Personal Income Tax Tools



Personal income tax checklist


Foreign Property Questionnaire and Foreign Income Verification Statement (T1135)


Rental worksheet


Vehicle worksheet


Office in Home Expense


2011/2010 Automobiles Deduction Limits and Expense Benefits Rates

The 2011 automobiles expense deduction limits and prescribed rates for determining the taxable benefit on automobile operating expenses remained the same as 2010, and are as follows:

  • The ceiling on the capital cost of passenger vehicles for capital cost allowance purposes is $30,000 (plus applicable federal and provincial sales taxes).

  • The limit on deductible leased costs is $800 per month (plus applicable federal and provincial sales taxes).

  • The limit on tax-exempt allowances paid by employers to employees is $0.52 per kilometer for the first 5,000 kilometers driven and $0.46 for additional kilometers (for Yukon, the Northwest Territories and Nunavut, $0.56 per kilometer for the first 5,000 kilometers driven and $0.50 for additional kilometers).

  • The maximum allowable interest deductions for amounts borrowed to purchase an automobile is $300 per month.

  • The general prescribed rate used to determine taxable benefit relating to the personal used of automobile paid by employers is $0.24 per kilometer (for taxpayers employed principally in selling or leasing automobiles, $0.21 per kilometer).

 

Payroll Deductions

Employers are responsible for deducting income tax, Canada Pension Plan (CPP) and Employment Insurance Premium (EI) from employers' paycheques. They are also responsible for remitting this money to Canada Revenue Agency, usually on or before the 15th day of the month following the month in which the deductions are deducted.

Employers are responsible for deducting income tax from the salaries, wages or other remuneration paid to employers. Since employees fall into various categories, employers usually need to complete TD1, Personal Tax Credit Return and TD1AB, Alberta Personal Tax Credit Return, in helping employers to decide what to deduct from their paycheque.

Both employers and employees contribute to the CPP. The contribution rate for 2011 is 4.95% (2010 - 4.95%) with an annual basic exemption of $3,500 and maximum pensionable earnings of $48,300 (2010 - $47,200) or maximum annual contributions of $2,217.60 (2010 - $2,163.15).

Employer's contribution to EI on behalf of employee is slightly more than the employee's. The EI premium rate for 2011 is 1.78% (2010 - 1.73%) with annual insurable earnings of $44,200 (2010 - $43,200) or maximum annual contributions of $786.76 (2010 - $747.36). Employer withholds EI premiums beginning with the first dollar of insurable earnings and stop deducting premiums when reaches the employee's maximum annual insurable earnings.

 

Capital Gains and Losses

Capital gain and losses are subject to special treatment. Changes to the taxation of capital gains have reduced from 3/4 to 2/3 after February 27, 2000 dispositions and further reduced to 1/2 for dispositions after October 17, 2000. To be a capital gain or loss, the gain or loss must be resulted from the disposition or deemed disposition of a property. A disposition of property occurs when there is a transaction, which entitles the seller to receive proceeds.

To claim capital gain or losses, the property must be capital in nature. Over the years, the courts have developed some guidelines to be considered when deciding whether the transaction is of a capital or income nature.

1. The period of ownership: property held for a short period will be considered to have been purchased for the purpose of resale and profits will be treated as income, while property that has been held a long time is more likely to be considered an investment and thus give rise to capital gain.

2. The frequency of similar transactions: a history of extensive buying and selling of similar properties may be taken as evidence indicating that the taxpayer is carrying on a business.

3. Improvement and development work: when an organized effort is made to put property into a more marketable condition, it may indicate a business of selling properties.

4. Reasons for and nature of sale: if a sale of property is the result of an active campaign to sell it rather than the result of something unanticipated at the time of purchase, the profits will be considered as business income (i.e. frustration of original intention).

5. The relationship of the transaction to the taxpayer's ordinary business.

Source: Preparing Your Income Tax Return, Taxworks 2001 edition.

 

Prescribed Interest Rates

 


Canada Revenue Agency released the new prescribed annual interest rates that apply to amounts owing to the CRA and vice versa. Rates are calculated quarterly in accordance with the appropriate legislation.


