Proccounting Inc

The GST/HST rate varies depending on the province. The following shows the applicate rates in different province in Canada.

When capital properties are transfered between taxpayers who are not dealing at arm's length, a consideration may be established at the level higher or lower than the fair market value to allow one or both taxpayers to reduce or avoid taxes. To prevent transfer price manipulations, rules are needed to deal with inadequate considerations.

Here is a table of the general rules (ITA 69) dealing with the non-arm's length transfer of property for consideration that is greater or less than the fair market value of that property.

Cumulative Net Investment Loss (CNIL) was introduced in the 1988 tax reform legislation to prevent individuals from simultaneously deducting investment losses while sheltering investment income through the use of the lifetime capital gain deduction.

CNIL is the amount by which the total of investment expenses after 1987 exceeds the total of investment income after 1987.

Individuals who have a CNIL will have the ability to use the lifetime capital gain deduction reduced.

For business owner/managers, CNIL can be reduced by having the business pay dividends or interest on shareholder loan accounts, rather than salaries.

The Capital cost allowance (CCA) is a tax deduction that Canadian tax laws allow a business to claim for the loss in value of capital assets due to wear and tear or obsolescence.

Depreciable assets are usually grouped into classes. The class system is used to prescribe a declining balance rate of depreciation. The total balance of the class (undepreciated capital cost (UCC) balance) is depreciated at the same percentage rate prescribed for that class.

Here are the commonly used classes and their CCA rates.

These are the documents generally needed for the preparation and Filing of Tax returns for 2009.

General Documents

• 2008 Notice of A ssessment/reassessment
• 2009 tax installment summary
• If new personal tax client, a copy of 2008 return, and carry forward details such as donations,
  losses, RRSP contributions, etc.

The following limits and rates are in effect for year 2009 and 2010 

• The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes is $30,000. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes. 

Income splitting is a family tax planning technique designed to shift income from a higher-income earner to a lower-income earner to reduce the overall tax paid by the family.

An example of income splitting

The following simple example will help you understand the basic idea.

If your taxable sales do not exceed $30,000 in a taxation year, GST/HST registration is optional. You will have to decide whether or not to register GST/HST voluntarily. Sometimes, this is not an easy decision to make. Here are some issues to think about.

You have to register for the GST/HST if your sales of taxable goods or services during the fiscal period of your business exceeds $30,000. You must register and begin charging the GST/HST the month after you reach the $30,000 threshold. You cannot wait until the following year to register.

The registered retirement savings plan (RRSP) is one of the best tax deferred income plans. An RRSP allows you to save pre-tax “earned” income, within specific limits into registered plans. The amount contributed into an RRSP is deducted from your taxable income and thus saves you tax. Another tax saving benefit is that income earned in the RRSP is not taxed. However, any RRSP withdrawal will be added into your income and taxed for that year.