ELECTRONIC FILING (EFILE)
Q: What is electronic filing?
Q: What are the benefits of EFILE?
Q: Are there some tax returns that cannot be EFILED?
Q: How can I be assured that my personal tax information will remain confidential?

EMPLOYMENT EXPENSES
Q: Can I deduct the cost of commuting to and from my place of work?
Q: Can I claim my car expenses as an employment expense?
Q: How can I claim my auto expense as employment expense?
Q: I need a car for work and wanted to know the tax advantages or disadvantages of purchasing versus leasing a car?
Q: I am a tradesperson and had to buy tools. Can I claim the amount I paid for tools?
Q: My work requires me to travel. Can I deduct my meals as meal expenses?

MEDICAL EXPENSES
Q: Which spouse can claim medical expenses?
Q: I had to pay for dental treatment for my 22-year-old son attending university. Can I claim these as medical expenses?
Q: Can over- the-counter drugs such as aspirin be claimed as medical expense?

AMOUNT FOR ELIGIBLE DEPENDANTS
Q: Who can claim the amount for eligible dependants?
Q: I pay child support payments to my ex-wife on behalf of our daughter. My daughter moved in with me in August, therefore I was no longer required to make support payments. Am I eligible to claim the amount for an eligible dependant for the period that she started living with me?
Q: My marital status changed last year from single to married while I was supporting my five-year old son from a previous relationship. Can I claim the amount for an eligible dependant for my son?

CHARITABLE DONATIONS
Q: How many years can you carry forward unclaimed charitable donations?
Q: I attended a function deemed as a fundraiser for a "recognized" Canadian charity. Can I claim the tickets I purchased as a charitable donation?
Q: I have charitable donation receipts of approximately $175 this year. I plan to donate the same amount next year. Is it better to claim this year’s donations on this year's tax return or wait until next year to claim them?

DISABLED TAXPAYERS
Q: Who can claim the disability tax credit? I have arthritis and it prevents me from participating in some recreational activities. Would I be able to claim the disability credit?
Q: Is there some kind of certification required in order to claim the disability tax credit?
Q: What amounts can I claim for my disabled child?

FISHERS
Q: My 17-year-old son worked for me as a crewmember. Can I deduct the amount I paid him?

FARMERS
Q: I have a 16-year-old son who does work for us on our farm. Can I deduct the amount he gets paid?
Q: I had to get an advance payment for my grain to pay for farming expenses this year. Is this advance payment reported as income on my tax return?

CHILD CARE EXPENSES
Q: I'm a single parent and work evenings. I have a babysitter who comes in to watch the kids when I go to work. Can I claim the amount I pay her as childcare expense?
Q: I have a 3-year-old son who attends daycare. What is the maximum amount of childcare expenses I can claim?
Q: My husband and I both have full time jobs and send our daughter to daycare. My income is higher than my husband’s, so it is beneficial for me to claim the day care expense. Is this all right?

CHILD SUPPORT PAYMENTS
Q: As part of our separation agreement, I paid my ex-wife $20,000 lump sum. Can I claim this?
Q: I have a daughter and pay child support to her mother. Her mother and I were never married nor did we live together. Can I claim this as a deduction?
Q: I receive $500 a month from my husband for child support for our two children. We have a separation agreement dated March 15, 2006. Are payments received for child supported reported as taxable income?

MOVING EXPENSES
Q: Do I need to keep receipts for my moving expenses?
Q: How do you calculate moving expenses using the detailed method?
Q: I'd like to work in a different city but wondering how I can claim moving expenses. Do I have to have a job offer in the new location before I move in order to claim moving expenses, or can I move to a new city, look for a job, and then claim moving expenses once I start working?
Q: I rented an apartment in the city where I used to live before I moved to start a job in a new location. I also bought a home in the new location. Can I deduct expenses like legal fees for the purchase of my home?

FOREIGN INCOME
Q: I was working in England last year and filed a tax return with the English government. I paid taxes to the English government on my earned income. Do I have to file a tax return in Canada even though I wasn’t here?
Q: I was the recipient of a dividend payment from an American company and the U.S. government withheld income tax. Do I have to report the dividends on my Canadian tax return and pay tax on it again?
Q: I live in Canada but receive U.S. Social Security retirement benefits. Do I have to pay tax to the U.S. government for these benefits?

INVESTMENT INCOME
Q: I've heard the term "marginal tax rate" referred to by financial planners. What does it mean?
Q: What does it mean when they say that dividends enjoy a preferential tax rate?
Q: How is the tax on capital gains calculated?

INCOME SPLITTING
Q: I'm planning on buying mutual funds and putting them under my son’s name. Would he have to report the income earned?
Q: Are there ways to split income with my son?
Q: My wife and I share a joint bank account. Since I am in a higher tax bracket, it is beneficial for us to have her report the interest from the joint bank account. Is this okay?

RETIREMENT INCOME
Q: I turned 71 this year. What happens to my RRSP?
Q: My wife did not contribute to the Canada Pension Plan so she will not receive benefits from it. I've heard that I can split my benefits with my wife. Is this true?
Q: My wife is a housewife. Would I be able to set up a retirement income plan for her?

IMMIGRATING TO CANADA
Q: I moved to Canada as an immigrant on September 1. Will I be taxed on my income for the full year?
Q: Can I claim expenses incurred in moving to Canada?
Q: I will be migrating to Canada later this year. Are there any preparations I can do now to reduce the amount of income tax I will have to pay?
Q: I am a U.S. resident and have a one-year employment contract in Canada. The rest of my family live in the U.S. and I will be returning to the U.S. as soon as my contract expires. For Canadian tax purposes, am I considered an immigrant to Canada?