Canada Revenue Agency - Prescribed interest rates: http://www.cra-arc.gc.ca/tx/fq/ntrst_rts/menu-eng.html

CCA Rates and Classes

Class 1 CCA rate 4%
Description: Buildings acquired after 1987 including their component parts such as electric wiring, lighting fixtures, and plumbing, heating and cooling equipment, elevators and escalators.
Class 3 CCA rate 5%
Description: Buildings acquired before 1988 including their component parts as listed in class 1 above.
Class 6 CCA rate 10%
Description: Buildings made of frame, log, stucco on frame, galvanized iron or corrugated metal that are used in the business of farming or fishing, have no footings below ground; fences and most greenhouses.
Class 7 CCA rate 15%
Description: Canoes, boats and other vessels, including their furniture, fittings or equipment.
Class 8 CCA rate 20%
Description: Property that is not included in any other class such as furniture, calculators and cash registers, photocopy and fax machines, display fixtures, refrigeration equipment, machinery, tools costing more than $500 (if acquired after May 1, 2006), outdoor advertising billboards and greenhouses with rigid frames and plastic cover.
Class 9 CCA rate 25%
Description: Aircraft, including furniture, fittings or equipment attached and their spare parts.
Class 10 CCA rate 30%
Description: Automobiles (except taxis and others used for rent or lease), vans, wagons, trucks, buses, trailers, drive-in theatres, general purpose electronic data processing equipment (e.g.: computers) and system software, timber cutting and removing equipment.
Class 10.1 CCA rate 30%
Description: Passenger vehicles costing more than $30,000 if acquired after 2000.
• $27,000 if acquired in 2000;
• $26,000 if acquired after 1997 and before 2000;
• $25,000 if acquired in 1997;
• $24,000 if acquired after August 31, 1989 and before 1997;
• $20,000 if acquired before September 1989
Class 12 CCA rate 100%
Description: Chinaware, cutlery, linen, uniforms, dies, jigs, moulds or lasts, computer software, cutting or shaping parts of a machine, certain property used for earning rental income such as apparel or costumes and videotape cassettes; certain property costing not more than $500 (if acquired after May 1, 2006), such as kitchen utensils, tools and medical or dental equipment; certain property acquired after August 8, 1989 and before 1993 for use in a business of selling or providing services such as electronic bar-code scanners and cash registers used to record multiple sales taxes.
Class 13 CCA rate N/A
Description: Property that is leasehold interest. Separate classes are required for leasehold related to buildings erected on leased land. Leasehold improvements are amortized on a straight line basis for a minimum period of 5 years and the maximum period of 40 years.
Class 14 CCA rate N/A
Description: Patents, franchises, concessions and licenses for a limited period, limited to the lesser of:
• capital cost of the property spread over the life of property;
• the undepreciated capital cost of the property at the end of the taxation year.
Class 16 CCA rate 40%
Description: Automobiles for lease or rent, taxicabs and coin-operated video games or pinball machines; certain tractors and large trucks acquired after December 6, 1991 that are used to haul freight and weigh more than 11,788 kilograms.
Class 17 CCA rate 8%
Description: Roads, sidewalks, parking lot or storage areas, telephone, telegraph or non-electronic date communication switching equipment.
Class 38 CCA rate 30%
Description: Most power-operated movable equipment acquire after 1987 used for moving, excavating, placing or compacting earth, rock, concrete or asphalt.
Class 39 CCA rate 25%
Description: Machinery and equipment acquired after 1987 and before February 26, 1992 that is used in Canada primarily to manufacture and process goods for sale or lease.
Class 43 CCA rate 30%
Description: Machinery and processing machinery and equipment acquired after February 25, 1992 described in class 39 above.
Class 44 CCA rate 25%
Description: Patents and licenses to use patents for a limited or unlimited period that the corporation acquired after April 26, 1993. However, may elect not to include such property in class 44 by attaching a letter to the return for the year the corporation acquired the property.
Class 45 CCA rate 45%
Description: Property acquired after March 22, 2004 and before March 19, 2007(other than property acquired before 2005 in respect of which an election is made under subsection 1101(5q)) that is general purpose electronic data processing equipment and systems software for that equipment, including ancillary data processing equipment.
Class 46 CCA rate 30%
Description: Property acquired after March 22, 2004 and before March 19, 2007 that is data network infrastructure equipment and systems software for that equipment, that would, but for this class, be included in Class 8.
Class 47 CCA rate 8%
Description: Property acquired after February 22, 2005 that is transmission or distribution equipment (which may include for this purpose a structure) used for the transmission or distribution of electrical energy.
Class 48 CCA rate 15%
Description: Property acquired after February 22, 2005 that is combustion turbine (including associated burners and compressors) that generates electrical energy.
Class 49 CCA rate 8%
Description: Property acquired after February 22, 2005 that is a pipeline, including control and monitoring devices, valves and other equipment ancillary to the pipeline, used for the transmission (but not the distribution) of petroleum, natural gas or related hydrocarbons.
Class 50 CCA rate 55%
Description: Property acquired after March 19, 2007 that is general purpose electronic data processing equipment and systems software for that equipment, including ancillary data processing equipment.
Class 51 CCA rate 6%
Description: Natutal gas distribution pipelines acquired after March 18, 2007. Natural gas distribution pipelines through which natural gas is carried from transmission pipelines to customers. They include both distribution mains, which run to the edge of a customer's property, and service lines, which run from the edge of the customer's property to the house or building.
Class 52 CCA rate 100%
Description: Property acquired after January 27, 2009 and before February 2011 that is a general purpose electronic data processing equipment and systems software for that equipment, including ancillary data processing equipment.

