TO HELP YOU GET STARTED

We have included comprehensive checklists you can refer to for Personal Income Tax filing, and for Small Business Tax Filing.

Below you can find answers to the most common tax filing questions. 

What is an RRSP?
Registered retirement savings plans (RRSPs) are designed for retirement savings. RRSPs can hold investments like bonds, stocks, mutual funds, and exchange-traded funds.
RRSPs offer:
  • tax-deductible contributions
  • tax-deferred savings (you won’t have to pay taxes until you withdraw funds)
  • Remember that your RRSP contribution limit is capped at 18% of your earned income in the previous year. This means the dollar limit is the maximum amount you can contribute regardless of your income.
What is a TFSA?
Tax-free savings accounts (TFSAs) are designed to help you save for any purpose. TFSAs can hold investments like bonds, stocks, mutual funds, and exchange-traded funds.
TFSAs offer:
  • tax-free investment growth
  • contributions made with after-tax dollars (you won’t have to pay tax when you withdraw funds)
  • The TFSA contribution limit has increased to $7,000 for the year. This means that if you’ve had an account since 2009, were 18 years of age and have been a resident of Canada throughout that period, the cumulative total you can have in your TFSA is now $95,000.
What is an FHSA?
The Tax-Free First Home Savings Account (FHSA) is a registered investment account that allows Canadian residents to contribute up to $40,000 (with an annual contribution limit of $8,000) to buy their first home in Canada. 
In general, FHSAs can hold any investments that a TFSA can hold – like stocks, mutual funds, GICs and segregated funds. And, any investment growth and withdrawals from an FHSA will be tax-free. This is provided you use your withdrawals to buy a qualifying home. 
How do I know if I need to file for HST/GST?
Most businesses: You need to register to GST/HST when the total amount of all revenues (worldwide) exceeds $30,000 over the previous four consecutive calendar quarters. Some self-employed individuals need to register to GST/HST the first day they start offering services: taxi-drivers, commercial ride-sharing drivers. Some businesses do not need to register to GST/HST even though they exceed the $30,000 threshold if they only offer exempted services: most health services and childcare services.
What business records should be kept?
Business owners are required by law to keep a record of their daily income and expenses. Most records must be kept for a minimum of 6 years from the end of the last tax year to which they relate. Records supporting the acquisition of assets and investments should be kept for longer periods.
Income records insluding: sales invoices, contracts, bank deposit slips, receipts, cash register tapes
Expense records including:
  • Date of the purchase
  • Name and address of the seller
  • Name and address of the buyer
  • Full description of the goods or services
  • The seller’s business number if registered to GST
Why should I file a tax return?
  • If too much tax was withheld from your earnings, it will be refunded.
  • Avoid penalties and interest when you file on time.
  • Receive government benefits that require the filing of a tax return; for example, the GST/HST Credit and the Canada Child Benefit.
  • Start building your RRSP contribution limit.
What are the new maximum contributions to the Canada Pension Plan?
The Canada Pension Plan (CPP) and Québec Pension Plan (QPP) have been increased by 6.5%. The maximum pensionable earnings are $66,600, with a basic exemption of $3,500 for 2023. For CPP, the employee and employer maximum contribution is $$3,754.45, while for QPP it is $4,038.40.

Quebecers also have the option to increase their Québec Pension Plan premiums, by making extra contributions, to the enhanced plan. The enhancement of the QPP will provide future retirees with an increase in their pension premiums from 25% to 33.33%.

Note that any self-employed individuals must account for both the employer and the employee sides of the contribution. For 2023, their maximum contribution amount for the CPP is $7,508.90 and for the QPP it is $8,076.80.

New for 2024, the first earnings ceiling has increased to $68,500 which will see the 5.95% CPP rate applied. A second ceiling became effective January 1st, 2024, up to $73,200. Individuals earning above the first and below the second ceiling will be subject to an additional CPP contribution.

CPP2 contributions are made by anyone who earns wages above the first earnings ceiling. These are calculated as a percentage of wages above the first earnings ceiling up to the amount of the second earnings ceiling.