MOVING TO THE UNITED STATES
Q: I'm planning on moving to the United States. Should I withdraw my RRSP’s before or after I move?
Q: Will I have to file a tax return in Canada after I move?
Q: I receive CPP and OAS benefits. Will these be taxed if I move to the U.S.?
Q: I inherited some shares from my grandfather 8 years ago, which he bought over 20 years ago. I want to sell these shares but would like to know the tax implications beforehand.
Q: I lost a fair amount in the stock market last year. Would I be able to claim my losses when I file my tax return?
Q: I was a shareholder in a company that went bankrupt last year. Can I claim this as a loss?

STARTING YOUR OWN BUSINESS
Q: I started a home-based business this year. How is the reporting done for income and expenses?
Q: I purchased a new car last year that I use strictly for business. Would I be able to claim this as an expense?
Q: I started a small home-based business that I work on in my spare time but have not sold anything yet. Can I claim my expenses against my other income?
Q: I started a business this year. Do all businesses have to register for GST?
Q: My sole proprietorship business is doing really well. Should I incorporate the business?
Q: Will my personal assets be protected if I incorporate my business?
Q: I receive dividend payments from a corporation. Are these a tax-deductible expense?

REGISTERED RETIREMENT SAVINGS PLAN (RRSP)
Q: How do I find out what my RRSP contribution limit is for 2008?
Q: I went over my RRSP contribution limit for 2008. What should I do?
Q: I'm not sure if I should be contributing to my own RRSP or to my wife’s. What information can I use to make my decision?
Q: What are the tax benefits of contributing to my wife's RRSP?

REGISTERED DISABILITY SAVINGS PLAN (RDSP)
Q: Can you explain what the Registered Disability Savings Plan (RDSP) is?
Q: Can you explain what the Canada Disability Savings Bond (CDSB) is?
Q: Can you explain what the Canada Disability Savings Grant (CDSG) is?

REGISTERED EDUCATION SAVINGS PLANS (RESP)
Q: What is a Registered Education Savings Plan (RESP)?
Q: What is the Canada Education Savings Grant (CESG)?
Q: What is the Canada Learning Bond (CLB)?
Q: Are there spousal Tax-Free Savings Account?
Q: I'm not sure if I should contribute to my RRSP or to a TFSA?

RRSP HOME BUYERS' PLAN
Q: I used to own a house a few years ago. Will that make me ineligible for the Home Buyers’ Plan?
Q: I am planning to buy a house in the next month or so but would like to use my down payment to buy RRSP’s so that I can get the tax deduction. Can I withdraw the funds after to use as down payment for the house?
Q: What commitments are involved if I take advantage of the Home Buyers' Plan?
Q: How are repayments made under the Home Buyers' Plan?
Q: Are you allowed to pay more than the amount required under Home Buyers' Plan?

SENIORS
Q: I will be 65 this year. Do seniors have a lower tax rate?
Q: My wife’s mother lives with our family. She receives Old Age Security and the Guaranteed Income Supplement. Are there any amounts we can claim for her?
Q: I just transferred my Registered Retirement Savings Plan (RRSP) to a Registered Retirement Income Fund (RRIF). I heard that I have to make annual withdrawals from this plan. Is that correct?

What makes an expense deductible?
Why do I need to keep a log of my kilometers driven?
What can I write off for home expenses?
What bookkeeping and accounting software are you familiar with?
How do we get our accounting / bookkeeping source information to you?
I have bookkeeping software at my office and I want to use it. How would your work in this situation?
How secure is our bookkeeping information?
Do you work with small companies?


ELECTRONIC FILING (EFILE)
Q: What is electronic filing?
A: Electronic filing (EFILE for short) is when tax information is entered into the computer and the information is sent electronically, via Internet, to Canada Revenue Agency.

Q: What are the benefits of EFILE?
A: There is no paperwork involved with EFILE, which means refunds can usually be processed quickly.

Q: Are there some tax returns that cannot be EFILED?
A: Deceased persons’, non-residents, and taxpayers filing post-bankruptcies have to send a paper return.

Q: How can I be assured that my personal tax information will remain confidential?
A: Canada Revenue Agency requires all EFILE transmissions to be encrypted. This prevents other Internet users from viewing or altering the file.

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EMPLOYMENT EXPENSES
Q: Can I deduct the cost of commuting to and from my place of work?
A: No you cannot. Commuting to and from work is a personal expense and is not tax-deductible.

Q: Can I claim my car expenses as an employment expense?
A: You can only claim your car operating costs to the extent that the car is being used in performance of your employment and you do not receive a non-taxable allowance for your expenses. Put another way, personal use of your car is not tax deductible and therefore cannot be claimed against your employment income.

Q: How can I claim my auto expense as employment expense?
A: Your employer will have to complete and sign form T2200 Declaration of Conditions of Employment. Your claim must be based on the actual auto expenses you incur, prorated by the ratio of employment use to total use. It is important to keep a logbook of all your auto expenses, as well as the total kilometers driven for employment purposes and the total kilometers for the year. Quebec residents use form TP64.3 General Employment Conditions and similar rules are applicable.

Q: I need a car for work and wanted to know the tax advantages or disadvantages of purchasing versus leasing a car?
A: If you lease, you can deduct your lease payments up to a maximum of $800 per month plus GST/HST/PST. If you purchase, you can deduct capital cost allowance (CCA) at a rate of 30% per year (15% in the first year). You cannot claim CCA to the extent that the cost of your car exceeds $30,000, plus GST/HST/PST. Interest charges can be claimed up to a maximum of $10 per day. Regardless of whether you lease or purchase, you must prorate the total amount by the ratio of employment use to total use.

Q: I am a tradesperson and had to buy tools. Can I claim the amount I paid for tools?
A: The tradesperson tool deduction allows tradespersons who buy eligible tools in excess of $1,019 to claim the deduction. There is a maximum claim of $500 and the employer has to complete form T2200 (form TP75.2 Employment Expenses of Salaried Tradespersons, if you are a Quebec resident).

Q: My work requires me to travel. Can I deduct my meals as meal expenses?
A: You can deduct meal expenses if you were out of town for a minimum of 12 hours and you are required to work away from your employer's place of business or in different places. Your employer will have to complete form T2200 Declaration of Conditions of Employment (and form TP64.3 General Employment Conditions for Quebec residents). You will only be allowed to deduct 50% of meal expenses, however different rules apply for employees in the transportation industry. If your employer’s business falls under the transportation of passengers or goods, Canada Revenue Agency will allow a claim of $17 per meal to a maximum of three meals a day without receipts. In this case, your employer will have to complete form TL2 Claim for Meals and Lodging Expenses (and form TP66 Employment Expenses of Transport Employees, if you are a Quebec resident). The 50% deductible applies, with the exception of long-haul truck drivers where the deductible could be 65%.

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MEDICAL EXPENSES
Q: Which spouse can claim medical expenses?
A: Usually the spouse with the lower net income should claim the medical expenses because the claim is reduced by 3% of one's net income. This means the higher the net income, the lower the net claim for medical expenses.

Q: I had to pay for dental treatment for my 22-year-old son attending university. Can I claim these as medical expenses?
A: If your son was dependent on you for support at some time in the year, you may be eligible to claim these medical expenses. For dependants 18 or over, the claim is reduced by the lesser of $1,962 and 3% of the dependant's net income. The maximum claim per dependant is $10,000.

Q: I purchased herbs and vitamins from a health food store. Can I claim them as medical expense?
A: They are not eligible medical expenses, even if prescribed by a medical practitioner.

Q: Can over- the-counter drugs such as aspirin be claimed as medical expense?
A: Drugs may be claimed if they are prescribed by a medical practitioner and recorded by a licensed pharmacist. Over-the-counter medications, vitamins, and supplements, even if prescribed by a medical practitioner, are not eligible.

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AMOUNT FOR ELIGIBLE DEPENDANTS
Q: Who can claim the amount for eligible dependants?
A: The amount for eligible dependants is a tax credit for single or separated taxpayers who are supporting a dependent. This was previously known as the equivalent to spouse amount.

Q: I pay child support payments to my ex-wife on behalf of our daughter. My daughter moved in with me in August, therefore I was no longer required to make support payments. Am I eligible to claim the amount for an eligible dependant for the period that she started living with me?
A: No, you cannot claim an amount for an eligible dependant if you were required to make support payments for that dependant any time during the year. You will, however, be able to claim this amount next year if you are no longer required to make support payments for your daughter and she continues to live with you.

Q: My marital status changed last year from single to married while I was supporting my five-year old son from a previous relationship. Can I claim the amount for an eligible dependant for my son?
A: Yes, you can claim the amount if you were single or separated any time in the year.

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CHARITABLE DONATIONS
Q: How many years can you carry forward unclaimed charitable donations?
A: Charitable donations may be carried forward for a period of five years.

Q: I attended a function deemed as a fundraiser for a "recognized" Canadian charity. Can I claim the tickets I purchased as a charitable donation?
A: You will probably not be able to claim the tickets because the cost to attend the function can only be claimed if the charitable organization separated the admission cost portion from the donation portion and issued a receipt for the amount qualifying as a donation.

Q: I have charitable donation receipts of approximately $175 this year. I plan to donate the same amount next year. Is it better to claim this year’s donations on this year's tax return or wait until next year to claim them?
A: For donations under $200, you might be better off to carry-forward the donations for several years and combine them as there is a higher credit for donations over $200. The federal non-refundable credit for donations up to and including $200 is 15%, and on the balance, 29%. You will also be entitled to a provincial credit equal to the lowest provincial tax rate on the first $200 and highest provincial tax rate on the balance. For Quebec residents, the rate of the provincial tax credit for the first $200 is 20% and 24% on the balance.

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DISABLED TAXPAYERS
Q: Who can claim the disability tax credit? I have arthritis and it prevents me from participating in some recreational activities. Would I be able to claim the disability credit?
A: To be eligible for the disability credit, a person must have a severe and prolonged mental or physical impairment and as a result of that impairment, is restricted in their ability to perform a basic activity of daily living. This does not include working, housekeeping, social or recreational activity. It is very unlikely you fall into this category.

Q: Is there some kind of certification required in order to claim the disability tax credit?
A: You must file the T2201 Disability Tax Credit Certificate with the Canada Revenue Agency and it must be completed by a medical doctor, optometrist, audiologist, psychologist, occupational therapist, speech language pathologist, or physiotherapist. In Quebec, residents file form TP752.0.14 with Revenu Québec.

