January 2012
This issue:
Indexation of Amounts for 2012
Every year, the federal tax brackets and most personal credit amounts are indexed for inflation. The Canada Revenue Agency (CRA) recently announced the changes from the 2011 taxation year to the 2012 taxation year, which reflect an increase of 2.8%…
Changes for Eligible Dividends in 2012
Individuals who receive an “eligible dividend” from a Canadian corporation are required to include in income the dividend plus the “gross-up” amount of the dividend. However, a dividend tax credit is applied, which results in a rate of tax payable on the dividend that is less than the regular rate that applies to other income…
Changes to Employee and Shareholder Benefit Rules
Under the current wording of the Income Tax Act, a benefit received by an employee in respect of, in the course of, or by virtue of an office or employment, is included in the employee’s income. Technical amendments released by the Department of Finance on October 31, 2011 propose to amend this rule, to “clarify” that employment benefits received by a person who does not deal at arm’s length with the employee are included in the employee’s income…
Shareholder Loans
Similarly, currently rules provide that a benefit conferred upon a shareholder of a corporation by the corporation is included in the shareholder’s income…
Tax Benefits for First-Time Home Buyers
There are certain tax benefits for first-time home buyers, as well as those who have not owned a home in the current year or the previous four years. The benefits are provided under the RRSP Home Buyers’ Plan, and the first-time home buyer’s credit…
Political Donation Tax Credit
The Income Tax Act provides a generous tax credit for donations to federal political parties. The credit is allowed in a year in which you make a donation to a registered federal party, a provincial division of a registered party, or a registered association or a candidate…
CRA Warns of “Tax Protester Schemes”
The CRA recently reiterated its warning about individuals who try to convince Canadians that they do not have to pay tax on the income they earn. The CRA refers to these individuals as “tax protestors”
Around the Courts
The “wholly dependent person” credit (sometimes referred to as the equivalent-to-spouse credit) can be claimed if, among other things, you are single and support your minor child who lives with you. However, you cannot claim the credit if you are required to pay support for that child to a former spouse and you live separate and apart form your former spouse for the entire year…
To read more, please see the following article Tax Tips – January 2012
