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NEWS

2023 TAX LETTER

MARCH 17, 2024

Hello valued clients & friends!

2023 has had its ups and downs for all of us. There has been the wind down of covid related programs, continued inflation, significant increases in government regulation and reporting, international strife, and worries about the cost of living for the average person. We know many were impacted by the forest fires and subsequent evacuations in the Okanagan this summer. Despite this, there has also been growth and stability in stock markets, and a renewed focus by many on helping our communities. It has been a privilege to be able to help you in this ever-evolving landscape, and we look forward to hearing from you this ‘Tax Season’ once again. Here is some information on some key tax items.

 

* TAX DROP-OFF DEADLINE - FRIDAY, APRIL 19, 2024 *

As we note each year, our office is VERY busy during tax season, and we do not want to let our clients down. To be able to serve everyone seeking our help, we need to receive as many tax returns in March as possible (and less in April) - we are humbly asking for your help to achieve this. We are NOT asking anyone to bring their returns in before they have everything they are waiting on - BUT for those who DO have everything available in March please bring it in ASAP.

Since we want to be able to assist all our clients in time, we need to take this opportunity to communicate our TAX RETURN DROP OFF DEADLINE OF APRIL 19, 2024. Beat the rush and come earlier if you can, HOWEVER, we can only ensure completion by the April 30, 2024, filing due date for returns we receive by this deadline.

REST ASSURED - we will always do all we can to serve you, and we will do our very best on any returns that come in after April 19, but we cannot assure their completion by April 30! Thank you for your help and understanding.

In this letter, we’ll briefly cover some tax considerations. This letter will be also be posted on our social media pages Facebook page https://www.facebook.com/oandacpa and Instagram Account https://www.instagram.com/ohlmanncpa/ Periodically items of tax interest will be posted there.

1. Tax Rates & Limits

2022 tax rates, brackets and credits are quite similar for 2022. The upper bracket sits fixed at 53.5% in B.C for income over $227,091. Details on combined (Federal & Provincial) B.C. rates can be found here: https://www.taxtips.ca/taxrates/bc.htm. Capital gains inclusion rates did not change in 2022, so only 50% of capital gains will be taxed on tax returns this year.

 

2. Residential Property Flipping Rule

Housing matters dominate many of the changes in taxation that the Federal Government has introduced. As mentioned in last year’s tax letter, legislation effective as of January 1, 2023 and will be of significant interest to anyone who is selling residential property (including their personal home) AND has recently sold a residential property (again including their previous personal home).

The tax implications to selling the same residential property (even if it is your home) within

one year are VERY significant in most cases. Please review this important item from last year’s tax letter on our website under “News” where it is posted or contact us for an emailed copy of that letter.

3. First-Time Home Savings Account (FHSA)

A new kind of tax-sheltered savings account has been introduced as of April 1st, 2023. This account has benefits and attributes similar to tax free savings accounts (TFSAs) and registered retirement savings plans (RRSPs). This includes:

  •  Qualifying contributions are tax deductible

  •  Qualifying withdrawals are not taxable income

  •  They can hold a variety of financial assets including stocks, savings accounts, GICs, and bonds

The account has its own contribution limits and other restrictions separate from that of TFSAs and RRSPs. The maximum annual contribution is $8,000.00 a year, for a maximum of $40,000.00 lifetime contributions. Qualifying withdrawals are in

very general terms, only those made for the purchase of a qualifying home when you have not lived in a home owned by yourself or your spouse in the tax year or the four prior calendar tax years. This account also allows the transfer of funds to and from RRSPs and FHSAs, though this does not qualify as additional tax-deductible contributions and has several restrictions. Do note that with transfers between RRSPs and FHSAs that since you cannot contribute to someone else’s FHSA (even a spouse’s), transfers from an RRSP that received a spousal contribution that year or the prior two year to an FHSA is NOT a qualifying contribution.

FHSAs can ONLY stay open to the later of 15 years (maximum life) or until the end of a year that you reach the age of 71.

You must file your income tax and benefit return for the year that you opened your first FHSA to let us know that you opened an account, even if you did not contribute to your FHSAs or transfer property from your RRSPs to your FHSAs in that year. Therefore please advise us if you have opened a FHSA in 2023 when you supply your income tax information, even if you did not contribute to it. Additionally, due to the 15 year maximum life of this account, we do not recommend opening a FHSA until a year that you plan to contribute.

4. The Underused Housing Tax (UHT)
In October we contacted all of our clients to educate them on this tax and to ensure they were not affected. The UHT has evolved since its introduction at the beginning of 2022, and continues to change for the 2023 and 2024 tax years. Those affected by this tax vary by tax year, and the filing deadline has repeatedly been extended. BOTH 2022 AND 2023 UHT filings are due on April 30, 2024. The vast majority of our clients are what would be termed “Excluded Owners” who do not need to file a UHT Return by virtue of being “an individual who is a Canadian citizen or permanent resident.” For 2022 this would not exclude you if you were named as an owner of a property with another person that earned income (arguably as rental partnership if the other person was not a spouse who co-owned the property), or if your name was on a property you did not own (such as having your name on an aging parents home or on an adult child’s to assist them with obtaining a mortgage). These common situations were nonsensical to make people required to file the UHT, but in 2022 they were required (and in fact still are for 2022). Thankfully, for 2023 it appears this will no longer be the case, and now being a non- citizen of Canada or a non-resident of Canada and owning real estate OR co-owning real estate with someone not a citizen of Canada or a Non-Resident of Canada may be the only situations where you need to file a UHT return.

5. Trusts

There have been significant changes in how Trusts are reported including “Bare Trusts” which must file for the first time ever in Canada. The title “Trusts” may sound unfamiliar to you, and may lead you to believe this topic does not impact you. Please read the attached documents (previously emailed to all clients in. February). This affects MANY unsuspecting Canadians and is having a significant impact this Tax Season already - it might relate to you as well!

6. Short Term Rental Charges

Much has changed regarding government and tax regulations for short term rental (STR) income. Short term rentals refer to rentals that are generally for vacations and run through websites like Air BnB or property managers. Federally this is defined as stays under 30 days, however there have been changes that now define them as under 90 days provincially. For personal income taxes there is little change for 2023. Any rental income, be it short term or long term rental income, must be reported on your income taxes. The two main changes to keep in mind are:

  1. a)  The federal government has proposed (but not implemented) new rules for 2024 that would prevent income tax deductions related to income from STRs that do not comply with provincial or municipal rules.

