Interest rates for the fourth calendar quarter

Interest rates for the fourth calendar quarter

Ottawa, Ontario, September 23, 2013… The Canada Revenue Agency (CRA) today announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporations. These rates are calculated quarterly in accordance with applicable legislation and will be in effect from October 1, 2013 to December 31, 2013. All interest rates have increased by 1% since last quarter, except for the rate for corporate taxpayers pertaining to interest on loans and indebtedness.

Income tax

  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 6%.
  • The interest rate to be paid on corporate taxpayers overpayments will be 2%.
  • The interest rate to be paid on non-corporate taxpayers overpayments will be 4%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 2%.
  • The interest rate used to calculate corporate taxpayers loans or indebtedness will be 5.02%.

SOURCE:

From the CRA website

http://www.cra-arc.gc.ca/nwsrm/rlss/2013/m09/nr130923-eng.html?utm_source=mediaroom&utm_medium=eml

What’s new – your 2011 income tax and benefit return

Extracts from the Canada Revenue Agency Website

Did you know that you may be able to take advantage of new incentives or changes to existing credits, deductions, benefits, and services when filing your 2011 return?

Important facts

Children’s arts tax credit:

Parents can save up to $75 at tax time when they claim an amount for eligible expenses paid for the registration or membership in a prescribed program of artistic, cultural, recreational, or developmental activities for their children.

Canada child tax benefit:

Parents must now notify the Canada Revenue Agency (CRA) of any changes to their marital status by the end of the month following the month in which the status changes. Since July 2011, each eligible parent in a shared custody situation will get half of the child benefit and credit payments for that child every month they qualify.

Volunteer firefighters tax credit:

Volunteer firefighters may be able to reduce their tax bill by as much as $450 if they have completed at least 200 hours of eligible volunteer time.

Taxable capital gains:

Donations of certain flow-through share properties made to a qualified donee after March 21, 2011, may give rise to a deemed capital gain that is subject to an inclusion rate of 50%.

Allowable amount of medical expenses for other dependants:

The $10,000 limit per eligible dependant has been removed.

Canada Pension Plan (CPP) contribution:

As of January 1, 2012, the rules for contributing to the CPP changed. The changes apply if you are an employee or self-employed, you are 60 to 70 years old, and you receive a CPP or Quebec Pension Plan retirement pension.

Students:

More examination fees now qualify for the tuition amount. In addition, the minimum duration of courses taken at a university outside Canada has been reduced to three consecutive weeks.

Ten (10) tips to Minimize your Tax payable

1) RRSP

Dead line to buy RRSP will be February 29, 2012. You can buy up to your maximum deductible.You can find this information line (A) of the RRSP Deduction Limit Statement, on your 2010 notice of assessment or notice of reassessment or call the Canada Revenue Agency.

2) CHILD CARE EXPENSES

Do not forget to ask to your daycare a summary of your expenses paid in 2011. Only the parent with the  lowest income can claim this deduction.

3) TFSA

The maximum annual contribution limit to a TFSA is $5,000. Any income from this saving account will be free of tax.

4) CHILDREN’S FITNESS AMOUNT

Maximum credit: $500 per child. Keep all your receipts.

5) PUBLIC TRANSIT AMOUNT

Monthly passes paid to the TTC are eligible to a credit. Keep all receipts plus cards.

6) EMPLOYMENT EXPENSES

Some employment expenses may be illegible to a deduction. Your employer will need to provide the form T2200 to you.

7) MEDICAL EXPENSES

This Canada Revenue Agency Link will give you the list of relevant expenses.

8) DONATIONS

Donation to charities may be illegible to a tax credit. The charities listing is available on the Canada Revenue Agency Website.

9) TAX ON SPLIT INCOME

If your spouse or partner is retired, you may be illegible tax on split income.

10) INTERESTS PAID ON STUDENT LOANS

Not all the banks send automatically a yearly statement. Do not forget to call them.

Tax tip Be well-informed when making investments

Did you know…?

Under the Income Tax Act, you may lower the amount of income tax payable as permitted under the law by making investments in certain arrangements, such as in RRSPs or TFSAs. However, you should be aware of the potential risks of other types of arrangements. The Canada Revenue Agency (CRA) is aware that abusive investment arrangements are offered by unscrupulous promoters and advises investors to take a number of precautions to protect their interests.

Important Facts

  • Abusive investment arrangements can take many forms. Typically these involve investing with the expectation that income deductions and tax credits will result in tax savings in excess of the cash paid.
  • Before investing, you should:
    • do your research on who is promoting the arrangement, and read any documents concerning the investment;
    • pay particular attention to any statements in the documents about the income tax consequences of the investment; and
    • obtain independent professional legal and tax advice about the investment arrangement.
  • It is important to remember that if the promoted return on investment sounds too good to be true, it probably is.

If you believe you have participated in an abusive investment arrangement and you wish to correct your tax return, you can do so through the Voluntary Disclosures Program (VDP). Taxpayers will not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated against them. More information is available at www.cra.gc.ca/voluntarydisclosures.

Learn more

For more information about abusive investment arrangements, go to www.cra.gc.ca/alert

Apprenticeship Job Creation Tax Credit (AJCTC)

Apprenticeship Job Creation Tax Credit (AJCTC)

The AJCTC is a non-refundable tax credit equal to 10% of the eligible salaries and wages payable to eligible apprentices in respect of employment after May 1, 2006. The maximum credit an employer can claim is $2,000 per year for each eligible apprentice. If your business hires an “eligible apprentice”, you qualify to claim the credit.

Who is an “eligible apprentice”?

An “eligible apprentice” is someone who is working in a prescribed trade in the first two years of their apprenticeship contract. This contract must be registered with a federal, provincial or territorial government under an apprenticeship program designed to certify or license individuals in the trade.

A prescribed trade includes the 53 trades currently listed as Red Seal Trades. For more information, see the Interprovincial Standards Red Seal Program.

How to claim?

If you are an employer, you will be able to claim the credit on your Individual Income Tax Return, on line 412 – Investment tax credit, by filing Form T2038(IND), Investment Tax Credit (Individuals).

In addition, any unused credit may be carried back three years and carried forward 20 years.

When two or more related employers employ the same apprentice, special rules apply to ensure that the $2,000 limit is allocated to only one employer.

Forms and publications

Related Topics

From the CRA Website: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/412/jctc-eng.html

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