New Educators Tax Benefit

A new school year has begun!! Who is more excited? … the children or parents? Well, now the childhood educators can be excited too!

The Government of Canada has introduced a new Eligible Educator School Supply Tax Credit starting for the 2016 Income Tax year.

This new credit will apply to educators who hold a teachers certificate or have a childhood education certificate or diploma in the applicable province. With employer certification, these eligible educators may claim a 15% refundable tax credit for purchases of up to $1000 in school supplies for the children.

For more details on this new credit, the eligible supplies, and tax filing requirements, click here to CRA web site.

On-line access

Today’s society is driven more and more toward a paperless world, from e-mails, social media, shopping, banking, receipt of bill, bill payments, and even event registrations. Dealing with Canada Revenue Agency is no different.

As you may know, CRA is setting up individuals with on-line access for their personal and business accounts. There are many things you can have access to, view, and manage from your access account.

For individual personal tax matters, you are able to have easy access to you balances owing, benefit payments, RRSP limits, Notice of Assessment, prior personal Tax Returns, direct deposit details, and set up for e-mail notifications … just to list a few.

For business accounts, this would include some of the above but also access to details regarding your Corporate tax, GST and payroll accounts.

Not only is this easier than trying to contact CRA over the phone, you are able to set up representatives for your account also, such as your bookkeeper, accountant, or Income Tax preparer who you authorize to deal with certain matters on your behalf – see RC59. By filling out a RC59, you are able to delegate who you authorize to represent you with CRA matters, what you are authorizing, and level of authorization you are allowing. Your on-line access account allows you to easily change this.

If you do not already have a CRA on-line access account, it is still recommended that you self-register through the CRA web ‘My Account’ or ‘My Business Account’. Once you are registered with your account, be sure to review your account and make any necessary changes. Particularly with the RC59 authorization, ensure that representative details and any applicable expiration dates are still valid.

 

Tax filing prep

Another income tax season is upon us! As have mention to my clients each year, the first step to being prepared is to collect all of your Income Tax documents and information and compare it to the prior year in order to determine if there is still something that you may be missing or need to gather, such as your medical expenses.

However, keep in mind that CRA also implements various changes to the Income Tax Return schedules and calculations which may affect your result. Some things have changed again for 2015 Income Tax Returns, such as the federal and provincial tax amounts, Child Fitness Credit, and the non-refundable tax credit for children under 18.

Research applicable changes on the CRA website, or ask your Income Tax professional so that you can also be prepared for what changes may have an effect on your result.  For future tax years,there has also been rumor of eliminating the Family Tax Cut credit, and implementing the Home Renovation Tax Credit, so keep your eyes and ears open for any future news on these and any other changes that you may need to be aware of.

Also, if you have not already, sign up with CRA on-line access account to have instant access to your Income Tax matters such as your Notice of Assessments (NOA). Your NOA may provide important details which may affect your future tax years, therefore it is helpful to ensure that you provide a copy of your NOA each year to your Income Tax Preparer.

As usual, please feel free to leave a comment and share. We’d love to hear from you.

Balance

Many people, particularly business owners, feel the effects of burn-out. Life happens, and periodically feeling ‘stretched thin’ is normal. However, this overdrive being a constant in your life only means the risk of failure or ‘dropping the ball’, and ultimately unhappiness. I’m sure you have heard more than once about the notion of needing life balance. If you are not achieving it, there are some things to consider.

#1: Life balance does not necessarily mean equal time for work/family and leisure. Everyone’s life and task thresholds are different. The key is to accomplish your own boundaries and schedule so that you do not reach burn-out.

#2: Being busy or taking on more does not equal success. Taking regular time to recharge helps to keep your body and mind focused and happy, which results in success. This means taking your lunch break away from the desk, sticking to work hours, leaving work at work, and taking vacation days. More importantly, understand that taking on an extra task or event does not mean you are considered more important or successful.

#3: Social and personal events should be kept at the same level as work commitments (Eg: picnic, celebration party, exercise routine, vacation days, home renovation projects, etc). Stick to these plans, and avoid work related thoughts or habits that will distract you (Eg: checking e-mails, calls, or phone messages). These non-work related commitments are just as important to your happiness and being accomplished.

#4: It is okay to say no. Especially if it means risk to your existing obligations, your own time, or your health. Prioritize and delegate when things become busy. You are not going to be any good to anyone if you are overwhelmingly unfocused or become ill because of burn out.

It may take time and perseverance to achieve, but it is possible to find that balance that works for you. Please like and share these messages with others, and don’t be shy to comment. I look forward to hearing from you.

RRSP Contribution?

As this next Income Tax season approaches, you may be considering an RRSP contribution before the upcoming deadline.

Regardless, I always suggest to make a list of your tax related details and compare them to the previous year. This allows you to be organized and prepared for filing, and provides a general overview of the possible tax results so that you can determine if any RRSP contribution will be a good choice.