  2. b)  Earning short term rental income from direct bookings (not through a marketplace like Air BnB) can result in sales tax obligations at the federal and provincial levels.

7. Disability Tax Credit (DTC)
We try to ensure that all our clients who we believe might be eligible for the DTC are aware of it and the application process involved. However, there are certainly situations where you (or a loved one) may qualify, and this has not yet been identified or acted upon. The DTC is a valuable tax credit that is transferrable between spouses for unused amounts, or between family members you support with the necessities of life (breathing, eating, dressing, seeing, hearing, going the bathroom, mobility, and a few others including some situations of mental impairment or challenges with cognitive functions).

Please review this important item from last year's tax letter on our website under "News" - see below.

8. Pensioners' Income Splitting

Pensioners can still split up to 1/2 of qualifying pension income with no expected changes in this option.

 

9. Cryptocurrency

Cryptocurrency (CRYPTO) has experienced significant ups and downs in the past 2 years and is still an evolving and active asset class. It is a digital asset that can work as a medium of exchange of goods and services. A digital form of “money.” Cryptocurrencies in general take many forms. The best known CRYPTO is Bitcoin.

Please review this important item from last year's tax letter below. In addition, we have discussed this in greater length in the past on our social media channels and we encourage you to scroll to those Facebook or Instagram, or contact us for a link.

10. B.C. Renter's Credit

Introduced for 2023 is a refundable tax credit of up to potentially $400 for people in B.C. who rent and have a FAMILY income that is under $60,000. Between $60,000-$80,000 Family Income the credit is gradually eroded to $0. If you rent and have Family Income under $80,000 please advise us of the amount of rent you pay and the name of your landlord so that we can include a claim on your 2023 Income Tax Return. Note, you must have rented for 6 months during the year to qualify.

 

11. Changes to Work From Home Expenses Credit

Moving forward, the temporary flat rate deduction and the simplified Declaration of Conditions of Employment for Working at Home Due to COVID-19 form (T2200s) are NO LONGER available for the 2023 and future tax years.

 

Home office expenses are still claimable under the detailed method, which requires much more documentation and information than the temporary flat rate required but may allow for higher deductions. Those who work from home and obtain a Declaration of Conditions of Employment form (T2200) filled out and signed by their employer can continue to make claims under the detailed method. The detailed method also requires taxpayers to retain receipts and other documentation to verify their expense claims. For 2023, employees are able to claim home office expenses if they have voluntarily entered into a formal work from home arrangement with their employer and do work from home.

12. RRSP & Tax Free Savings Account (TFSA) Limits
The maximum RRSP deduction was $30,780 for the 2023 tax year ($31,560- 2024). Contributions must have been made by February 29, 2024, to deduct in 2023- those made after will be for 2024. The TFSA contributions limit increased to $6,500 for 2023 (and $7,000.00 for 2024). Tip: Ensure you have available RRSP/TFSA contribution room first overcontributions are penalized.

Finally, we want to remind everyone that scams under the name of CRA are always a risk and come up more often at this time of year. Please be VERY wary of calls from the “Canada Revenue Agency” especially if you feel they are pushy, demanding, or threatening. The CRA will also never require payment by credit card, gift cards, crypto currency or anything but payment to them in cash (and if doubt, only pay your CRA account (your Social Insurance Number) at a chartered bank, never over the phone, by interac transfer, paypal, or by purchasing gift cards of any kind. REMEMBER How to tell you’ve been contacted by a REAL CRA employee.

CONCERNED ABOUT “CRA SCAMS?” How to tell you’ve actually been contacted by a REAL CRA employee.

  • TELL the caller that you first want to verify their identity.

  • ASK for, and note the caller’s name, phone number and office location (you can also ask for the agent’s ID number,

    though some do not have one).

  • CALL the CRA phone number from the official CRA website to confirm that the call was legitimate (Individuals:

    1-800-959-8281, Businesses: 1-800-959-5525): and

  • CALL the CRA employee back.

  • If you think you’ve encountered a scammer, visit antifraudcentre.ca or call 1-888-495-8501.

Thanks folks, we hope you have an excellent 2024 - Your business and trust are so important to us -

THANK YOU for engaging us.

We will continue to work hard for you and if you're happy tell a friend, and if not, please tell us.

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2022 TAX LETTER

MARCH 13, 2023

Hello valued clients & friends!

2022 brought us more COVID, significant changes in markets and housing, war, high inflation and more. We hope for a calmer 2023 overall but one thing we know for sure is that we are happy to have the privilege to be able to help you as it’s ‘Tax Season’ once again, Here is some information on some key tax points.

 

* TAX DROP-OFF DEADLINE - APRIL 21, 2023 *

As we note each year, our office is VERY busy during tax season, and we do not want to let our clients down. To be able to serve everyone seeking our help, we need to receive as many tax returns in March as possible (and less in April) - we are humbly asking for your help to achieve this. We are NOT asking anyone to bring their returns in before they have everything they are waiting on - BUT for those who DO have everything available in March please bring it in ASAP.

Since we want to be able to assist all our clients in time, we need to take this opportunity to communicate our TAX RETURN DROP OFF DEADLINE OF APRIL 21, 2023. Beat the rush and come earlier if you can, HOWEVER, we can only ensure completion by the May 1, 2023, filing due date for returns we receive by this deadline.

REST ASSURED - we will always do all we can to serve you, and we will do our very best on any returns that come in after April 21, but we cannot assure their completion by May 1! Thank you for your help and understanding.

In this letter, we’ll briefly cover some tax considerations. This letter will be also be posted on our social media pages [Facebook page @oandacpa https://www.facebook.com/oandacpa and Instagram Account @ohlmanncpa https://www.instagram.com/ohlmanncpa/] Periodically items of tax interest will be posted there.

