Income Tax Filing Scarborough

Personal Income Tax Returns in Scarborough- everything comes down to refunds

Personal Income Taxreturn filing is important. Not just because CRA database should be up to date but also because filing return makes you eligible for refunds as per tax laws.

As the income tax return filing date is nearing, knowledge of refunds is a must. After all, it all comes down to refunds. Especially if you're a first time taxpayer. ZRPC, the leading firm for income tax return filing in Scarborough, tells about all that you need to know about refunds before you file for the previous financial year.

1. Tax deductible contributions and conditions

To calculate your refund, you need to first of all add up your income from all sources, including salary, income from home business, capital gains from selling of an asset, income from investments etc.

Even though tax refunds vary from person to person according to sources of income, the common deductions available in the net income section include child care, moving expenses, pension contributions by self employed individuals, and contributions to RRSP.

You can even claim losses that you incurred in previous years like loss of a job or loss in business. You're also applicable for deductions of some portion of your expenses if you're running a home based business.

2. When is the notice of assessment for refunds issued by CRA?

The timeline varies on the mode of return filing. If you file through My Account, assessment notice is issued within 2 weeks of receiving your electronically filed return. In case of paper filed return, this time extends to 8 weeks. These timelines pertain only when you've filed your return on or before due date.

3. What are the reasons of delayed refunds?

The most common reasons for refund delay include :

●     In case you owe a balance payment;

●     Income Tax refunds fall under the category of Garnishable Moneys that can be directly paid towards family support according to “Family Support Order and Agreements Garnishment Regulations”;

●     Paid against your outstanding GST/HST returns from a sole proprietorship or partnership;

●     If the refund is $2 or less.

You can check the status of your refunds through My Account service or via MyCRA app. You can transfer your refund towards your instalment account but you cannot transfer this refund in someone else's name or account. Nor can you settle someone else's debt through your refund.

CRA also pays daily compound interest on your income tax refund for previous financial year from the following three dates

●     The due date for filing income tax return

●     From the 31st day after you file your return

●     The day just after when you overpaid your taxes.

This is the important piece of information regarding income tax refund that every taxpayer must know about. For timely personal income tax return filing in Scarborough, contact ZRPC today.

Income Tax Filing Scarborough

CRA’s Online Services to Facilitate Online Tax Return Filing

Internet has made everything easy. From ordering pizza to booking flights, you can do everything from the convenience of your home. So why shouldn’t your tax return filing be that easy?

That’s exactly what CRA thinks, resulting in them offering their online services for hassle free and easy tax payment. But not everybody is familiar with online services offered by CRA.

ZRPC, the best personal and corporation tax consultation firm in Scarborough, tells about the CRA’s online services that’ll make personal and corporation tax filing definitely easy for you.

My Account Service

My Account service is great for personal income tax filing. With your CRA My Account, you can:

•          View your benefit and credit payment amounts and dates;
•          View your notice of assessment;
•          Change address, direct deposit information, and marital status;
•          Sign up for account alerts though email;
•          Check your TFSA contribution room and RRSP deduction limit;
•          Check the status of your tax return;
•           Request your proof of income statement (option “c” print);  
•           Link your CRA my account with my service Canada account.

You can get all the information you need about how to register with My Account by visiting the link canada.ca/my-cra-account.

Business Tax Payment

Not just for personal income tax filing, CRA has something for businesses as well. CRA’s online services can be used by businessmen across Canada in a number of ways such as:

•          View account balance and transactions;
•     Through a pre-authorized debit agreement set-up in My Business Account or My Payment Service, businessmen can make direct payments to CRA;
•       File current financial year’s return while you can view status of previously filed returns and  even amend returns online;
•          Document submission to CRA;
•          Authorize a representative for online access to your business accounts;
•          Get mail from CRA directly in your My Business Account upon registration;
•          Change addresses;
•          Manage direct deposit information;
•          Submit account and audit related enquiries and view answers to common enquiries;
•          Add multiple businesses to your account;
•          Payment transfer and balance update;
•          Future balance calculation;

For more information regarding My Business Account, visit the link canada.ca/taxes-business-online.

Withdrawal of a pre-determined amount

You can allow CRA to withdraw a pre-determined amount from your bank account through Pre-Authorized Debit (PAD) which is a flexible online payment option. This is to facilitate tax payment on a particular date/s. PAD agreement can be set up through CRA’s secure My Business Account service.

These are the three key online services offered by CRA to make tax payment and tax return filing easy for Canadian Taxpayers. For more information, contact ZRPC, the leading personal and corporation income tax return consultation firm in Scarborough.  

Provides Tax Planning & Counseling Services in Scarborough

Tax on Split Income- Key Exclusions

Department of Finance has revised the TOSI rules and have come up with four key exclusions. Income Sprinkling/TOSI was subject to revision and certain exclusions have been stated to new rule. ZRPC, the corporation income tax experts in Scarborough brings to you the list of categories excluded from the new rules pertaining to TOSI. 