Q: What amounts can I claim for my disabled child?
A: The regular disability amount is $7,021. A disabled child under 18 at the end of the year is entitled to a supplement of $4,095, however the supplement is reduced by child care expenses claimed for your child that are in excess of $2,399. If any portion of the disability amount and supplement cannot be fully utilized by your child, that portion can be transferred to you. The provinces and territories, except for Quebec, also have disability supplements for children under 18. In the Northwest Territories, Yukon and Nunavut, they are the same as the federal supplement. In the other provinces, they range from as high as $9,355 in Alberta to a low of $2,403 in Newfoundland and Labrador. In Quebec, residents receive a supplement for disabled children under 18 as part of the Child Assistance benefits.

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FISHERS
Q: My 17-year-old son worked for me as a crewmember. Can I deduct the amount I paid him?
A: If you paid the wages and the work your son completed was necessary for you to earn fishing income, you can claim the wages paid for services performed. The wages must be reasonable considering your son’s age and the amount comparable to what would have been paid to an arm's length individual.

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FARMERS
Q: I have a 16-year-old son who does work for us on our farm. Can I deduct the amount he gets paid?
A: If you paid the wages and the work your son completed was necessary for you to earn farming income, you can claim the wages paid for services performed. The wages must be reasonable considering your son’s age and the amount comparable to what would have been paid to an arm's length individual.

Q: I had to get an advance payment for my grain to pay for farming expenses this year. Is this advance payment reported as income on my tax return?
A: Advance payments received under the Advance Payments for Crops Act and the Prairie Grain Advance Payments Act are considered loans and as such are not reported on your tax return when the payments are received. However, the amounts are reported as income when the related cash purchase or deferred cash purchase ticket amounts would normally be reported.

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CHILD CARE EXPENSES
Q: I'm a single parent and work evenings. I have a babysitter who comes in to watch the kids when I go to work. Can I claim the amount I pay her as childcare expense?
A: Yes, so long as she’s not related to you and she is looking after your kids so you can go to work. You will need to get her SIN and a receipt.

Q: I have a 3-year-old son who attends daycare. What is the maximum amount of childcare expenses I can claim?
A: The maximum amount you can claim is the lesser of:
- total child care expenses paid
-$7,000
- two-thirds of your earned income The maximum amount is reduced from $7,000 to $4,000 for children between the ages of seven and sixteen. For children with a disability (regardless of age), the amount is increased to $10,000.

Q: My husband and I both have full time jobs and send our daughter to daycare. My income is higher than my husband’s, so it is beneficial for me to claim the day care expense. Is this all right?
A: The spouse with the lower net income must claim the childcare expense. There are exceptions for periods during which the lower-income spouse was infirm, in the hospital or a similar institution, attending school or in prison.

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CHILD SUPPORT PAYMENTS
Q: As part of our separation agreement, I paid my ex-wife $20,000 lump sum. Can I claim this? A: Only regular periodic amounts are deductible unless payments were behind and a lump-sum payment was paid to bring current the regular periodic amount.

Q: I have a daughter and pay child support to her mother. Her mother and I were never married nor did we live together. Can I claim this as a deduction?
A: If you did not live with the woman, the payments would only be deductible if you paid them pursuant to a court order (not a written agreement) dated before May 1,1997.

Q: I receive $500 a month from my husband for child support for our two children. We have a separation agreement dated March 15, 2006. Are payments received for child support reported as taxable income?
A: For separation agreements dated after April 30, 1997, child support payments are not taxable to the recipient nor are they deductible for the payer. Spousal support payments however, are taxable to the recipient and deductible to the payer.

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MOVING EXPENSES
Q: Do I need to keep receipts for my moving expenses?
A: Not all moving expenses receipts have to be kept. If you use the simplified method for claiming meals and vehicle expenses, you do not need to keep all your receipts. Under this method, you can claim a flat rate of $17 per meal to a maximum of $51 per person per day. If you use your car, a flat rate per kilometer is used, the flat rate depends on which province you moved from, however you must keep a record of the total kilometers driven that pertain to the move. All other moving expenses are required to be supported by receipts.

Q: How do you calculate moving expenses using the detailed method?
A: If you are using the detailed method, you should itemize all your motor vehicle expenses for the full year and calculate your deduction as a percentage of the total kilometers driven (e.g.) If the distance you moved was 3,000 kilometers, your total mileage for the year was 30,000 kilometers and your total vehicle expenses for the year were $4,000, your deduction would be $400. Calculation used is (3,000/30,000km) x $4,000.

Q: I'd like to work in a different city but wondering how I can claim moving expenses. Do I have to have a job offer in the new location before I move in order to claim moving expenses, or can I move to a new city, look for a job, and then claim moving expenses once I start working?
A: You can claim moving expenses at the new location regardless of whether you acquired your new job before or after the move.

Q: I rented an apartment in the city where I used to live before I moved to start a job in a new location. I also bought a home in the new location. Can I deduct expenses like legal fees for the purchase of my home?
A: If you did not own and sell a home in the old location then you cannot claim expenses related to purchasing a home in the new location.

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FOREIGN INCOME
Q: I was working in England last year and filed a tax return with the English government. I paid taxes to the English government on my earned income. Do I have to file a tax return in Canada even though I wasn’t here?
A: If you were considered a UK resident under the UK-Canada tax treaty, your income will not be taxable in Canada. If you maintained residential ties with Canada while you were away, you may be considered a "factual resident" of Canada, even though you were not physically present here. In this case you will have to report the UK income on your tax return and claim a foreign tax credit for the tax paid to the government there.