1. Tax Rates & Limits

2023 tax rates, brackets and credits are quite similar for 2023. The upper bracket still sits fixed at 53.5% in B.C for income over $240,716. Details on combined (Federal & Provincial) B.C. rates can be found here:  https://www.taxtips.ca/taxrates/bc.htm. Capital gains inclusion rates did not change in 2023, so only 50% of capital gains will be taxed on tax returns this year (though historically it has varied at times in the past and may still increase or decrease again).

 

2. Residential Property Flipping Rule

Housing matters dominate many of the changes in taxation that the Federal Government has introduced. As mentioned in last year’s tax letter, legislation effective as of January 1, 2023 and will be of significant interest to anyone who is selling residential property (including their personal home) AND has recently sold a residential property (again including their previous personal home).

The tax implications to selling the same residential property (even if it is your home) within

one year are VERY significant in most cases. Please review this important item from last year’s tax letter on our

website under “News” where it is posted or contact us for an emailed copy of that letter.

3. Increase to the First-Time Home Buyers Tax Credit

Did you purchase your first home in 2022? The First-Time Home Buyers’ Tax Credit has doubled and buyers can now access tax relief of $1,500. The relief is a non-refundable credit, meaning that your tax owing will be lowered by up to $1,500, but if your credit exceeds the tax you actually owe, no amount will be refunded to you. You can claim the credit for the purchase of a qualifying home in 2022 if both of the following apply:

  • You (or your spouse or common-law partner) acquired a qualifying home

  • You did not live in another home that you (or your spouse or common-law partner) owned in the year of acquisition

    or in any of the four preceding years (first-time home buyer)

 

4. The Underused Housing Tax (UHT)
At the beginning of 2022 the UHT came quietly into effect. As described by the CRA, “The Underused Housing Tax is an annual 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022. The tax usually applies to non-resident, non-Canadian owners. In some situations, however, it also applies to Canadian owners.” We know the vast majority of our clients are what would be termed “Excluded Owners” who do not need to file a UHT Return by virtue of being “an individual who is a Canadian citizen or permanent resident.” To that end, we know this tax will affect very few of our clients. However, as noted above, some Canadian owners can be impacted (as they may be “Affected Owners”) who have to file this return (even if they may have an exemption that avoids paying the tax). An

“Affected Owner” situation generally occurs if they are:

o any person - including an individual who is a Canadian citizen or permanent resident - that owns a residential property as a partner of a partnership

▪ While we may complete your Tax Returns, we may not know that this is your ownership form. If you are part of a formal (likely legal) partnership that owns real estate that is either vacant, rented below market, infrequently occupied, or solely occupied on a short term (ie. Air B&B) basis while being owned by a partnership (and you as a partner in that partnership), then you may have to file.

o an individual who is a Canadian citizen or permanent resident and who owns a residential property as a trustee of a trust (other than as a personal representative of a deceased individual- an Executor of an Estate)

▪ This tax is based on legal ownership, not beneficial ownership. Therefore a bare trust situation (where you may be on title for estate planning purposes or to have helped someone obtain financing) may make your ownership to be through a trust and you very well may need to file.

 

In these situations, the owner (even if a Canadian citizen or permanent resident) is an Affected Owner and must file a UHT return.

 

To reiterate, we believe very few will need to file this return and that not many who must file will have to pay any tax:

     

• If you do not own residential real estate, you will not need to file.
• If you are an Excluded Owner, you will not need to file.

o However, if you own residential property, and are a non-citizen/non-resident, or own through a proper partnership, or own as part of a trust (including a bare trust) or have a private corporation that owns- you very well may need to file   (even though you may be exempted from having to pay any tax).

We need to make extremely clear that filing for the UHT is NOT part of your annual Income Tax Return and it is possible we may be unable to assist you with it. Please do not assume your exposure to this tax is being determined for your situation when we prepare your Tax Return. It is not as we often would simply not know the information to be able to determine your requirement to file (or not). Please also remember, many may meet one of the (numerous) exemptions from paying any tax- but for those who must file, they would be required to file the UHT return by April 30 (including any private corporations, partnerships or trusts) and the penalties for not filing (even if no tax is owed) are extremely significant. If you believe that this may impact you we ask that you PLEASE read the following and try to assess your situation. If you are unsure, please send us an email with the details that make you believe that you may A/ be an “Affected Owner” (who has to file, even if you may have an exemption from paying the tax) and B/ what (if any) exemption you think you may qualify for. Please send these details to us in written form (email or drop off a written letter) as we (unfortunately) cannot answer these questions on phone in calls- the topic is too complicated and time-consuming during Tax Season unfortunately. We also ask that you contact us as early as possible- we are unsure what capacity we will have to assist with these filings (based on the complexity of this matter and the timing of it, as many of the concerning details have really only emerged in recent weeks and we, as with many small practitioners, are overrun with Tax Season). If we can assist, we will, but can only advise that we may be unable to and would like to try to advise anyone of that ASAP given the very punitive penalties.

Before contacting us, please consult the following to assess your situation as best you can:

https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html#3

https://static1.squarespace.com/static/5732b331d210b8ea38f6e7bd/t/63e3c20a318f9e55b2a5c9a2/1675870730784/ UHT+-+Quick+Reference+Chart+-+v2.1+-+01.31.2023.pdf

5. Disability Tax Credit (DTC)

We try to ensure that all our clients who we believe might be eligible for the DTC are aware of it and the application process involved. However, there are certainly situations where you (or a loved one) may qualify, and this has not yet been identified or acted upon. The DTC is a valuable tax credit that is transferrable between spouses for unused amounts, or between family members you support with the necessities of life. We would always take health over a tax credit, but where a disability arises,

this credit can assist. The bar to be qualified is rather high (a Dr. needs to determine the person is “markedly restricted” due to their impairment in being able to manage a basic function of life without assistance (functions include: breathing, eating, dressing, seeing, hearing, going the bathroom, mobility, and a few others). It is often much harder to qualify for than CPP Disability, EI Disability, Provincial Disability, or other Disability Pensions. However, if you suspect you or someone close may qualify, please contact us. Applications may not be fully processed during tax season, but when approved it has the potential to be retroactive and adjustments to claim it in prior years can be made. This year, the government has expanded eligibility, providing some broader access to the DTC. Specifically, the definition of mental functions/impairment is being expanded as well as loosening the restrictions of life-sustaining therapy requirements (and specifically making TYPE 1 Diabetics eligible, but not TYPE 2). We want to make sure all our clients are aware of the substantially updated T2201 Disability Tax Credit Certificate form and the new digital application form for medical practitioners to fill out. If you think you or a loved one you know may now qualify for the DTC, let us help you make application and adjustments to any prior year tax returns impacted by the DTC you may now qualify for (likely following the current Tax Season).

6. Pensioners' Income Splitting
Pensioners can still split up to 1/2 of qualifying pension income with no expected changes in this option.

7. Cryptocurrency

Cryptocurrency (CRYPTO) is certainly a hot topic these days, although it remains mysterious to some people (and with respect to taxes, can be quite confusing). CRYPTO is a digital representation of value that is not legal tender. It is a digital asset that can work as a medium of exchange of goods and services. Cryptocurrencies in general take many forms. The best known CRYPTO is Bitcoin. Bitcoin is not controlled by any particular party, and operates independently of any central bank, central authority, or government. In some ways it is useful to think of CRYPTO a bit like gold. Gold has been an asset that holds value over long periods and is used to hedge against market downturns and tumultuous events- an alternative to currency or other investments. CRYPTO is “younger” but is an asset that people also use to store value (or grow in value) and hedge against economic uncertainties.

A disposition of CRYPTO triggers a reportable and taxable transaction. The proceeds in Canadian dollars at the time of disposition need to be determined for reporting purposes. The exchange of CRYPTO for other goods and services or another form of CRYPTO, rather than for cash, is a barter transaction which involves a disposition of the CRYPTO that also must be reported at fair market value. The value in Canadian dollars at the time of one of these transactions (sale or exchange for goods) can be determined from the exchange broker (if one is used) or an average of midday values across several high-volume exchange brokers. However, taxpayers must track all their purchases and dispositions/exchanges throughout the year and be consistent in the method of pricing/valuation used in their record keeping. The responsibility to do this always rests with the taxpayer. This is really the same as with buying/selling stocks. However, stock prices and transactions are generally presented in monthly statements and annual summaries to a taxpayer from an investment advisor or stockbroker, whereas it is up to the individual to keep all details on purchases/dispositions/exchanges through the year when it comes to CRYPTO.

As we have noted before, if you have CRYPTO transactions, please track them (all purchases and dispositions/exchanges) and provide them to us when you supply your tax materials to us.

A significant question for our clients is whether to record these CRYPTO transactions as “business income” or “capital gains.” If the holding and disposition of CRYPTO is a part of a business (or regular pattern of buying and selling that resembles business activity), the profits are fully included as business income. If the activities do not constitute carrying on

a business, the determination of whether the taxpayer realizes ordinary income, or a capital gain will depend on other factors.

CRA has indicated that they generally treat CRYPTO’s as commodities and that speculators in commodities may report all their gains and losses on such transactions as capital gains or losses, provided they do so consistently from year to year. CRA can always take an alternate view on this emerging area of taxation based on the facts of a taxpayer’s specific situation, but most will likely have CRYPTO transactions treated as capital gains/losses. Last year we posted a longer writeup on our Facebook page which you can still scroll to in the feed.

8. Electronic Notice of (Re)Assessments (NOA- Notice of Assessment / NORA- Notice of Reassessment)

CRA are continuing the process of switching to electronic NOA’s / NORA’s. Taxpayers who netfile or efile their returns will receive their NOA / NORA electronically through the netfile software or efile service provider and / or through My Account. If the return is filed on paper, the NOA / NORA will be provided through My Account if the taxpayer provided CRA with an email address or by mail if no address was provided. We want to advise that you consider making 2023 the year to prepare for this conversion and establish a My Account, if not already done so. If you have any questions do not hesitate to call us after May for assistance. We are happy to assist as best we can, but unfortunately, the demands of Tax Season will not allow us to help with this during the next few months.

 

9. Work From Home Expenses Credit

As noted last year, the CRA extended to 2022 the working from home deduction and the temporary flat rate deduction. The maximum yearly claim for the flat rate is $500 ($500 in 2021). Those who worked from home for at least 50% of the year for at least four consecutive weeks will be able to claim home office expenses. If working from home because of COVID is new to you for 2022, the CRA has created a simplified form, the T2200S. Bring this form to your employer’s attention for them to sign promptly. We can then work with you on what expenses to tally (per the attached guidance) and provide to us so they can be used as deductions against your income. However, this approach is detailed and there is a temporary $2 a day “Flat Rate” or “Simplified” method that may be a better fit for your situation (easier, without the need to get an employer signed document or retain various receipts). Please note you cannot claim expense amounts that an employer reimbursed you for. See the attached document for more details.

10. RRSP & Tax Free Savings Account (TFSA) Limits
The maximum RRSP deduction was $29,210 for the 2022 tax year ($30,780 - 2023). Contributions must have been made by March 1, 2023, to deduct in 2022- those made after will be for 2023. The TFSA contributions limit held at $6,000 for 2022 but has increased to $6,500 for 2023. Tip: Ensure you have available RRSP/TFSA contribution room first overcontributions are penalized.

The CRA released this TAX TIP for everyone to take note of given the numerous scammers out there:

CONCERNED ABOUT “CRA SCAMS?” How to tell you’ve actually been contacted by a REAL CRA employee.

  • TELL the caller that you first want to verify their identity.

  • ASK for, and note the caller’s name, phone number and office location (you can also ask for the agent’s ID number,

    though some do not have one).

  • CALL the CRA phone number from the official CRA website to confirm that the call was legitimate (Individuals:

    1-800-959-8281, Businesses: 1-800-959-5525): and

  • CALL the CRA employee back.

  • If you think you’ve encountered a scammer, visit antifraudcentre.ca or call 1-888-495-8501.

Thanks folks, have an excellent and safe 2023. As always, we want to THANK you for your business and trust.

We continue to work hard to do the best that we can. If you're happy tell a friend, but if you aren't please tell us.

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2021 TAX LETTER

FEBRUARY 26, 2022

Hello valued clients & friends!

2021 has come and gone, another year filled with COVID issues. On the tax front, Canada Revenue Agency (CRA) wants us all to know it’s ‘Tax Season’ again. We at Ohlmann & Associates want to help you to be ready. Here is some information to build your knowledge on some key tax points.

