Dear Client, December 2023
Thank you for your continued business in 2023. Below I have highlighted various updates for your personal and/or business tax considerations.
Important reminders:
Expensing rules for businesses on capital or depreciable property:
These rules will be expiring shortly.
If you have a corporation do not forget to buy that piece of equipment, furniture, or computer before January 1, 2024 so your corporation can write it off completely in the year of purchase instead of over time.
Unincorporated businesses have until the end of 2024 to make their capital purchases and claim the full write-off on them in the year of purchase.
Canada Dental Benefit:
The Canada Dental Benefit provides eligible parents or guardians with a direct tax-free payment of up to $650 per year for two years to help cover dental expenses for children under 12.
CRA began receiving applications for the Canada Dental Benefit on December 1, 2022. Applications are open until June 30, 2024.
First Home Savings Account (FHSA)
The First Home Savings Account started on January 1, 2023 for all first-time home buyers.
Please refer to last year’s Tax Season Update for further details on all the above: https://www.deanconstand.ca/post/tax-season-update
Canadian Emergency Business Account (CEBA) Loan Repayment Extension:
The CEBA loan program for Covid support offered interest-free partially forgivable loans of up to $60,000 to small businesses.
The repayment deadline for CEBA loans in order to qualify for partial loan forgiveness of up to 33% (up to $20,000) was extended from December 31, 2023 to January 18, 2024.
This was done to give businesses a grace period because of the holidays so that businesses had time to apply for refinancing with their CEBA financial institution.
If a refinancing application is completed by January 18, 2024, the repayment deadline is extended to March 28, 2024.
Retiring Later:
Old Age Security:
As baby boomers are living longer, retiring in their 60s could mean they could be retired almost as long as they were employed. Will savings last? Do they need to continue working?
You can start collecting Old Age Security (OAS) once you reach 65, or you can delay these payments up to 70 years of age, and receive larger payments at that time. You can collect OAS while you are working, but once your income reaches $90,997 or higher in 2024, the OAS gets “clawed back” which means you will have to repay some or all of the OAS benefits.
Canada Pension Plan:
Regarding the Canada Pension Plan (CPP), you can start collecting these benefits as young as 60, or you can delay these payments up to 70, and then receive larger payments at that time.
If you start collecting CPP at 60 and you continue working, you must make CPP contributions until 65 (which goes towards your pension).
At 65 years of age, if you continue to work and you are collecting CPP, you have the option to stop making CPP contributions or continue making them until 70. If you stop making CPP contributions, a special form called “CPT30 Election to Stop Contributing to the Canada Pension Plan” must be filed with CRA and a copy given to your employer.
Registered Retirement Savings Plan:
Regarding your Registered Retirement Savings Plan (RRSP), you must stop making contributions by the end of the year you reach 71. However, you can still work after 71 and accumulate RRSP room. At that time, you may contribute to your spousal RRSP as long as your spouse has not reached 71 yet. Your RRSP contribution will be a tax deduction on your taxes.
Ontario Business Registry – Have you registered your business online?
The purpose of this registry is to allow businesses and not-for-profit corporations to perform various business-related activities online. It came into effect late 2021.
For example, corporations must provide the Ontario government with a current list of their board of directors annually. I am available to assist you with this mandatory reporting requirement using the online registry.
Did you know?
A board of directors is the governing body of a company, whose members are elected by the shareholders to set strategy, oversee management, and protect the interests of shareholders.
As a director, you are personally liable for monies held in trust by the company such as payroll deductions and sales taxes should the company become unable to meet its obligations.
Changes to Trust Reporting Rules:
A trust is created when the settlor transfers the title of a property to the trustee who holds it for the benefit of the beneficiaries.
Changes to the trust reporting rules will be in effect for the 2023 tax filing period:
Trusts must file a T3 trust tax return even if there is no income to report (due date is 90 days after December 31, 2023).
Enhanced reporting is required and now must include: name, address, date of birth, residence, and taxpayer account number of all settlors, trustees, and beneficiaries of the trust.
There are exceptions to not filing a trust return under the new rules. For example, if a trust holds certain assets totaling $50,000 or less in total fair market value throughout the year, then the trust is not required to file a trust tax return. Please note that there are a number of other exception scenarios.
You may have opened an In-Trust-For-Account for a child or grandchild, which is an informal trust, and may be caught under these new rules.
The penalties can be onerous for not complying. A penalty of up to 5% of the value of all properties held by the trust in the year can be applied.
Please reach out to me to further discuss any trust tax-related questions that you may have.
Additional information about the use of trusts is available on my blog: https://www.deanconstand.ca/post/estate-planning-checklist-part-2-trusts
Cybersecurity
Spikes of cyberattacks often can happen during the holidays when everyone is busy so be alert during these festive times.
Please refer to the blog on my website for practical tips on cybersecurity: https://www.deanconstand.ca/post/some-practical-tips-for-cybersecurity
My wish for you and those dear to you is a holiday season filled with happiness, good health, and time to relax. I look forward to serving your future accounting needs.
Kindest regards,
Dean Constand CPA