Keep in mind that although investment is important, an RRSP contribution is not necessarily the best option for everyone. Taking into consideration your current and anticipated life style, goals, contribution limits, and overall tax implications, a spousal contribution, TFSA, or other investment means may be a better option for you.

Personal or spousal RRSP contributions made between March 3, 2015 and February 29, 2016 will be applicable for your 2015 Income tax Return. Consult your financial adviser to determine the best option for you.

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Income

Inflation, inflation, inflation!! Have you ever sat back and contemplated the ridiculousness of what things cost now compared to 20 years ago? Or even 10 or 5 years ago? And ironically things are produced cheaper and aren’t made near the same quality, thus don’t last as long.

Business overhead costs increase due to such things as fuel prices and minimum wage increases, which in turn causes them to increase their selling prices. With this, the value of money actually becomes less as you aren’t able to buy as much as you used to. Yet the standard of living goes up, therefore there is this continuous feeling of requirement to increase your income. Quite the weird wheel of life, isn’t it?

Before you consider asking for a pay raise, boosting your business income, or looking forward to that pension, consider the tax implications. It has been said that you can never make enough money, however making the best of your money and sending as little as possible to the Government is something that takes regular monitoring.

The first thing to consider is educating yourself on the Income Tax bracket thresholds. Is that $1.00 per hour raise (or approx $2000/year income increase) going to put that income into a higher tax bracket, thus you giving a higher percentage of it to the government? Perhaps you could avoid the next tax bracket with an RRSP contribution? What portion of your income can you spilt with your spouse? What are the other things you could consider that affect your ‘taxable income’?

Everyone’s situation is different, therefore some options work better for some than others. Be prepared with assistance from your Income Tax professional and financial advisor. Refer here for the most recent 2016 Indexation adjustment for personal income tax and benefit amounts.

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Best wishes for you in 2016!

RDSP’s (Registered Disability Savings Plan)

DID YOU KNOW …

Individuals under the age of 60 years who are eligible for the Disabilty Tax Credit, their parents or other legally authorized person to act on the disabled behalf, can apply for a RDSP. This is a long-term savings that is non-taxable until withdrawn (dependant on fund deposit). The plan must be opened before or by December 31st of the year the person is 59 years of age.

Encouraging savings, the Government will match a year RDSP contributions of up to $3500 in additional Disability Grant, and will be paid on contributions made before December 31st of the year the beneficiary turns age 49. The Government will also pay a Canada Disability Savings Bond of up to $1000 for low-income and modest income Canadians, and paid on applications made before December 31st of the year the beneficiary turns 49.

Select HERE or HERE for more CRA details, and THIS SECTION for recent updated information.

 

 

Wishing you all good health and happiness … all year through!

 

Claimable Medical Expenses

DID YOU KNOW …

Canada Revenue Agency has convenient on-line information related to most areas regarding your Personal Income Tax Return. However, not all details are indicated or clear.

One area which I have to frequently clarify is when it comes to medical expenses which are and are not eligible expenses on your income tax return. Not all medical expenses are listed on the CRA web site … even the common ones such as chiropractic, physiotherapy, massage, or parking fees for appointments.

Did you know that home alterations, travel, or moving expenses may be eligible?

My advice is to ALWAYS KEEP RECEIPTS!! If you are not sure if something may be a claimable expense or not, contact CRA directly, or your Income Tax Professional.

Education and Your Future

Well, June has come and gone already! Another school year done as we celebrate the new graduates. On one hand we are cheering “Yeah summer holidays!” while on the other hand we wonder where the past six months have gone.

On the topic of education, and being a mother of a child who is entering into post graduate studies, an article that came upon me was quite intriguing. This article mentioned how there seems a necessity for education for your career, but also stressed the major impact of education loans.

Overall, when putting numbers to paper, the financial implications even within a 10 year time frame is quite substantial. Within the first ten years after a persons’ graduation, a portion of their income is going toward paying this loan instead of their financial future. The implications over this short 10 year time frame actually compounds drastically over subsequent years and affects your financial future right through your retirement years.

There are many other options to consider instead of that education loan. Whether a parent, grandparent, or student, this long term financial implication is definitely something to strongly look into … for yours and loved one’s futures …

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Second opinion

Inquiring minds want to know!! …

Over the years I have been very curious about the differences in tax filing options available to us. Yet again, my interest has been sparked due to more people coming to me asking for 2nd opinions, which ended in different results – some more significant than others.

Whether it’s wrong allocation of tax details, not knowing or using the best tax benefits, human error, or other reasons, my second opinions have proven that you may be at risk of being re-assessed due to errors or maybe loosing out because you paid more taxes than you should have.

If you are curious about your Return, for the month of May 2015 I am offering a FREE second opinion on your previously filed 2014 Income Tax Return. (subject to restrictions)

We thank those of you that are already one of our many great customers. Tell your friends and family! If you or someone you know wants a second opinion, contact Balanced Business Bookkeeping Solutions at 204-268-4433 to schedule a meeting. Let’s see if you have been loosing out!