*TAX DROP-OFF DEADLINE - APRIL 21, 2022*

As we note each year, our office is VERY busy during tax season, and we do not want to let our clients down. For us to be able to serve everyone seeking our help, we need to receive as many tax returns in March as possible, and less in April - we are humbly asking for your help to achieve this. Please note we are NOT asking anyone to bring their returns in before they have everything they are waiting on - BUT for those who DO have everything available in March please bring it in ASAP. Thank you for this help!

Since we want to be able to assist all our clients in time, we need to take this opportunity to communicate our TAX RETURN DROP OFF DEADLINE OF APRIL 21, 2022. Beat the rush and come earlier if you can, HOWEVER, we can only ensure completion by the April 30, 2022, filing due date for returns we receive by the end of April 21, 2022.

REST ASSURED - we will always do all we can to serve you, and we will do our very best on any returns that come in after April 21, but we cannot assure their completion by April 30! Thank you for your support and understanding.

In this letter, we’ll briefly cover some tax considerations.

 

1. Tax Rates & Limits

Good News! 2021 tax rates remain unchanged with no increases in each bracket. The upper bracket sits fixed at 53.5% in B.C for income over $222,420. The combined (Federal & Provincial) rate for middle income earners in B.C. ($84,369 - $96,866) remains at 31%. Further, the basic personal amount for individuals has increased from $13,299 to $13,808.

2. Work From Home Expenses Credit

As the pandemic carries on in the world, many people continued working from home in 2021. As such, the CRA has

extended to 2021 and 2022 the working from home deduction and the temporary flat rate deduction. The maximum yearly claim for the flat rate has increased to $500 (from $400 in 2020). Those who worked from home for at least 50% of the year for at least four consecutive weeks will be able to claim home office expenses. The T777S and T2200S forms are very similar to the 2020 forms. If working from home because of COVID is new to you for 2021, the CRA has created a simplified form, the T2200S. Bring this form to your employer’s attention for them to sign promptly. We can then work with you on what expenses to tally (per the attached guidance) and provide to us so they can be used as deductions against your income. However, this approach is detailed and there is a temporary $2 a day “Flat Rate” or “Simplified” method that may be a better fit for your situation (easier, without the need to get an employer signed document or retain various receipts). Please note you cannot claim expense amounts that an employer reimbursed you for. See the attached document for more details.

3. One-time $500 OAS payment

For our senior clients who were 75 or older as of June 30, 2021, please remember that you received a one-time $500 OAS payment in August 2021. Take note this will be considered taxable income to you this year (no deductions were withheld) and will be reported on a separate T4A slip (in box 205). This is in addition to the T4A(OAS) that you will also be receiving. In addition, the government announced that regular OAS payments to individuals 75 and older will increase by 10% permanently in July 2022.

          

4. Disability Tax Credit (DTC)

We try to ensure that all our clients who we believe might be eligible for the DTC are aware of it and the application process involved. However, there are certainly situations where you (or a loved one) may qualify, and this has not yet been identified or acted upon. The DTC is a valuable tax credit that is transferrable between spouses for unused amounts, or between family members you support with the necessities of life. We would always take health over a tax credit, but where a disability arises, this credit can assist. The bar to be qualified is rather high (a Dr. needs to determine the person is “markedly restricted” due to their impairment in being able to manage the basic functions of life without assistance (functions include: breathing, eating, dressing, seeing, hearing, going the bathroom, mobility, and a few others). It is often much harder to qualify for than CPP Disability, EI Disability, Provincial Disability, or other Disability Pensions. However, if you suspect you or someone close may qualify, please contact us. Applications may not be fully processed during tax season, but when approved it has the potential to be retroactive and adjustments to claim it in prior years can be made. This year, the government has expanded eligibility, providing some broader access to the DTC. Specifically, the definition of mental functions/impairment is being expanded as well as loosening the restrictions of life-sustaining therapy requirements. We want to make sure all our clients are aware of the substantially updated T2201 Disability Tax Credit Certificate form and the new digital application form for medical practitioners to fill out. If you think you or a loved one you know may now qualify for the DTC, let us help you make application and adjustments to any prior year tax returns impacted by the DTC you may now qualify for (likely following the current Tax Season).

5. Zero Emission vehicles

As we have pointed out in the past, if you purchased a zero-emission vehicle there is a VERY generous business deduction

(for small corporations, self-employed individuals, partners in partnerships and those claiming employment expenses). The deduction has not only increased to a maximum $59,000 CCA write off in the year of purchase, but the government has extended this accelerated capital cost allowance to a wider array of eligible zero-emission automotive equipment and vehicles. This now includes arm’s length purchases of used zero-emission vehicles meeting certain criteria. This is significant as previously this credit was only available on new zero-emission vehicles. These changes will take effect as of January 1, 2022

6. Cryptocurrency

Cryptocurrency (CC) is certainly a hot topic these days, although it remains mysterious to some people (and with respect to taxes, can be quite confusing). CC is a digital representation of value that is not legal tender. It is a digital asset that can work as a medium of exchange of goods and services. Cryptocurrencies in general take many forms. The best known CC is Bitcoin. Bitcoin is not controlled by any particular party, and operates independently of any central bank, central authority, or government. In some ways it is useful to think of CC a bit like gold. Gold has been an asset that holds value over long periods and is used to hedge against market downturns and tumultuous events- an alternative to currency or other investments. CC is “younger” but is an asset that people also use to store value (or grow in value) and hedge against

economic uncertainties.

A disposition of CC triggers a reportable and taxable transaction. The proceeds in Canadian dollars at the time of disposition need to be determined for reporting purposes. The exchange of CC for other goods and services, rather than for cash, is a barter transaction which involves a disposition of the CC that also must be reported at fair market value. The value in Canadian dollars at the time of one of these transactions (sale or exchange for goods) can be determined from the exchange broker (if one is used) or an average of midday values across several high-volume exchange brokers. However, taxpayers must track all their purchases and dispositions/exchanges throughout the year and be consistent in the method of pricing/valuation used in their record keeping. The responsibility to do this always rests with the taxpayer. This is really the same as with buying/selling stocks. However, stock prices and transactions are generally presented in monthly statements and annual summaries to a taxpayer from an investment advisor or stockbroker, whereas it is up to the individual to keep all details on purchases/dispositions/exchanges through the year when it comes to CC.