Q: I was the recipient of a dividend payment from an American company and the U.S. government withheld income tax. Do I have to report the dividends on my Canadian tax return and pay tax on it again?
A: Canadian residents are required to pay tax to the Canadian government on their worldwide income even though foreign income may also be taxed in the country from which it is earned. To avoid paying tax twice, the foreign tax credit compensates taxpayers for foreign taxes paid to a foreign country.

Q: I live in Canada but receive U.S. Social Security retirement benefits. Do I have to pay tax to the U.S. government for these benefits?
A: U.S. Social Security retirement benefits paid to a Canadian resident are completely tax-exempt in the United States and moderately exempt from tax in Canada. The full benefit amount is reported as income on your Canadian tax return and the exempt part (15% of the benefits) is claimed as a deduction.

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INVESTMENT INCOME
Q: I've heard the term "marginal tax rate" referred to by financial planners. What does it mean?
A: Marginal tax rate is the rate at which you are taxed on your next dollar of income. Factors such as your taxable income, the amount of non-refundable tax credits you can claim and province of residence at the end of the year all contribute to the marginal tax rate. In Canada, the federal tax system has four tax rates. For 2009, the first $38,832 of taxable income is taxed at 15%. The next $38,832 of taxable income is taxed at 22%. Taxable income between $77,664 and $126,264 is taxed at 26% and taxable income over $126,264 is taxed at 29%.

Q: What does it mean when they say that dividends enjoy a preferential tax rate?
A: Dividends paid to shareholders have already been taxed at the corporate level. To prevent double taxation, a dividend tax credit can be claimed by an individual who receives the dividend, to allow the offsetting of some or all of the corporate tax paid.

Q: How is the tax on capital gains calculated?
A: For capital gains, only 50% of the amount is included in income. This results in paying tax on only 50% of what you would pay on most other types of income, such as interest or employment income. For qualified farm or fishing property or qualified small business corporation shares, the first $750,000 of capital gains are tax-free.

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INCOME SPLITTING
Q: I'm planning on buying mutual funds and putting them under my son’s name. Would he have to report the income earned?
A: When property is transferred to a child under 18, the parent has to report any income it earns up until the year in which the child turns 18. However, if capital gains were realized by the property, then the child has to report the income.

Q: Are there ways to split income with my son?
A: Your son would be able to report his Child Tax Benefit payments as income if they were deposited in a separate bank account in his name. Registered Education Savings Plan (RESP) is an alternative you might want to consider if you are saving money for his education. Income earned in an RESP is not taxed until it is withdrawn. When your son is ready to withdraw the funds to pay for his post-secondary education, it will then be taxed in his name.

Q: My wife and I share a joint bank account. Since I am in a higher tax bracket, it is beneficial for us to have her report the interest from the joint bank account. Is this okay?
A: Income from investments must be reported in the same proportion you contributed to their purchase. If both of you contributed equal amounts of money to the account, you would each report 50% of the interest, but if you made all the contribution, you would report all the interest. You could manage your finances so that you use your money for non-income producing items such as mortgage payments and your wife uses her money to make income-producing investments.

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RETIREMENT INCOME
Q: I turned 71 this year. What happens to my RRSP?
A: You will have to either cash in your RRSP or convert it into a form of retirement income by the end of the year you turn 71. There are two forms of retirement income: Registered Retirement Income Fund (RRIF) and annuity. Many people choose to convert their RRSP into RRIF since RRIF are similar to RRSP except that they can no longer make contributions. Any income earned from RRIF is allowed to accrue tax-free, however, you will be required to withdraw a fixed minimum amount every year. Annuities, on the other hand, will provide specific monthly payments, either for life or for a fixed term (usually until age 90). The payments may be a permanent amount or they may increase at regular time periods using a fixed percentage or to match the rate of inflation. People who want the security of a fixed income usually choose this method. If you were to withdraw the money from your RRSP, the entire amount will be taxable in the year it is withdrawn and will be subject to tax at a higher marginal rate if the amount is significant.

Q: My wife did not contribute to the Canada Pension Plan so she will not receive benefits from it. I've heard that I can split my benefits with my wife. Is this true?
A: Spouses can apply to have their CPP retirement benefits split between them, but the amount that can be split will be dependent on how long you lived together during your contributory periods.

Q: My wife is a housewife. Would I be able to set up a retirement income plan for her?
A: If you have ample RRSP deduction room, you can contribute to a spousal RRSP. When she makes withdrawals from the plan, she will be taxed for the income unless you have contributed to the plan within the last three years. Since 2007, pension income splitting has been available as an option.

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IMMIGRATING TO CANADA
Q: I moved to Canada as an immigrant on September 1. Will I be taxed on my income for the full year?
A: You will be taxed on the portion of world income earned after establishing your Canadian residency.

Q: Can I claim expenses incurred in moving to Canada?
A: Full-time students attending a post-secondary institution may claim expenses incurred in moving to Canada. Expenses may be deducted against income such as scholarships, fellowships, bursaries or research grants.

Q: I will be migrating to Canada later this year. Are there any preparations I can do now to reduce the amount of income tax I will have to pay?
A: If you anticipate receiving a retiring allowance, or any lump-sum payments from your current place of employment, try to delay the establishment of your Canadian residency status until after you receive the payments. For Canadian tax purposes, any payments received will have to reported as world income. Before leaving, you might also consider transferring some of your investments to a non-resident trust. If the income is held in the trust, it will not be taxable in Canada until you have been in Canada for a period of five years.