Excluded Share Test

This is the share ownership test and has more plot twists than what appears on the surface. It states that the new TOSI rules will not apply to an individual aged 25 if he/she owns at least 10% of the outstanding shares of a corporation in terms of votes and values. The corporation must fulfill the following criteria:

• Services account for less than 90% of its income.

• It’s not a professional corporation.

• A related business does not provide for all or nearly all of its income. 

Excluded Business Test/ Labour Test

According to CRA, TOSI rules excludes an individual 18 or above and employed by an excluded business.  By definition, an excluded business is a business in which the individual, in his/her taxation year, is actively engaged on a regular, continuous and substantial basis for which an amount is received in the same or in any five previous taxation years. The five previous taxation years may or may not be consecutive on or after 2017 to qualify for the exclusion. Exclusion extends to seasonal businesses and takes into account seasonal period.

The definition of “actively engaged on a regular, continuous and substantial basis” according to CRA is an individual who works an average of 20 hours per week during the part of the year that a business operates.

Reasonable Return on Capital Test

It consists of two parts:

•  An individual 18-24 years of age with corporation contribution not qualifying for either excluded business test or excluded share test, may still qualify for “safe harbor exemption”. The amount exempted will be your capital contribution multiplied by the prescribed rate under this test (currently 1%). For a contribution of $100,000, you can exclude $1000. The fairly low prescribed rate seems unfair. 

•  A reasonableness test or reasonable return test takes into account work performed, risks assumed by the individual in the business, and other relevant factors of individuals 25 years and over. 

Miscellaneous

• TOSI rules will not apply to spouses of active owner-managers when they reach the age of 65, given they meet the labour contribution rules.

•  When an individual on reaching the age of 18 years inherits shares in a private corporation from someone who met TOSI exclusions, those shares will continue to be excluded.

•   New rules do not apply to salaries.

This is just a small part of TOSI that we’ve discussed here. For more information on TOSI and its exclusions, contact ZRPC, the corporation income tax consultants in Scarborough.

Changes to Private Corporation Tax proposed by DoF

Come 2018 and there’s a lot that can happen in private corporation tax sector. A consultation paper on taxation of Private Corporation was released on July 18 2017 by Finance and it’s still under consideration. The proposed legislation deals with raising taxes on large corporations while reducing the tax burden on middle class.

But it’s not as simple as that as it affects small business holders, home-based business owners, farmers, and people employed in private corporations. The implications of these proposed legislations are wide. KPMG has asked the Ministry of Finance to delay the implementation of the proposed legislature as it’s a major shift in private sector taxation. ZRPC, the leading corporation tax consultancy firm in Scarborough, brings to you the key changes mentioned in the paper and its effect on you. 

• Income Sprinkling

It’s a form of income splitting that reduces family income taxes by realizing individual income (subject to high income tax) as family income (subject to low income tax).

• Holding a passive investment portfolio inside a private corporation   

The Government is proposing to tax the investments inside a private corporation. It attempts to neutralize the financial advantage one has by passively investing in a private firm.

With the recommendations, the rules will most likely to be implemented in 2018 and following years. Contact ZRPC, the corporation income tax consultants, for a complete information about the new tax proposals.

What is self-supply in context with GST/HST New Residential Rental Property Rebate?

When it comes to taxation, every word matters. Take self-supply for example. It might mean that demand and supply originate from the same source. But it’s not that simple when it stands to pertain to builders. It might seem like a simple, easy to follow concept but there are certain rules that connect this term to GST/HST New Residential Rental Property (NRRP) Rebate eligibility.

Personal and corporate income tax experts at ZRPC, Scarborough, thus explain the criteria that defines self-supply and how it relates to GST/HST NRRP rebate.

What Self Supply means here?

In the context of a builder, self-supply means when a builder constructs a residential complex, multiple unit or not, or builds an addition to a multiple unit residential complex, both intended to be leased or rented, it means that builder has made a self-supply of that construction. If you’re that builder, you’re eligible to claim GST/HST NRRP rebate.

When a builder makes a taxable sale of real property and buys it immediately, he/she is fulfilling the criteria of self-supply. A builder of a newly constructed or substantially renovated residential complex, an addition to a multiple unit residential complex, a residential complex carved out of a non-residential unit, then you’ve made a self-supply if:

• ·         You lease that constructed/renovated/converted property to an individual for long term residential use and that person is the first occupant.

• ·         You are the first occupant of that residential complex/addition to a multiple residential complex, for residential purposes.

• ·         You consider exempt sale of the building part of complex and exempt long term lease of the land part of complex under a single agreement.

• ·         You lease the land to a person who attaches a residential unit, like a site on lease in a residential trailer park. 

A builder who is considered to have made a self-supply by satisfying the above mentioned criteria, is also considered to have paid and collected GST/HST, calculated on the current and fair market value of the property from the date of the self-supply. If you’re that builder, you’re required to show the GST/HST transaction while filing your GST/HST return. It doesn’t matter if you’re registered for GST/HST or not. The NRRP rebate amount will solely depend on the GST/HST amount you’re supposed to have paid on the self-supply.