As we have noted before, if you have CC transactions, please track them (all purchases and dispositions/exchanges) and provide them to us when you supply your tax materials to us.

A significant question for our clients is whether to record these CC transactions as “business income” or “capital gains.” If the holding and disposition of CC is a part of a business (or regular pattern of buying and selling that resembles business activity), the profits are fully included as business income. If the activities do not constitute carrying on a business, the determination of whether the taxpayer realizes ordinary income, or a capital gain will depend on other factors.

CRA has indicated that they generally treat CC’s as commodities and that speculators in commodities may report all their gains and losses on such transactions as capital gains or losses, provided they do so consistently from year to year. CRA can always take an alternate view on this emerging area of taxation based on the facts of a taxpayer’s specific situation, but most will likely have CC transactions treated as capital gains/losses. We’ve posted a longer writeup on our Facebook page.

   

7. US Economic Impact Stimulus Payments

Americans living in Canada who received this U.S. government assistance related to the COVID-19 pandemic will not

have to include these amounts on their Canadian tax returns. This was confirmed by a CRA technical interpretation dated August 31, 2020 “the amount of any Advance Payment received, or Tax Credit claimed, under the US Economic Income Payment Program (EIP) by a Canadian resident individual, would not be required to be included in the individual’s income under the Income Tax Act.” Some individuals with cross border tax obligations may have received some of these payments in 2021.

8. Electronic Notice of (Re)Assessments (NOA- Notice of Assessment / NORA- Notice of Reassessment)

CRA has announced that they will begin the process of switching to electronic NOA’s / NORA’s in 2022. Taxpayers who netfile or efile their returns will receive their NOA / NORA electronically through the netfile software or efile service provider and / or through My Account. If the return is filed on paper, the NOA / NORA will be provided through My Account if the taxpayer provided CRA with an email address or by mail if no address was provided. We want to advise that you consider making 2022 the year to prepare for this conversion and establish a My Account, if not already done so. If you have any questions do not hesitate to call us after May for assistance. We are happy to assist as best we can, but unfortunately, the demands of Tax Season will not allow us to help with this during the next few months.

9. Administrative relief for Canadian & US resident cross border workers

In 2020 the CRA provided administrative relief in respect of the 183-day test in the employment article of the Canada- United States income tax treaty. This was in respect of for US-resident individuals present in Canada and exercising their employment duties in Canada solely due to the travel restrictions, and likewise Canadian resident individuals forced to perform their employment duties from their home in Canada instead of at the office of their Unites States employer. CRA stated that those days would not count toward the 183-day test for employment income. For the 2021 tax year, the CRA has extended this relief to the earlier of the lifting of travel restrictions and December 31, 2021. Therefore, individuals “stuck” on one side of the border for more than 183 days would not necessarily be deemed residents of that country for tax purposes.

10. COVID Benefits – Repayment of and related tax slips

During the pandemic, the government, to support impacted Canadians, introduced many forms of emergency benefits – Canada Emergency Response Benefit (CERB), Employment Insurance benefits, Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB), Canada Recovery Caregiving Benefit (CRCB) and Canada Recovery Sickness Benefit (CRSB). These benefits represent taxable income and will be reported on T4A and T4E statements issued to recipients to include their income. Later on you may have found out you weren’t actually eligible and repaid it. If this is the case, you will be receiving a T4A slip and the repayment amount will appear in Box 201.

11. Pensioners' Income Splitting
Pensioners can still split up to 1/2 of qualifying pension income with no expected changes in this option.

12. RRSP & Tax Free Savings Account (TFSA) Limits
The maximum RRSP deduction is 27,830 for the 2021 tax year ($29,210 - 2022). Contributions must have been made by March 1, 2022, to deduct in 2021- those made after will be for 2022. The TFSA contributions limit is held at $6,000 for 2021 & 2022. Tip: Ensure you have available RRSP/TFSA contribution room first overcontributions are penalized.

 

The CRA released this TAX TIP for everyone to take note of given the numerous scammers out there:

CONCERNED ABOUT “CRA SCAMS?” How to tell you’ve actually been contacted by a REAL CRA employee.

  • TELL the caller that you first want to verify their identity.

  • ASK for, and note the caller’s name, phone number and office location.

  • CALL the CRA phone number from the official CRA website to confirm that the call was legitimate (Individuals:

    1-800-959-8281, Businesses: 1-800-959-5525): and

  • CALL the CRA employee back.

  • If you think you’ve encountered a scammer, visit antifraudcentre.ca or call 1-888-495-8501.

Thanks folks, have an excellent and safe 2022. As always, we want to THANK you for your business and trust.

We continue to work hard to do the best that we can. If you're happy tell a friend, but if you aren't please tell us.

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KELOWNA CRANE COLLAPSE

JULY 12, 2021

Thank you to our clients and friends for your kind and thoughtful inquiries in the wake of this tragedy.

Our team was on site at the time of the accident, but were completely safe.  Our thoughts, wishes and prayers remain for those individuals who affected, and their families.

We are aware some people may have attempted to contact us in the period we were evacuated from the building and non-operational.  If you telephoned in the period of July 12 – July 21, 2021 you would not have got an answer (and no voicemail, as electricity was off to our building and systems were disrupted).  We apologize for this gap in availability,  and ask that if you needed to contact us that you reach out now that things have returned to a more normal state.We would be happy to assist.

Once again, we are grateful for the concern and kindness expressed to us, and wish you all the best at this time.

 

Robert and The Ohlmann & Associates Team

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2020 TAX LETTER

MARCH 7, 2021

Hello valued clients & friends! 2020 flew has ended (thankfully) it’s ‘Tax Season’ again & we want to help you be ready.

*TAX DROP-OFF DEADLINE - APRIL 21, 2021*

As we have noted before, we are lucky enough to have a special “problem” in that our office is VERY busy during tax season and we do not want to let our clients down. For us to be able to serve everyone seeking our help, we need to receive as many tax returns in March as possible, and less in April- we are humbly asking for your help to achieve this. Please note we are NOT asking anyone to bring their returns in before they have everything they are waiting on- BUT for those who DO have everything available in March please bring it in ASAP. Thank you for this help!

