WINK Calgary prsents Understanding personal tax
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Transcript of WINK Calgary prsents Understanding personal tax
Understanding Personal Tax
Presented by Patty Auger, CPA, CA, CFP
Patty Auger Consulting
Books and records
Personal tax records must be kept for 6 years from the date of filing! EXCEPT…..information relating to long-term transactions such as investments and capital properties until sold or disposed of and/or until a notice of objection or appeal is completed and time for further appeal has expired
Filing deadline…….
April 30th…..or is it….
June 15th?
Interest and penalties
- late filing penalty (5% of balance plus 1% of balance per month to max 12 months; if charged late penalty in prior 3 years, could be 10% plus 2% per month up to 20 months); - balance owing- interest begins May 1st on any unpaid amounts at the prescribed rate (currently 5%)- failure to report income in consecutive years could be 10% of amount failed to report- interest on refunds starts May 31st (or 31 days after file your return or day after you overpaid your taxes) is paid to you at 3%
Understanding taxes payable
INCOMElessDEDUCTIONSequalsTAXABLE INCOMEapply graduated tax ratesCALCULATED TAXES
CALCULATED TAXESlessCREDITSequalsTAXES PAYABLE
Deductions
Reduce income by 100% of amount incurred- RRSP contributions (contribution limit; do not have to deduct in year of contribution)- union or professional dues- child care expenses (limit; T778)- moving expenses (>= 40km)- spousal support payments made- carrying charges and interest expenses- employment expenses
Credits
In most cases, USE THEM OR LOSE THEM- reduce taxes payable by 15% of amount calculated except donations- Amount for Eligible Dependent (if no spouse)- Family caregiver amount (for children<18)- Volunteer Firefighter / Search & Rescue Volunteer- Public transit (monthly or annual passes)- Children’s fitness amount – refundable, $1,000 per child- Children’s arts amount – $500 per child- New home buyer’s amount - $5,000- Adoption expenses - $15,255- Caregiver amount (dependent > 18 years, net income < $20,343,
physical/mental impairment)
Credits
In most cases, USE THEM OR LOSE THEM- reduce taxes payable by 15% of amount calculated except donations- Student loan interest- Tuition, education and textbook amounts (Schedule 11);
maximum $5,000 transfer per child to parent- Medical expenses - > 3% of income before deductions or $2,208- Charitable Donations – 15% of first $200, 29% of all others (do
not have to claim in year donated; can carryforward)- 1st time donor – extra 25% upto $1,000 (2013-2017)
Other Credits
- political donations- Family Tax Cut (Schedule 1A) – maximum $2,000 reduction from taxes payable
Once you’ve filed your return…..
CRA may issue a Request for Information- 30 days to respond
CRA will issue a Notice of Assessment (NOA)- review for completeness- includes RRSP contribution room- can file an objection up 90 days after day of NOA
Tools Available
Canada Revenue Agencyo Website - http://www.cra-arc.gc.cao General Income tax and benefit guide – excellent resource!!o Free preparation software
Federal Tax Rates
2015 2016 Rate Income Rate IncomeFirst bracket 15% $0 - $44,701 15% $0 - $45,282 Second bracket 22% $44,702 - $89,401 20.50% $45,283 - $90,563 Third bracket 26% $89,402 - $138,586 26% $90,564 - $140,388 Fourth bracket 29% $138,587 and up 29% $140,389 - $200,000 Fifth bracket NA 33% $200,000 and up
Alberta Tax Rates
2015 2016 Rate Income Rate IncomeFirst bracket 10.00% $0 - $125,000 10.00% $0 - $125,000 Second bracket 10.50% $125,001 - $150,000 12.00% $125,001 - $150,000 Third bracket 10.75% $150,001 - $200,000 13.00% $150,001 - $200,000 Fourth bracket 11.00% $200,001 - $300,000 14.00% $200,001 - $300,000 Fifth bracket 11.25% $300,001 and up 15.00% $300,001 and up
Combined Tax Rates2015 2016
Rate Income Rate Income25.00% $0 - $44,701 25.00% $0 - $45,282 32.00% $44,702 - $89,401 30.50% $45,283 - $90,563 36.00% $89,402 - $125,000 36.00% $90,564 - $125,000 36.50% $125,001 - $138,586 38.00% $125,001 - $140,388 39.50% $138,586 - $150,000 41.00% $138,586 - $150,000 39.75% $150,001 - $200,000 42.00% $150,001 - $200,000 40.00% $200,001 - $300,000 43.00% $200,001 - $300,000 40.25% $300,001 and up 44.00% $300,001 and up
Impact of New Rates
Income Estimated Taxes (before credits) 2015 2016 Impact $75,000 $ 16,326 $ 15,769 (557) $150,000 $ 43,217 $ 42,701 (516) $300,000 $ 103,092 $ 110,702 7,610 $450,000 $ 163,467 $ 182,702 19,235
Questions?