December 5, 2016
As we approach Christmas and the New Year, a few planning items can make tax season feel a little better.
Firstly, do your charity donations before December 31, 2016. This way you get the tax savings as part of your 2016 tax filings.
Buy RRSP's up to your contribution limits at all times if your income is over $45,283. Work with the government refunds to create more wealth.The deadline for this is March 1, 2017 for 2016. Time to get proactive and contribute. Those with work pensions will have less RRSP room, but it is still good to contribute.
Do your TFSA contribution early in the year. Thus, on January 1, 2017 an additional $5,500 per person can be contributed to the account. Please note that the maximum limit currently is $46,500 (for residents that have been in Canada continuously since 2009 and 18 years of age) and another $5,500 will commence Jan 1, 2017.
If you have lots of medicals this year, then maybe prepay your travel insurance to get the writeoff this year. Eligible medical costs are based on an as paid basis. So for those that do payment plans for braces and other non cosmetic procedures, this may not be good as you would be losing some of the write off this year. Also, the 3% personal medical exemption would be deducted twice if you straddle your payments over two year. So payment plans are nice, but that could cost you with the tax man.
As always, have a current Will with Power of Attorneys' for property and health care. These will provide some peace of mind having them in place. For those of you with disabled children then a Will with a Henson Trust is extra important. Call me if you need details and I can recommend law firms that prepare these documents.
Buy your life insurance policy before Jan 1, 2017 as new rules are coming for those that want to over contribute into the policies. Lastly, make sure you have life insurance, critical illness, and disability insurance for those unexpected things in life. Time to get these in place for those that are procrastinating. Also, mortgage insurance is expensive term insurance and not normally recommended as it is better to get a proper term 10, 20 or UL policy.
So have a prosperous and great Holiday Season!
Notice to Reader - Warning and Disclaimer
This monthly update was prepared on December 5, 2016.
When considering any of ideas from this article, please contact the writer directly before acting on them. This will ensure that any information has been updated.
Without contacting the writer before implementing any of these items you will bear all the responsibility for any tax assessments and or business issues that may arise from this information.
Copyright @ 2016
A recent CRA conviction.
Ottawa, Ontario, October 19, 2016… The Canada Revenue Agency (CRA) announced today that, on October 17, 2016, Tania Kovaluk was sentenced in the Superior Court of Justice in Ottawa to 1,825 days (5 years) in jail for deliberately choosing not to pay a court-imposed fine for criminal tax evasion. On November 20, 2012, Kovaluk pleaded guilty to multiple counts related to income tax and GST evasion, and counseling others to participate in the Paradigm Education Group (Paradigm) tax protestor scheme which “educated” people on how to structure their affairs in a way to illegally avoid taxes She was sentenced to two years and five months in jail, and was fined $887,328, which was payable in full by June 30, 2014. Since she was released from jail she has made no attempt to pay her court-imposed fine.
Kovaluk, a dentist, knowingly failed to report $2,578,987 in income she earned from 2003 to 2007, thereby evading $721,617 in federal taxes. She promoted the Paradigm scheme through seminars held in Ottawa and Toronto, and counseled others to join the Paradigm program, including nine employees working at Kovaluk's dental practice in Ontario. In addition to spending large amounts of money on personal luxury items such as art, jewelry, vacations, a home in Ottawa, and personal home furnishings, Kovaluk invested her money in offshore assets, including two villas in Costa Rica. Kovaluk transferred her ownership of these villas to third parties for no consideration, with the intention of avoiding payment of her court-imposed fine.
The preceding information was obtained from the court records.
“Tax evasion takes money away from the services that benefit all Canadians,” said Vince Pranjivan, Assistant Commissioner of the Ontario Region. “The CRA takes action against those who try to avoid paying what they owe.”
The Canada Revenue Agency warns all Canadians to beware of “tax protesters” who try to convince you that Canadians do not have to pay tax on the income they earn. Canadian courts have repeatedly and consistently rejected arguments made in these tax protester schemes. For those involved in tax protester schemes, the CRA will reassess income tax and interest, and charge penalties. In addition, if convicted of tax evasion, the court may fine them up to 200% of the tax evaded and sentence them for up to a five-year jail term. More information on tax protester schemes is available at www.cra.gc.ca/alert.
If you have ever made a tax mistake or omission, the CRA is offering you a second chance to make things right through its Voluntary Disclosures Program (VDP). If you make a valid disclosure before you become aware that the CRA is taking action against you, you may only have to pay the taxes owing plus interest. More information on the VDP can be found on the CRA's website at www.cra.gc.ca/voluntarydisclosures.
Also, you can contact Peter Wiesner CPA, CA to assist in making the appropriate filings with the government.