Q: I am a U.S. resident and have a one-year employment contract in Canada. The rest of my family live in the U.S. and I will be returning to the U.S. as soon as my contract expires. For Canadian tax purposes, am I considered an immigrant to Canada?
A: Under the Canada-United States tax treaty, you will be treated as a non-resident for Canadian tax purposes, not as an immigrant. This means you will not be taxable to Canada on your world income, but you will be taxable on your Canadian employment income unless the total remuneration received in the year was less than $10,000 or you were in Canada for not more than 183 days and your remuneration was borne by a source outside Canada.

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MOVING TO THE UNITED STATES
Q: I'm planning on moving to the United States. Should I withdraw my RRSP’s before or after I move?
A: It is usually not advisable to cash your RRSPs before you move to the U.S. since Canadian residents who withdraw RRSP’s, are taxed at their marginal rate for that year. If you wait until you move, the tax rate for lump sump payments is 25%. If you leave the money in the RRSP and later convert it to a RRIF or an annuity, the tax rate drops to 15%.

Q: Will I have to file a tax return in Canada after I move?
A: If the move is temporary and you maintain your Canadian residency status, you will have to continue to file a Canadian tax return every year to report your world income. If the move is permanent and you will not be maintaining your Canadian residency status, you will have to file as a part-year resident in the year you move. In succeeding years, you only have to file a Canadian tax return if you have Canadian-source employment or business income or dispose of taxable Canadian property.

Q: I receive CPP and OAS benefits. Will these be taxed if I move to the U.S.?
A: Under the Canada-U.S. tax treaty, CPP and OAS benefits paid to U.S. residents are not taxable in Canada but have to be declared on your U.S tax return.

CAPITAL GAINS
Q: I inherited some shares from my grandfather 8 years ago, which he bought over 20 years ago. I want to sell these shares but would like to know the tax implications beforehand.
A: Contact the executor of your grandfather's estate as the tax cost of the shares would be their value at the time you inherited the shares.

Q: I lost a fair amount in the stock market last year. Would I be able to claim my losses when I file my tax return?
A: Capital loss can only be used to offset capital gain. If your capital loss is more than your capital gain, you will have a net capital loss that you can apply against taxable capital gain in one of the three prior years or in any future year.

Q: I was a shareholder in a company that went bankrupt last year. Can I claim this as a loss?
A: You can get rid of your shares for nil proceeds the same year in which a company declares bankruptcy, allowing you to claim a capital loss equal to the adjusted cost base of the shares. Indicate in your tax return that you are electing to have subsection 50(1) of the Income Tax Act apply to the shares.

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STARTING YOUR OWN BUSINESS
Q: I started a home-based business this year. How is the reporting done for income and expenses?
A: If your business is not incorporated, it would be considered a proprietorship, which means you are the sole owner. You would need to record your business income and expenses on form T2125 (and on form TP80, if you are a Québec resident) and include the net income in your current-year income tax return.

Q: I purchased a new car last year that I use strictly for business. Would I be able to claim this as an expense?
A: The car is considered capital property, therefore you will not be able to claim the entire cost of the car in the year of purchase. You will, however, be able to claim capital cost allowance (CCA), which will allow you to claim a portion of the expense each year over a number of years.

Q: I started a small home-based business that I work on in my spare time but have not sold anything yet. Can I claim my expenses against my other income?
A: Business loss can only be claimed if the operation constitutes a source of income. The loss may not be permitted if there is the assumption that a cumulative profit will not be acquired over the entire period that the business is operating.

Q: I started a business this year. Do all businesses have to register for GST?
A: You will have to register for GST if your taxable sales are more than $30,000 and they are not exempt from GST/HST. If your sales are less than $30,000 it is optional to register. For Québec, residents need to register for QST when they register for GST and the same rules apply to both taxes.

INCORPORATION
Q: My sole proprietorship business is doing really well. Should I incorporate the business?
A: In general, it is advisable to incorporate a small business if the profit you make is more than you personally need, as incorporating will allow you more options for distributing income. Small business corporations also have a more favourable income tax rate than individual shareholders.

Q: Will my personal assets be protected if I incorporate my business?
A: Incorporating your business will limit your liability, thus providing some protection against your personal assets. However, when you need credit, most financial institutions require personal guarantees from principal shareholders, which would then eliminate the protection on your personal assets.

Q: I receive dividend payments from a corporation. Are these a tax-deductible expense?
A: No, the corporation already paid taxes before issuing the dividends. As a result, recipients pay a lower tax rate on dividends than on other income.

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REGISTERED RETIREMENT SAVINGS PLAN (RRSP)
Q: How do I find out what my RRSP contribution limit is for 2008?
A: Your RRSP contribution limit for 2008 is shown on the 2007 Notice of Assessment. You can also access Canada Revenue Agency’s online services at www.cra-arc.gc.ca and use your Epass or Quick Access to open My Account for Individuals, or contact Revenue Canada at 1-800-267-6999.

Q: I went over my RRSP contribution limit for 2008. What should I do?
A: If the excess contribution is less than $2,000, you can carry-forward the excess amount on Schedule 7 and deduct it in a future year when you have accumulated more RRSP room. If your excess contribution is more than $2,000, you will be subject to penalty tax. In which case, to avoid getting taxed on an amount that was never deducted, you might want to withdraw the excess amount using either Canada Revenue Agency forms T3012A or T746.

Q: I'm not sure if I should be contributing to my own RRSP or to my wife’s. What information can I use to make my decision?
A: It all depends on the level of income you and your wife can expect at retirement. To minimize taxes, you should try to equalize the retirement income between the two of you. If your wife will receive a company pension when she retires (and you will not), it may be best to contribute to your own RRSP. If the situation is reversed, you should contribute to her RRSP, until she has generated enough capital in her RRSP to generate an income equal your own retirement income.

