changes to cra tax rules 2017

3 Canada Revenue Agency (CRA) Initiatives That Could Affect YOU!

changes to cra tax rules 2017

Last month I was at a two-day intensive tax course.  While not considered exciting by most, I can say there was a lot of interesting information being shared by the presenters and the attendees. The CRA has been busy trying to collect the data and the tax dollars of those that are either trying to avoid the required reporting and remitting, or are ignorant of their responsibilities.

Here are 3 Initiatives, Results or Ongoing Actions:

1. Sale or Transfer of Real Estate

Between April 2015 and March 2017 the CRA reviewed 21,000 transactions (files) related to the sale or transfer of real estate.  As a result they assessed over $329 million in previously unreported income.  They also applied over $17 million in penalties.  They’re looking at rental properties being sold as principle residences, potential house flipping, properties being sold with revenue reported as capital gains when it should be reported as income, etc. As I discussed in a previous blog the reporting of the sale of your personal residence now must be included when filing your personal tax return.  The CRA has indicated that this will be an ongoing requirement, and they will continue to enhance their compliance procedures.  From the CRA Release dated June 16, 2017 “The CRA will continue to strengthen relationships with key partners such as provinces, territories, and municipalities to further expand, obtain, and exchange information on real estate transactions, thereby enhancing the CRA’s ability to combat tax evasion and avoidance.”

2. Sharing Economy

In a March 2017 Tax Tip the CRA gave us a heads-up that it is co-operating with the industries, the provinces, and the territories to identify and address areas where the tax system and compliance might be affected in the Sharing Economy. If you’re involved in the Sharing Economy you better know your tax obligations. The sharing economy includes;

  • Accommodation sharing – an example being Airbnb. Income earned by renting out your home through Airbnb must be declared on your income tax return. Depending on the services you provide it is either rental income or business income.  If you’re an Airbnb host you know the detailed documentation you and your guest receive.  The CRA also has access to that information.
  • Ride sharing – Uber and Lyft are examples of the major ride share resources. And if you ever hear about any of the companies being audited by the CRA, don’t worry about them. The CRA is actually looking for the individual higher revenue earners and the audit will have a trickle-down effect.
  • Music and video streaming
  • Online staffing
  • Peer/crowd funding

Besides reporting the income you also need to be aware of the GST/HST obligations on all of the above.  Generally, if you earn income from the above services or supplies of less than $30,000 in a 12 month period, you do not have to register for a GST/HST number. Be aware that this is based on revenue, not profit.

3. Cracking Down on Tax Cheats

The purpose of a CRA news release June 1, 2017 is to update Canadians on the government’s progress to crack down on tax cheats. Here are a few of their initiatives to capture more than $13 billion-worth of taxes owed in the past fiscal year;

  • Establishing specialized collection teams and adding technical and legal expertise to its audit and investigative teams
  • Improving processes to better use external data for the identification of high risk taxpayers
  • Increasing collaboration and information sharing with international partners

And as a positive;

  • Striving for early resolution of audit issues in a fair and consistent manner
  • Reviewing and modernizing existing programs, such as the Voluntary Disclosure Program, through consultation with experts and Canadians.

As you can see from the above it doesn’t matter whether you are; single, in a relationship, employed or self-employed, in a business partnership or major shareholder in a corporation you may receive a request for information from the CRA.  It can come in the form of “the brown envelope”, email or telephone call.

DO NOT IGNORE responding to the CRA.  If you’re not comfortable in communicating with them have a representative act on your behalf. If you’re unsure of your responsibilities speak with a tax professional. Death and taxes – CRA will not go away.

You can connect with me by clicking the contact tab at the bottom of the screen if you are reading this post on the website. Or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

 

5 Tax Changes for 2016 That May Affect Your Tax Return

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The Canada Revenue Agency (CRA) has many new services and changes in-store for us this coming tax season.

Here are 5 of the changes that might affect your 2016 personal tax return:

1. Income Splitting Tax Credit

In prior years the Family Tax Cut was a considerable benefit to spouses when one spouse had earned significantly more money than the other.  For 2016 and future years it has been eliminated.  Thankfully the ability to split pension income with your spouse or common-law partner is still available.

2. Children’s Fitness Tax Credit

The maximum amount of eligible fees in the year has been reduced from $1,000 per child to $500.  The amount for children eligible for the disability tax credit has not changed

3. Children’s Arts Tax Credit

This has also been reduced, this time from $500 to $250 per child.  The amount for children eligible for the disability tax credit has not changed

4. Home Accessibility Tax Credit (HATC)

Starting in 2016 you can claim a non-refundable tax credit for eligible expenses incurred for work performed or goods acquired for a qualifying renovation.  For an explanation and examples of what is eligible see CRA link here.

5. Principal Residence Rules

Effective January 1, 2016 you are required to report the basic information on your tax return when you sell your principal residence to claim the full principal residence exemption.  Basic information is; the date purchased, proceeds of the sale and the address. I wrote about this in a previous blog posted October 13th if you would like more details and the reasoning behind this new rule.

The CRA is also expanding its Community Volunteer Income Tax Program (CVITP).  This service helps Canadians with modest income and a simple tax situation complete their tax returns, while ensuring all eligible credits and benefits are received.  CRA is currently still recruiting more organizations and volunteers for participation.  Here is a link to determine if you might be eligible for this free service, and current locations near you.

And if your tax return is complicated, your circumstances have changed from prior years or you started a business, talk to a tax professional.  Contact us for a consultation to help determine eligible expenses to offset your income. You don’t want to give more money than necessary to the CRA!

You can connect with me on Facebook, or by clicking the contact tab at the bottom of the screen if you are reading this post on the website. Or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen