Ross + Sylvestre’s: Tax Tips, Tricks and Traps

Ross + Sylvestre Chartered Accountants Quarter 1 2019 issue of Tax, Tips, and Traps is now available. 

Tax Ticklers

SOME QUICK POINTS TO CONSIDER:

The annual TFSA contribution limit for 2019 will be increased to $6,000 (from $5,500) due to indexation. For those who have been eligible to build contribution room since inception of the program in 2009 and have never contributed, the total maximum room as of January 1, 2019 is $63,500.

For 2019, the Employment Insurance premium rate is reduced to 1.62% (from 1.66%). The maximum insurable earnings is $53,100 (from $51,700), resulting in a maximum employee premium of $860 (a net increase of $2) and maximum employer premium of $1,204 (a net increase of $3).

Registered charities will now be able to pursue their charitable purpose by engaging in non-partisan political activities in the development of public policy without limitation. These rule charges are largely retroactive to January 1, 2008.

Investment management fees in respect of tax-sheltered accounts (like RRSPs, RRIFs and TFSAs) paid outside of the account (e.g. management fees charged to a non-registered account), would be subject to a 100% advantage tax says the CRA. That is, a tax equal to the full value of the management fee would be levied.

Federal Carbon Tax: Costs and Rebates

As of April 1, 2019, a federal carbon tax is scheduled to be imposed in Ontario, New Brunswick, Manitoba, and Saskatchewan. The federal backstop legislation will be partially used in Prince Edward Island, Yukon, and Nunavut. The other provinces and territory are not subject to this regime as they have, or are, instituting their own custom carbon pricing structures. In the first year, the federal tax will subject gasoline purchases to a 4.42 cents/L tax while 3.91 cents/cubic meter will be assessed on marketable natural gas.

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Child Care Expenses: Art, Sport and Educational Camps

The CRA has reviewed their position on leisure or recreational activities, and fees related to education costs, vis a vis whether they can be claimed as a child care expenses. Based on an informal (vs. precedential) court case, tax payers incurring child care costs with a recreational or educational component, can now consider claiming these amounts as a child care expense, up to the maximum allowed amount.

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Canada Pension Plan (CPP) Changes:
Costs and Benefits are Increasing

Starting January 1, 2019, the CPP will be enhanced. This means that both employees and employers will be required to contribute more but, retirement, survivor, and disability pensions will also increase. The changes will be gradually phased in over 7 years: Phase 1 will take place from 2019 to 2023; and Phase 2 will take place in 2024 and 2025.

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For more tax tips, tricks & traps visit Ross + Sylvestre Chartered Accountants online, www.rsgroupcpa.com.