Since we want to be able to assist all of our clients in time, we need to take this opportunity to communicate our TAX RETURN DROP OFF DEADLINE OF APRIL 21, 2021. Beat the rush and come earlier if you can, HOWEVER, we can only ensure completion by the April 30, 2021 filing due date for returns we receive by the end of April 21, 2021.

REST ASSURED - we will always do all we can to serve you, and we will do our very best on any returns that come in after April 21, but we cannot assure their completion by April 30! Thank you for your support and understanding.

In this letter, we’ll briefly cover some tax considerations. We hope the following information is helpful for you.

1. Tax Rates

2020 tax rates have changed with increases in each bracket and an upper bracket of 53.5% in B.C for income over $222,420. The combined (Federal & Provincial) rate for middle income earners in B.C. ($84,369 - $96,866) remains at 31%.

2. Canada Emergency Response Benefit (CERB) Repayment & 2020 Income Tax Debt Interest Relief

On Feb. 9, 2021 it was announced that self-employed persons who applied for the CERB would have qualified based on their gross income and won’t be required to repay CERB provided they met all eligibility requirements. Canada Revenue Agency (CRA) and Service Canada will return any repaid CERB payments to self-employed individuals whose net self- employment income was less than $5,000 and who have already voluntarily repaid their CERB over the coming months.

Of important note: The government will also provide interest relief to Canadians who received COVID-related income support benefits. Once individuals have filed their 2020 income tax and benefit return, they will not be required to pay interest on any outstanding income tax debt for the 2020 tax year until April 30, 2022.

In order to qualify for this targeted interest relief, individuals must have had taxable income of $75,000 or less in 2020 and have received income support in 2020 through one or more of the following COVID-19 measures:

 

• the Canada Emergency Response Benefit (CERB);

• the Canada Emergency Student Benefit (CESB);

• the Canada Recovery Benefit (CRB);

• the Canada Recovery Caregiving Benefit (CRCB);

• the Canada Recovery Sickness Benefit (CRSB);

• Employment Insurance benefits;

 

The CRA will automatically apply the interest relief for individuals who meet these criteria. Interest will still be applicable on tax debt if no COVID benefits were received by the taxpayer during 2020. Additionally, any CRA- administered credits and benefits, such as the Canada Child Benefit and the goods and services tax/harmonized sales tax credit, will not be applied to reduce individuals’ tax debt owing for 2020.

3. Work From Home Expenses Credit

Many more people were working from home with COVID restrictions, and the CRA has formalized that those who worked from home for at least 50% of four consecutive weeks will be able to claim home office expenses. If working from home is new to you for 2020, the CRA has created a simplified form, the T2200S; bring this form to your employer’s attention for them to sign promptly.

       

We can then work with you on what expenses to tally (per the attached guidance) and provide to us so they can be used as deductions against your income. However, this approach is detailed and there is a temporary “Flat Rate” or “Simplified” method that may be a better fit for your situation (easier, without the need to get an employer signed document or retain various receipts). Please see the attached document for more details.

4. Zero Emission vehicles

We want to remind that if you purchased a zero emission vehicle there is a VERY generous business deduction (for small corporations, but also for self-employed individuals, partners in partnerships and those claiming employment expenses). The deduction is a maximum $55,000 depreciation write off all in one year. The vehicle must be for business use and must be a “full zero emission vehicle” (many “green” cars do not meet the standards of being “fully electric, a plug-in hybrid with battery capacity of 15kWh, or be powered by hydrogen”). The vehicle must also not have been used before being acquired. Few will qualify for this credit, but support is available for “green vehicles”- perhaps with more to come.

5. Pensioners' Income Splitting
Pensioners can still split up to 1/2 of qualifying pension income with no expected changes in this option.

6. RRSP & Tax Free Savings Account (TFSA) Limits
The maximum RRSP deduction is $27,230 for the 2020 tax year ($27,830 - 2021). Contributions must have been made by March 1, 2021 to deduct in 2020- those made after will be for 2021. The TFSA contributions limit held at $6,000 for both 2020 & 2021. For RRSP & TFSA ensure you have available contribution room first - overcontributions are penalized.

7. Home Buyers Plan (HBP) & Home Buyers Credit (HBC)

On March 19, 2019 HBP limits increased. This means those eligible to participate (first time home buyers) can withdraw up to $35,000 from their RRSP. Therefore, a couple could withdraw a combined $70,000 from their RRSPs to buy their first property. Please advise us if you bought your first home so that we can help you or your spouse claim the first time Home Buyer’s Credit (HBC) of a $750 reduction in tax owed.

8. Bitcoin and Cryptocurrency

Bitcoin is very relevant these days. We offer a reminder that, when purchased and later sold, transactions in these items create a capital gain or loss. Please track these and provide them to us when you bring your tax materials to us.

9. Disability Tax Credit (DTC)

If you or a loved one have significant ailments that “markedly restrict” (or significantly impair) the basic functions of life (eating, breathing, seeing, dressing, going to the bathroom or having basic mobility) and they require support for these, they may be entitled to apply for the DTC. Please contact us about this in May or June so we can help apply (it will not be processed in time for the 2020 tax returns, but we can help file adjustments to claim for earlier years when approved).

10. Canada Training Credit

This is a new and complicated credit to recognize education for those aged 26-65. Given its complexity, please see the description on our Facebook page (https://www.facebook.com/oandacpa/) or the government’s page.

TAX TIP: Make collecting medical expenses easier and (more importantly) more accurate for 2020!

Medical practitioners you visit regularly (such as Pharmacists, Dentists, Orthodontists, Podiatrists, Registered Massage Therapists, Physiotherapists and Chiropractors) will usually provide you an annual summary of payments made for use in completing your taxes if you ask (a phone call to them will often be all it takes). You save significant time as opposed to looking for receipts and have the confidence of knowing all expenses are included. Please note also that extended health insurance providers can generate summaries that show total expenses made on medical items and the amount that insurance reimbursed- making clear tax deductible amounts. We strongly encourage use of these tools!

 

Thanks folks, this has been a very brief summary. As always we want to THANK you for your business and trust. We continue to work hard to do the best that we can. If you are happy, please let others know, and us if you aren’t.

