilized by Canadian taxpayers as, in 2019, just under 60% of individual income tax returns were filed using E-FILE.

There are likely a couple of reasons for that – returns filed by electronic means, through the CRA website, are processed more quickly than returns which are paper filed – a particular benefit to the taxpayer who is expecting a tax refund. As well, where a taxpayer chooses E-FILE, a third party – usually an accountant or tax return preparer – files the return on the taxpayer’s behalf. And, almost always, the E-FILE service provider also prepares the return which they are filing. Consequently taxpayers who use E-FILE don’t have to either prepare or file their own return (although, like all taxpayers, they are responsible for the information provided and claims made on that return).

The majority of Canadians who would rather have someone else deal with the intricacies of the Canadian tax system on their behalf can find information about E-FILE for 2019 tax returns on the CRA website at http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/fl-nd/menu-eng.html That site will also provide a listing (searchable by postal code) of authorized E-FILE service providers across Canada, and that listing can be found at https://apps.cra-arc.gc.ca/ebci/efes/epcs/prot/ntr.action.

NETFILE
Taxpayers who want to enjoy the benefits of filing their tax return electronically but who are willing and able to prepare the return on their own can do so using NETFILE. There are a substantial number of Canadian taxpayers who fit that description – In 2019, just over 9 million individual income tax returns, representing 30% of such returns filed, were submitted using NETFILE.

Most returns filed by individual residents of Canada will be eligible for NETFILE, although there are some exceptions – for instance, a return for someone who declared bankruptcy in 2018 or 2019 cannot be filed using NETFILE. Information on the NETFILE service for 2019 tax returns, including eligibility requirements, can be found on the CRA website at http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/netfile-impotnet/menu-eng.html.

A return can be filed using NETFILE only where it is prepared using tax return preparation software which has been approved by the CRA. While such software can be found for sale just about everywhere at this time of year, approved software which can be used free of charge is also available. A listing of free and commercial software approved for use in preparing individual tax returns for 2019 can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/netfile-overview/certified-software-netfile-program.html.

Paper filing
A much smaller (although still substantial) number of returns were filed in 2019 by taxpayers completing and submitting the tax return form on paper. Specifically, 3.6 million returns, representing 12% of all individual income tax returns, were paper filed.

The CRA website indicates that individuals who paper-filed their 2018 tax return will be sent a copy of the 2019 Income Tax Return and Guide package by mail. Those who do not receive such a package by mail but want to obtain hard copy of the 2019 Income Tax Return and Guide package have a few options.

First, copies of the 2019 tax return and guide package can be ordered online, at https://apps.cra-arc.gc.ca/ebci/cjcf/fpos-scfp/pub/rdr?searchKey=ncp%20, to be sent to the taxpayer by regular mail. Taxpayers can also download and print hard copy of the return and guide from the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package.html. Finally, the CRA has made a “limited” number of tax packages available at Service Canada offices and post offices across the country.

File My Return
In 2019, the CRA reinstated, for some taxpayers, a tax return filing option that was previously discontinued. For several years, taxpayers with simple returns had the option of filing their returns using a touch-tone telephone. That option, now called File my Return service will be available again this year to eligible Canadians with low or fixed incomes whose situations remain unchanged from year to year, even if they have no income to report, so that they receive the benefits and credits to which they are entitled. That option is, however, available only to taxpayers who are advised by the CRA of their eligibility for the File my Return service, and those individuals will have been notified by letter during the month of February 2020.

Free Tax Return Preparation Clinics
Finally, taxpayers who are not comfortable preparing their own returns, but for whom the cost of engaging a third party to do so is a financial hardship, have another option. During tax filing season, there are a number of Community Volunteer Tax Preparation Clinics where taxpayers can have their returns prepared free of charge by volunteers. A listing of such clinics (which is regularly updated during tax filing season) can be found on the CRA website at https://www.canada.ca/en/revenue-agency/campaigns/free-tax-help.html.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

What's new on the 2019 tax return? (March 2020)

The one constant in income tax is change and consequently, while Canadian taxpayers must prepare and file the same form – the T1 Income Tax and Benefit Return – every spring, that return form is never the same from one year to the next.

Some of the changes are the “automatic” result of the indexing of income tax brackets and credit amounts. As the result of such indexing, basic personal credits which can be claimed by most taxpayers increase every year, as do the income brackets which determine the tax rate which applies at each level of income, as both are changed to reflect the rate of inflation.

Changes in tax credit amounts or tax bracket figures are largely invisible to the average taxpayer, as they don’t require any change to the layout or organization of the tax return form, or the process of completing it. The more significant changes are those which provide new credits or deductions to qualifying taxpayers or, conversely, eliminate such credits or deductions which taxpayers might have claimed in previous years. What follows is a listing of some of the changes which will affect a significant number of taxpayers with respect to their 2019 tax situation.

Increased Canada Pension Plan/Quebec Pension Plan contributions
Changes to the Canada Pension Plan and Quebec Pension Plan which were implemented in 2019 meant that working Canadians contributed more to such plans in 2019 than in previous years. The silver lining to such increased contribution amounts is that the non-refundable tax credit which is claimed on the annual return for such contributions will also increase, resulting in a lower overall tax bill for the year.

Canada Training Credit
As of January 1, 2019, eligible taxpayers are able to save $250 per year (to a lifetime maximum of $5,000), with such amount used to calculate the new Canada Training Credit. Savings information provided on the return will be used by the Canada Revenue Agency (CRA) to determine an individual’s Canada Training Credit Limit.

In 2020 and future years, the taxpayer may then be able to claim a Canada Training Credit equal to the lesser of his or her Canada Training Credit Limit for the year, or 50% of eligible tuition and fees paid by the taxpayer to an educational institution in Canada.

Canada Workers Benefit
For several years, the federal government has provided a refundable tax credit – the Working Income Tax Benefit – for lower income working taxpayers. For 2019, that Benefit is replaced by the new Canada Workers Benefit (CWB). The new CWB is claimed on Schedule 6 to the annual return.

Home Buyers’ Plan
The maximum amount which an individual can withdraw from his or her registered retirement savings plan (RRSP) under the Home Buyers’ Plan (HBP) increased from $25,000 to $35,000 for withdrawals made after March 19, 2019. The HBP permits qualifying home buyers to withdraw funds from their RRSP on a tax-free basis, with such funds being re-contributed to the RRSP over several subsequent years, on a prescribed schedule.

Medical Expenses Tax Credit
For expenses incurred after October 16, 2018, certain cannabis products purchased for a patient for medical purposes will be considered eligible medical expenses for the medical expense tax credit.

Zero-emission vehicles
Taxpayers who are self-employed or who claim employment expenses may be able to claim capital cost allowance on zero-emission vehicles. As of 2019, there is a temporary enhanced first-year capital cost allowance of 100% for eligible zero-emission vehicles. In order to qualify for the enhanced capital cost allowance, eligible vehicles must be acquired after March 18, 2019, and become available for use before 2024.

The changes to the income tax return which will be most apparent to taxpayers aren’t any of the substantive tax changes outlined above. Rather, it’s the layout and organization of the form which will look unfamiliar. In previous years, the return package has been comprised of the basic 4-page T1 form, together with numerous supporting Schedules, on which tax payable for the year, or various tax credit or deduction amounts were calculated, with that information then transferred to the T1 form. This year, the CRA has eliminated some of those Schedules by incorporating them into the T1. The result is that the T1 General Form is now 8 pages long.

In part as a consequence of that re-organization of the T1 form, the CRA has found it necessary to change the line numbering on the return. Each line of the return has a corresponding number by which it is identified in the Income Tax Guide. In previous versions of the T1 Form, those identifying numbers were three digit numbers, but they have now been increased to five digits. Fortunately for taxpayers trying to make their way through the new return form, in most cases the numbering change has simply meant adding two zeros to the end of the existing number – for instance line 210 on the 2018 return has become line 21000 on the 2019 form.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

Sandra and Priya Working

Please contact our office for more information on your specific tax or financial situation. We serve Regina and area.