Interest are subject to change quarterly so make sure you check the CRA website regularly for updated rates (http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/ntrst/menu-eng.html).

The late filing penalty is 5% of the outstanding balance, plus 1% of the outstanding balance every month that your return is late, to a maximum of 12 months. 

Remember, prepare your tax returns well ahead of the due date to avoid paying interests and penalties!

Not only that, the CRA charges a  late filing penalty of 5% of the outstanding balance plus 1% of the oustanding balance every month that your return is late, to a maximum of 12 months. 

Remember:  Prepare your tax returns way ahead of  time. The earlier you file your tax return the better! 

If you have any tax questions, let the tax guru know!

• This is a non-refundable & temporary tax credit valid for the 2009 tax year only.
• The tax credit is 15% of eligible expenditures on home renovations made on eligible dwellings
•  The tax credit applies to expenditures over $1,000 to $10,000
• The maximum tax credit amount is $1,350 per family ($9000 x 15%)

We’ll get into more detail on my next blog!

Sources:  www.cra-arc.gc.ca and www.taxtips.ca

Please note that the HRTC’s is available for the 2009 tax year only and the eligible period began last January 28, 2009 and will end on January 31. 2010. 

Eligible expenses for goods acquired during this period, even if they are installed after January 2010 will still qualify.  However, if an eligible expense involves work done by a contractor or a third party, and the work is not completed by the end of January 2010, only the portion that is completed before February 1, 2010 will qualify even if a payment has been made.

Sources:  www.cra-arc.gc.ca  and www.taxtips.ca

1.       Ensure there is a Tax Shelter number (TS#)

2.       Ensure the transactions are structured legally.

3.       Ensure the transactions make business sense.

4.       Ensure there is a legal opinion by a reputable lawyer.

5.       Ensure there is a defense fund in place to back the program.

6.       Ensure the charities are Registered Canadian Charities.

7.       Ensure the organizations involved could function without the tax shelter being in existence.

8.       Ensure the cause is real and there is a real benefit for recipients.

The first thing you need to know is that CRA has announced that they will challenge all Gifting Arrangement Tax Shelters in Canada.  You will probably be reassessed. The key factor is to pick the winners that will be able to withstand CRA’s challenge and deal with CRA through out the years and likely win in Court.

Having said that, however, the tax savings you will receive from your flow through shares could still make up for your losses if your shares do not perform. 

1.       Utilization of capital losses

2.       RRSP meltdown

3.       One time or large income years

4.       Eliminate OAS Claw Backs

5.       Become eligible for tax credits due to lower income

6.       Corporations with large income years

If you have any questions about flow throughs, please send me a message through the ask the gurus section! Look forward to hearing from you!

What is the difference between a Flow Through Share and a Super Flow Through Share?

Both Flow Through shares give you nearly 100% of your participation amount as a tax deduction.  The main differences are

1.       Flow Through Shares are in the Oil & Gas Industry

2.       Super Flow Through Shares are in the Mining Industry and give you an extra 15% Tax Credit on top of the tax deduction.

1.       Use it yourself – both for Federal and Provincial

2.       Let your spouse use it – If your income is less than the personal exemption, then your spouse can use the amount you can’t claim.

3.       Claim an Eligible Dependent – If you’re a single parent, you can claim your child as an “equivalent to spouse” and claim your personal exemptions as well as your eligible dependent’s personal exemptions.

Please note that personal exemptions are referred to as “Basic Personal Amounts” on the T1 Income Tax Return.