 

We are optimistic that the pandemic may soon be behind us - and we are wishing you all a SAFE and prosperous 2021!

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2019 TAX LETTER

FEBRUARY 20, 2020

Hello valued clients & friends! 2019 flew by & it’s ‘Tax Season’ again & we want to help you be ready. 

 

*TAX DROP-OFF DEADLINE- APRIL 21, 2020: NEW THIS YEAR* 

As we have noted before, we are lucky enough to have a special “problem” in that our office is VERY busy during tax season!  We are grateful to have this challenge but do not want to let our clients down. Unfortunately, this year our team has experienced challenges beyond anyone’s control and as a result we are at the foot of tax season and we do not have the same level of staffing resources we have had in other years.  This creates issues for our capacity- particularly in the month of April. In order for us to be able to serve everyone seeking our help, we need to receive as many tax returns in late February and March as possible, and fewer in April- we are humbly asking for your help to achieve this.  Please note- we are NOT asking anyone to bring their returns in before they have everything they are waiting on. BUT we are asking those who have everything in February & March to bring it ASAP please. 

 

While to date, we haven’t needed to turn clients away late in the tax season, the capacity issues discussed above create challenges this year in April. 

Since we want to be able to help all of our clients we need to take this opportunity to communicate our TAX RETURN DROP OFF DEADLINE OF APRIL 21, 2020. Beat the rush and come earlier if you can, but we can only ensure completion by the April 30, 2020 filing due date for returns we receive by the end of April 21, 2020.

 

REST ASSURED- we will always do all we can to serve you, and we will do our best on any that come in after April 21, but we cannot assure their completion by April 30! Please beat the rush and bring tax returns in as early as possible. Thank you for your support and understanding.

 

In this letter, we’ll briefly cover some tax considerations. We hope the following information is helpful for you.

 

1. Tax Rates​

2019 tax rates are unchanged from 2018 with slight increases in the income subject to each bracket. As an average example, the combined (Federal & Provincial) rate for middle income earners in B.C. ($81,416 - $93,476) is still 31%, with the rate on taxable income of over $210,371 (the “top rate”) remains at 49.8%. 

2. Pensioners' Income Splitting

Pensioners can still split up to 1/2 of qualifying pension income with no expected changes in this option.

 

​3. RRSP & Tax Free Savings Account (TFSA) Limits

The maximum RRSP deduction limit is at $26,500 for the 2019 tax year ($27,320 for 2020). Contributions must be made by February 29, 2020 to deduct for 2019- but ensure you have available contribution room first. The limit for TFSA contributions held at $6,000 for 2019, remaining at $6,000 for 2020. 

 

​4. Home Buyers Plan

Effective March 19, 2019 limits have been increased. This means those eligible to participate (first time homebuyers) can withdraw up to $35,000 from their RRSP, up from $25,000 in previous years. Therefore a couple could withdraw a combined $70,000 from their RRSPs to buy their first property

 

5. Zero Emission Vehicles​

Also effective March 19, 2019, if you purchased a zero emission vehicle there is a very generous business deduction 

(for small corporations, but also for self-employed individuals & partners in partnerships). The deduction is a maximum $55,000 depreciation write off all in one year.  The vehicle must be for business use and must be a “full zero emission vehicle” (many “green” cars do not meet the standards of being fully electric, a plug-in hybrid with battery capacity of 15kWh, or be powered by hydrogen).  The vehicle must also not have been used for any other purpose before being acquired.  Few will qualify for this, but it indicates the support available for green initiatives.

 

​6. Tax on Split Income (TOSI) Rules

Just a reminder that as of 2018, the (still relatively new) TOSI rules apply to Canadians.  As previously mentioned in last year’s letter the rules are extremely complicated and will be very hard for the tax community and Canada Revenue Agency to navigate in the years to come. However it is important to know that (particularly if you own a small business corporation), the ability for a spouse active in the business to split income with a non-active spouse/family member has become extremely limited.

 

​7. Bitcoin and Cryptocurrency

A reminder that, when purchased and later sold, transactions in these items create a capital gain or loss.  Please track these and provide them to us when you bring your tax materials to us.

 

​8. Deductibility of Service Animal Expenses

The Service Animal Medical Tax Credit has been expanded and now includes costs associated with specially trained animals that assist in coping with a severe mental impairment. This means many Canadians who require psychiatric service dogs for a host of issues such as post-traumatic stress disorder (PTSD) can receive a tax break. Most Canadians won’t be affected as animals that provide comfort or emotional support but have not been specially trained to perform specific tasks above will not be eligible. 

9. Foreign Property (Asset) Disclosure

It is crucial to advise if you own ANY foreign property over $100K Cdn (land, US stocks, foreign bank accounts etc.).  Severe penalties for failure to report exist- please contact us if you require a refresher.

 

​10. Missing T Slip Penalties

If you fail to report a T slip for income in any two years out of four, you are subject to a 10% penalty (Federal and Provincial) of the income- even if no income tax is payable. Please be sure to include all slips.

11. Canada Training Credit

This is a new and complicated credit to recognize education for those aged 26-65. Given its complexity, please see the description we will post on our Facebook page https://www.facebook.com/oandacpa/ or the government’s page.

 

TAX TIP: Make collecting medical expenses easier and (more importantly) more accurate for 2019!

Medical practitioners you visit regularly (such as Pharmacists, Dentists, Orthodontists, Podiatrists, Registered Massage Therapists, Physiotherapists and Chiropractors) will usually provide you an annual summary of payments made for use in completing your taxes if you ask (a phone call to them will often be all it takes). You save significant time as opposed to looking for multiple receipts and will have the confidence of knowing all expenses are included. Please note also that extended health insurance providers can generate summaries that show total expenses made on medical items and the amount that insurance reimbursed- making clear the tax deductible amount. We strongly encourage clients to use these tools!

 

**U.S. citizens who’ve not been U.S. filing taxes (IRS) while resident in Canada should do so- please inquire.**

 

Thanks folks, this has been a very brief summary.  We encourage you to contact us with questions. As always we want to THANK you for your business and trust. We’ll continue working hard to do the best that we can. If you are happy, please let others know, but if you’re not, please tell us. 

Wishing you a safe and prosperous 2020!

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