Frequently Asked Questions
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What is the difference between EFILE and NETFILE?
EFILE is an online service operated by the CRA for professional EFilers. An Efiler must register with CRA and get an agent number. Efilers can update the address and banking information for their clients and can do batch processing of tax returns. Whereas NETFILE is a service by the CRA for individuals to file their personal tax returns over the internet. The individual must have a Web Access Code (WAC) (found on their government letters) to netfile their tax return, and requires using CRA certified software.
I became separated recently and am raising a child alone, am I allowed any credit on my tax return?
You do not need to be officially single, divorced, separated or widowed throughout the year, but only at some point during the year and with a dependant living with you. You could then be eligible for an additional credit as well, if at any time in the year, you were Single, Divorced, Separated or Widowed. The “amount for an eligible dependent” is lowered by the income of the dependant for which the claim is made.
Is a commission employee able to claim more expenses than a salaried employee?
Yes, a commission employee may claim additional expenses, which are not allowed for salaried employees, for example property tax and insurance for home office expenses. Employment expenses are limited to commission income plus capital cost allowance and interest on car loans.
I am 18 years old, when am I able to apply for GST?
As long as you turn 19 before April 1 of next year, you are eligible to apply for GST credit on your Tax Return for this year. You must also have filed your tax return from last year.
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I earned $40,000 last year and my wife earned $20,000, while taking care of our child. Am I able to claim child care expenses?
Child care expenses must be claimed by the spouse with lower income, which in this example would be your wife.
I recently moved, and had moving expenses during this transition. I was not able to claim everything on my last return. Can I claim the remaining expenses in the future?
Can I claim expenses related to my home office on my tax return?
Yes, you will need a signed T2200 form, “Declaration of Conditions of Employment” from your employer. There will also be additional requirements, based on the types of expenses you incur.
What is the difference between a passenger vehicle and motor vehicle for tax purposes?
Not all motor vehicles are passenger vehicles. A passenger vehicle is an automobile purchased or leased after June 17, 1987 — most cars, station wagons, vans, and some pick-up trucks are passenger vehicles. Passenger vehicles are subject to the limits for capital cost allowance, interest, and leasing costs.
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Is it better to buy a car or lease it?
You should keep the following questions in mind when making your decision:
- How many miles do you expect to travel? Most leasing companies charge additional fees over a certain mileage. This information will be outlined in the leasing contract.
- How long will you keep the vehicle? Do you prefer to change a vehicle after 2-3 years or do you prefer to keep the same vehicle for 5-10 years? A leased car is better for those who prefer to change their vehicle more often.
- What is your cash flow and state of credit? A leased car is easier, if you don’t have a lot of cash on hand or have a bad credit rating.
- Do you have any court orders against you? If you owe money to other people, or are in the process of a divorce settlement — your assets (which include an owned car) could be seized or distributed.
- In terms of a tax perspective, the difference between buying and leasing a car is minimal.
I renovated my rental property. Am I able to claim its expenses?
You may claim the cost of supplies to repair your rental property, but you cannot deduct the cost of your own labor. You can also claim other reasonable expenses, including transport of tools and materials to the rental property.
I purchased an appliance for my rental property, can I claim this cost on my tax return?
You cannot directly claim the cost of appliances on your tax return, but you may claim the capital cost allowance on appliances. However, capital cost allowance cannot be used to create or increase rental loss.
If I rent out a part of my house, could I lose the principal residence status for it?
You are allowed to rent a minor part of your house and maintain this status, however you should not claim capital cost allowance on your house (with the rented-out part in mind).
I want to gift my property to my child, are there any tax consequences?
You and your child will have to follow the “deemed disposition” rule; a requirement to report the sale of a home or other assets on an individual’s tax return at their fair market value and subsequently reacquire them for the same amount, even if there were no actual proceeds or cash received. There will also be payable tax on capital gain if any, and if this is a depreciable property, there may be recapture or terminal loss.
My child attends college/university, and we paid a tuition fee. How do I claim this on my tax return?
You will need the T2202A form given by your child’s school. Your child will have to file their tax return, and then based on other certain information, the tuition fee could be transferred to you.
I am a truck driver, and I want to claim meal expenses. Do I need receipts?
No, you can use the following method to claim meal expenses: You claim three meals per day, for $17 per meal (if you go to the US then you can claim US $17). While you do not need receipts, you will need a TL2 form, signed by your employer.
I drive to work, can I claim my commute costs on my tax return?
No, the cost of travelling to work is considered a personal expense.
I use my car for work. What will I need in order to claim its costs as an employment expense?
You will need a signed T2200 form provided by your employer. You should also hold on to all your receipts and keep a detailed log sheet of kilometers you drove for business and personal.
I am entitled to claim employment expenses, and I started leasing my car last year. How much of the monthly leasing cost can I claim?
If the leasing cost exceeds $800 per month, then the lease formula must be used to calculate allowable deduction.
I am employed by a publicly traded corporation, and plan to exercise my stock options. Are there any tax consequences for this?
Yes, you will receive taxable benefits when exercising your options. These taxable benefits will be calculated based on the difference between fair market value at the time of exercise, minus option price. However, you can file a T1212 election form to defer taxes until the disposition of your shares.
What is the maximum amount I can contribute to my RRSP in a year?
Your Notice of Assessment from the Canada Revenue Agency received after filing your taxes, will display a calculated RRSP limit. You will also have to consider any ‘undeducted amount’ (RRSP contributions you have not yet deducted on a tax return) on the same notice, as well as any amounts owing under Home Buyers Plan or Life-long Learning Plan.
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I take care of an aging parent who lives with me, and their income is through investment and social security programs. Can I claim any benefits for this?</p> <p>
If your parent is older than 65, and their income is less than $17,363, a caregiver benefit can be claimed by either of you. The maximum claim is $3,933 and the income threshold is $13,430. They must be living with you (at sometime during the year) and not share rent or be the caretaker for any of your children.
I have a sick family member that requires medical expenses, can I claim these expenses?</p> <p>
Yes, you may claim these expenses, and they include prescription drugs, dental treatment, eyeglasses, premiums paid for private health coverage etc. The expense should be claimed by yourself or a spouse, depending on who has the lower income. The maximum claim is $10,000 per dependant, and depending on your relationship to them and their age, the calculation will be based on yours or their net income.
What benefits are there to incorporating my business?
The decision to incorporate your business comes with many benefits, including limited liability, income splitting, a lower tax burden, and more.
When do I need to pay back a withdrawal from my RRSP, through the Home Buyers’ Plan?
The withdrawn amount has to be repaid over a 15-year period through re-investment in your RRSP, which begins the second year after the withdrawal. The CRA will notify you every year the date by which it has to be repaid and the yearly instalment. If you are unable to repay the investment through your RRSP before the stipulated date, the amount will be added as income for that year.
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