2011 Personal Income Tax Rates

Federal tax rates - 2011
Taxable income
Tax on lower limit
Tax rate on excess
$ 0 - $41,544
$ –
15%
$41,545 – $83,088
$6,232
22%
$83,089 – $128,800
$15,731
26%
$128,801 and over
$27,256
29%
Alberta tax rate - 2011
10% of taxable income

 

Registered Plan and Pension Tables:
Year
RRSP
RPP
DPSP
2005
$16,500
$18,000
$9,000
2006
$18,000
$19,000
$9,500
2007
$19,000
$20,000
$10,000
2008
$20,000
$21,000
$10,500
2009
$21,000
$22,000
$11,000
2010
$22,000
$22,450
$11,225
2011
$22,450
$22,970
$11,485
2012
$22,970
Indexed
Indexed

 

Important Dates For Income Tax

Sole Proprietorship, Partnerships and Corporations


Monthly by the 15th
Remit the payroll deductions from employees' paycheques, along with employer's portion of CPP and EI premiums by the 15th day of the following month.

Last day of February
File T4 and T4A supplementary slips along with related summary. Distribute the supplementary slips to employees.


March 15
If self-employed, make first instalment payment of tax and CPP contributions.

Monthly or Quarterly
Corporations have to pay instalment of current year taxes by the last day of each month or each quarter.

March 31
Partnerships (except those made up of corporations, or a combination of individuals, corporations, or trusts with different filing dates) that are required must file a partnership information return.

Two months from taxation year-end
The balance of the corporation tax payable is due.

April 30
File T1 personal income tax return for the previous year. Pay any tax amounts owing. Most self-employed individuals and their spouses have until June 15 to file their returns.

Three months from taxation year-end
For corporations claiming small business deduction, the balance of the corporation tax payable is due.

June 15
If self-employed, make a second instalment payment. Self-employed individuals and their spouses must file their T1 personal income tax returns. However, tax payable is due by April 30 to avoid any interest charges.

Six months from taxation year-end
Corporations must file a T2 corporation income tax return no later than six months after the corporation's year-end.

September 15
If self-employed, make third instalment payment of tax and CPP contributions.

Six months after the end of the calendar or taxation year-end
File T5018 summary of contracts payments and statement of contract payments.

December 15
If self-employed, make fourth instalment payment of tax and CPP contributions.

December 31
For farmers and fishers, calculate and pay the amount of your current year tax instalment payment.


Source: RC4070 - Guide for Canadian Small Business