Q: What are the tax benefits of contributing to my wife's RRSP?
A: It is an excellent way to split income between spouses. You get the same deduction as when you contribute to your own RRSP, but the deduction is subject to your own RRSP contribution limit, not your wife's. The RRSP will belong to your wife, so when the money is withdrawn, she will have to report it as income. To summarize, you get the deduction but she reports the income. However if a spousal RRSP is withdrawn during the year purchased or the preceding two years, the income is attributed back to the contributor to the extent contributions were made to any spousal RRSP.

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REGISTERED DISABILITY SAVINGS PLAN (RDSP)
Q: Can you explain what the Registered Disability Savings Plan (RDSP) is?
A: The RDSP is a savings plan for taxpayers who qualify for the disability amount. The contributions made to RDSP’s are not tax deductible and contributions can be made by anyone, including the disabled who is the beneficiary of the plan. Any income earned from the plan will be subject to tax when a withdrawal is made. There is no annual contribution limit, however, there is a lifetime contribution limit of $200,000.

Q: Can you explain what the Canada Disability Savings Bond (CDSB) is?
A: The CDSB is an initiative designed to help low-income families save for the future of a dependent with a disability. There is no contribution requirement to be eligible for the bond. Taxpayers with a family net income of up to $21,287 in the second preceding year (i.e., 2006 for 2008 payments) will receive the maximum $1,000 bond and taxpayers with a family net income between $21,287 and $37,885 will receive a partial bond. The level of income is based on the income of the disabled taxpayer’s parents or guardian until the taxpayer reaches 18. After that time, they are based on the taxpayer’s own income and his or her spouse or common-law partner. CDSB’s are paid every year for a maximum of 20 years or until the taxpayer reaches the age of 49. The lifetime maximum is $20,000.

Q: Can you explain what the Canada Disability Savings Grant (CDSG) is?
A: The CDSG is a supplement the federal government contributes to a Registered Disability Savings Plan. The supplement is equal to 300% on the first $500 and 200% on the next $1,000 for taxpayers with a family net income of up to $75,769 in the second preceding year (i.e., 2006 for 2008 grants) and 100% on the first $1,000 for taxpayers with a family net income in excess of $75,769. Up to the age of 18, the level of income is based on the disabled taxpayer’s parents or guardian. After that time, they are based on the taxpayer’s own income and his or her spouse or common-law partner, even if the taxpayer continues to live with his or her parents. The lifetime maximum CDSG is $70,000 per beneficiary.

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REGISTERED EDUCATION SAVINGS PLANS (RESP)
Q: What is a Registered Education Savings Plan (RESP)?
A: Registered Education Savings Plan allows anyone to contribute into a tax-deferred savings account on behalf of a child to fund future post-secondary education costs. The interest the savings account accumulates is tax-deferred. There is no maximum contribution limit per child per year but there is a lifetime limit of $50,000.

Q: What is the Canada Education Savings Grant (CESG)?
A: The Canada Education Savings Grant is a program the Government of Canada is offering that equals up to 20% on the first $2,500 of annual RESP contributions (or maximum of $500 per child per year). For families with income of up to $37,885, the grant is increased on the first $500 of contributions to 40%. For families with income between $37,885 and $74,769, the amount is 30%. The lifetime maximum CESG is $7,200 per child.

Q: What is the Canada Learning Bond (CLB)?
A: The Canada Learning Bond is a program the Government of Canada is offering to help low income families start saving early for their children's post-secondary education. Children born after December 31, 2003 are eligible for a CLB for every year that the family receives the National Child Benefit (NCB) supplement, up to and including the year in which the child turns 15 years of age. The amount of the CLB will be $500 in the first year and $100 in any succeeding year of entitlement. The lifetime maximum CLB is $2,000.

TAX-FREE SAVINGS ACCOUNT (TFSA)
Q: My daughter will be 18 later this year. Can she open her own TFSA now?
A: She will have to wait until she turns 18 before opening an account. She will, however, earn contribution room for the entire year.

Q: Are there spousal Tax-Free Savings Account?
A: Tax-Free Savings Accounts are individual accounts; there are no spousal or joint accounts. Individuals can open their own account and the spouse or common-law partner can give the funds to invest in their TFSA.

Q: I'm not sure if I should contribute to my RRSP or to a TFSA?
A: If you can no longer contribute to RRSP (because of age or lack of RRSP contribution room), consider opening a TFSA. Withdrawals from TFSA do not result in permanent loss of contribution room, unlike RRSP’s. If you have a short-term goal in mind, TFSA is a better alternative. RRSP’s purpose is to provide retirement savings and should be used for that intent. You can accomplish both by using the refund generated from your RRSP deduction to make your TFSA contribution.

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RRSP HOME BUYERS' PLAN
Q: I used to own a house a few years ago. Will that make me ineligible for the Home Buyers’ Plan?
A: It depends on how long ago you were a home-owner. If you did not own a home and live in it as principal residence in the period beginning January 1, 2005 and ending 31 days prior to your withdrawal, you will be eligible for the Home Buyers’ Plan for 2009. If you were a previous participant in the Home Buyers’ Plan, your repayment balance must be zero as of January 1 of the year in which you wish to make a new withdrawal.