• You’ve made a self-supply and are eligible for GST/HST NRRP rebate on the following dates:

• ·         The day of the completion of construction or substantial renovation.

·         The very day you occupy the said property for residential purpose or you give possession or use of the complex/unit in the complex/addition, under a lease to a lessee or under some sort of license of occupancy for residential purpose (it’s advisable to determine the fair market value of property at the very moment of occupancy as It helps to clearly define the time of occurrence of self-supply).

Residential rental property rebate is a tricky matter to deal with. The fact that the criteria vary from province to province makes it more perplexing. To solve your property related tax matters, consult the personal and corporation income tax consultants at ZRPC, Scarborough.  

Corporation Income Tax Filing Scarborough

Common Personal Income Tax Return Filing Mistakes Committed by Taxpayers

According to CRA reports, there’s a huge discrepancy between the numbers of returns filed each year VS the expected number of returns that should have gone into processing. There’s a huge tax collection lag to accompany the woe. According to OECD, tax wedge for Canada is on a higher side and is constantly increasing as we speak. That leads to Canada’s lower rank on OECD’s list.

These statistics can be attributed to many factors, one big factor being the common mistakes that tax payers commit. ZRPC, the best personal and corporation income tax consultants in Scarborough, enumerate the top blunders made by tax payers and how to avoid them.

Late filing of Income Tax Return

You think it’s okay to file income tax returns on or after the due date. You feel it’s no big deal. Well, last minute filing can do more harm than good. First of all, there’re always chances of wrong filing in haste. You end up giving false info unintentionally. Plus, you haven’t taken bookkeeping seriously. So when audit happens, you’re in a fix. Take the help of professional bookkeeping services and personal income tax consultations to ensure a worry free, on time filing of tax returns.

Not claiming tax credits for the fear of audit

You have a list of tax benefits you’re qualified for. But you’re scared to claim them. Why? Because if audit happens, they might nullify that and charge a heavy penalty. Many people don’t know that they can claim CEA (Canada Employment Amount) with a T4 income. Fewer still claim the Children’s Fitness Tax Credit.

This is wrong on so many levels. One thing that you’re denying yourself the tax benefits you’re entitled to. Secondly, you’re denying CRA useful information regarding the employment scenario in the country and financial strength of the people that live in. If government thinks all are prospering under its regime, why it would make policies that benefit underprivileged?

Claim the tax benefits you deserve. Audit can harm if your paperwork is not in order. Hire the services of professional tax consultants to keep the paperwork in check.

Producing false information

While we encourage the citizens to avail the appropriate tax benefits, forging false info to make undue tax claims is completely unacceptable. There’s a term for it. It’s called tax theft. That’s the reason Canada lags behind in OECD’s list.

It’s a crime and can get you jail time if auditors catch you with your hand in the cookie jar. Don’t give false information. Sometimes, in the absence of proper bookkeeping, missing links can be misunderstood by auditors. Take help of good bookkeeping services. Many cloud based bookkeeping services are also available that let you access data anywhere, anytime.

ZRPC offers excellent bookkeeping services and personal & corporation income tax consultancy in Scarborough. Visit our website and ask your tax related queries.

Personal Income Tax Filing Scarborough

FAQs Regarding Personal Income Tax Filing

When the time of filing personal income tax hovers on your head, there are certain doubts that are lurking behind the anticipated process. There are several questions that can actually haunt you and you really don’t have accurate answers to the. What further complicates the situation is that you need the latest and complete information when it comes to personal income tax filing in Scarborough.

The queries related to income tax range from healthy premiums, life insurance deductions and what not. So, in this post, we are going to try our level best to answer the frequently asked questions about personal income tax.

FAQ 1 What is better for me: Tax Free Savings Account or Registered Retirement Savings Plan?

If your financial situation allows you, go for both. But in a case, you have to make choice, then let us understand the pros and cons of both. If you want to be in the category of lower tax, go for RRSP. But once you withdraw from the plan, it would be taxed next time. Whereas TFSA has no such limitation and none of the amount in TFSA is subjected to taxes.

FAQ 2 When is the perfect time to relocate, keeping in mind the taxation slab?

According to the policies, you fall under the category of taxation rate of the State of which you are resident of on December 31 of any given year. So before relocating include finding out income tax rates in your home work list.

FAQ 3 Can I claim elderly parents as dependents?

If your parents are mentally or physically unfit, and they are living with you and you have net income of less than $19,824, you can claim for Caregiver Amount. Even your kids who are below the age of 18 years and your grandparents are dependent ones as well.

FAQ 4 How does the refund depend on the taxes I have paid the whole year?

Yes, your refund depends upon the taxes you pay the whole year. You will get refunds only if you have paid income tax exceeding the amount you should pay or if you have paid the income taxes within the year. The refunds are calculated according your taxable income.

But apart from that, there are certain other complexities that need the expert advice of a professional. In case, if you are worried about personal income tax filing in Scarborough, you should engage the services of Z Rahman Professional Corporation, who are indeed professionals in taxing and accounting.