Q: I am planning to buy a house in the next month or so but would like to use my down payment to buy RRSP’s so that I can get the tax deduction. Can I withdraw the funds after to use as down payment for the house?
A: To claim the deduction, the RRSP contribution has to be made 90 days before the withdrawal under the Home Buyers’ Plan, however, this rule applies only if the balance in the RRSP after the withdrawal is less than the amount contributed in the 90-day period.

Q: What commitments are involved if I take advantage of the Home Buyers' Plan?
A: You will have to repay over a 15-year period, the amount withdrawn. Payment starts the second year after your withdrawal. Revenue Canada will send a statement of account detailing the amount of your withdrawals, amount repaid to date, balance and amount to repay the following year. If you do not make the repayment for that year, the amount will be included as income for that taxation year.

Q: How are repayments made under the Home Buyers' Plan?
A: Make regular contributions to any of your RRSP’s. It can be the same RRSP from which you withdrew the funds, or a different RRSP, but must be your own personal RRSP, not a spousal RRSP. When you file your taxes, allocate the amount that relates to your Home Buyers’ Plan repayment.

Q: Are you allowed to pay more than the amount required under Home Buyers' Plan?
A: You can repay as much as the total balance owing. Make your contribution to a personal RRSP and allocate the amount you want as repayment when you file your tax return. This will result in reducing your outstanding balance and your future minimum repayment amounts.

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SENIORS
Q: I will be 65 this year. Do seniors have a lower tax rate?
A: Age is not a factor in determining the tax rates but seniors are entitled to some credits that other taxpayers are not eligible for. These would be the age amount ($5,276) and the pension income amount (maximum of $2,000). The age amount is decreased by 15% of your net income in excess of $31,524. You may also be entitled to special provincial tax credits, depending on your province of residence.

Q: My wife’s mother lives with our family. She receives Old Age Security and the Guaranteed Income Supplement. Are there any amounts we can claim for her?
A: You or your wife can claim a caregiver amount for your mother-in-law if she is 65 or older and makes less than $18,081 per year. The caregiver amount is $4,095 and is reduced by her income in excess of $13,986. She has to be living with you and not just visiting temporarily but she is not required to have lived with you for the full year. If you are a Quebec resident, you can also claim the caregiver refundable tax credit. For income up to $20,650, the maximum claim for 2008 is $1,033. For income over $20,650, the maximum claim is reduced to $565. She must also have lived with you for a minimum period of 365 consecutive days, including at least 183 days in the taxation year. To claim this tax credit, she must be either disabled or over the age of 70.

Q: I just transferred my Registered Retirement Savings Plan (RRSP) to a Registered Retirement Income Fund (RRIF). I heard that I have to make annual withdrawals from this plan. Is that correct?
A: Yes, there are annual minimum withdrawal amounts from your RRIF. To determine the minimum amount, multiply the value of the RRIF at the beginning of the year by a prescribed factor, or you can choose the age of your spouse. All amounts withdrawn from your RRIF must be included in your taxable income, except for the minimum amount, which is not subject to tax withholding at source. You have the option of withdrawing more than the minimum amount. RRIF payments are eligible for the pension income amount if you are 65 or over. If you have a spouse, you are eligible to split pension income.

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What makes an expense deductible? According to the CRA, any expense incurred to operate a business is deductible. The amount must be "reasonable" in the circumstances. For example, if your business pays your spouse a salary that is greater than what you may have paid to a person not related to you, this greater amount may be considered "unreasonable". There are many restrictions on what and how much you may deduct, consult us if you have any doubts about a deduction.

Why do I need to keep a log of my kilometers driven? You need to keep a log of kilometers driven because you can only deduct the "business use" portion of your automobile expenses. Remember to keep track of total kilometers driven too. The best way to keep a log is every time you get into the car make an entry in the log of where you are going, where you have been and the kilometers driven. In addition, if CRA ever has a query about your automobile expenses you have the proof for what you claimed as "business use" of the automobile. No proof... no deduction.

What can I write off for home expenses? For home expenses to be deductible, they must meet one of two tests. First, the workspace is the chief place where your business is carried out. You may fulfill contracts at your customer locations, but your main business functions, i.e., bookkeeping, purchasing, etc., are done in your home office. Second, You may also qualify if the workspace is used exclusively to carry out your business activities. In addition to these activities, you must use the space on a regular and continuous basis for meeting clients or other associated with your business. In the CRA's opinion, infrequent meetings or frequent meetings at irregular intervals are not regular and continuous.

What bookkeeping and accounting software are you familiar with?
As a team, we know all of the most commonly used bookkeeping software such as QuickBooks, MYOB and Peachtree. If you have other software that you would like us to work with we will quickly train our staff to work with your software. Since our staff is familiar with a wide range of accounting software, they can learn your specific software in a matter of days and at no cost to you.

How do we get our accounting / bookkeeping source information to you? You can scan/fax/email or upload your source documents (invoices, receipts, bills). We can also arrange to have your information picked up at your location.

I have bookkeeping software at my office and I want to use it. How would you work in this situation? One of the options we have with working with you is to log onto your computer. We can use a secure software service to login to your computer and do the bookkeeping entries right on your PC. Your source documents can be uploaded from your PC as well.

How secure is our bookkeeping information? We do not use the old paper based methods where your information could be at a desk or at an unlocked file cabinet. We use a secure encryption technology. You use the same technology for doing your online banking with any of the major banks. It is secure and dependable and you can be assured that you are the only one who has access to your confidential information.

Do you work with small companies? Absolutely, we work with small and medium-sized companies from various industries.

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