  • Employees contribute 4% of the amount they earn between the first earnings ceiling and the second earnings ceiling
  • Self-employed individuals contribute 8% of the amount they earn between the first earnings ceiling and the second earnings ceiling
If you earn less than the first earnings ceiling, you will not make CPP2 contributions. You will continue to make base and first additional CPP contributions of 5.95% if you are an employee or an employer, or 11.9% if you are self-employed.
CRA has billed me for an income tax and/or HST return I never filed
If CRA requests that you file an income tax or HST return and you don’t respond, sometimes they get impatient and just file something on your behalf. This is called an arbitrary or notional return, and it usually generates a tax bill/ assessment. However, that doesn’t mean you can’t still file!

Usually notional returns aren’t very favourable – you’d get a better outcome with a return you filed yourself. The good news is, you can override a notional return by filing your own version. If you have already paid or got garnished for an inflated tax bill, fear not: the overpayment will either be credited to your taxes, or refunded to you.
What are some strategies to get out of debt?
Whether you're dealing with credit card balances, student loans, a mortgage, being behind on car payments, or simply falling on hard times and taking out a personal loan, these strategies will help you get out of debt faster so you can get your finances back on track.

  • Consolidate Your Debt: Consolidation involves combining multiple debts into a single loan, typically with a lower interest rate. This strategy can simplify your monthly payments and potentially reduce the total amount of interest you'll pay over time. Consider consolidating if you're juggling several high-interest debts, and you can secure a consolidation loan with a lower rate. This move can streamline your finances, making it easier to focus on one payment and pay down your debt faster.
  • Negotiate Better Terms With Your Creditor: Approach your lenders to discuss options like lowering interest rates, waiving fees, or modifying repayment plans. Be honest about your financial situation and be ready to present a case for why the adjustment is necessary. Successful negotiation can lead to reduced payments or interest rates, making your debt more manageable and accelerating your journey to being debt-free. Before you negotiate, gather all of the information you can regarding your account standing and any competing offers you might have as leverage. This won’t work all of the time, but it won’t hurt to try.
  • Cut Your Living Expenses: Fifty-one per cent of Canadians under 35 are living beyond their means, according to a 2023 report by the Healthcare of Ontario Pension Plan. This means that a big portion of the country has taken on bills and expenses that they technically shouldn’t be able to afford. Take car payments, for example. Financial advisors typically caution that your car payment should be no more than 10 per cent of your monthly income. This means that somebody with a $500 monthly car payment should ideally be earning at least $5,000 per month. The problem is that cars are more expensive than ever and are a necessity for many people. As a result, many car buyers get lured into financing more of a car than they can really afford. If this sounds like your situation, consider trading in your newer car for a more affordable used car with lower monthly payments. As you cut back, keep track of the extra money you’re saving and put it towards making higher debt payments.
Incorporated business owners: How should you pay yourself?
A salary may be better than dividend income when it comes to tax deductions for child care expenses and RRSP contributions. But as a business owner, you’ll also have to pay CPP contributions on that salary as both the employer and employee.

Generally speaking, paying a salary is preferable to dividends in most provinces. Paying salary may, for example, allow a business owner to deduct child care expenses. Dividend income is not considered earned income when it comes to child care expense deductibility. Salary is considered earned income for Registered Retirement Savings Plan purposes and generates RRSP room. Dividend income is not. Paying a salary allows a business owner to contribute to Canada Pension Plan (CPP). However, they must contribute both the employee and employer portion. This reduces the return on paying into CPP to earn a future retirement pension.

It's not the end of the world that you missed a deadline (or a few!)
The Canada Revenue Agency (CRA) is really only concerned with collecting any taxes you may owe to them. They are less concerned if you don't owe anything. So, consider getting back on track as soon as possible and file any outstanding returns that you may have.
 
Take note of Interest and Penalties
  • If you owe money, there is a late-filing penalty, 1% of the balance owing for each month that the return is late, to a maximum of 12%.
  • If you were late on any of the three previous years, that penalty doubles.
  • In addition to the late filing penalties, they will charge compound daily interest on any unpaid balances (including the penalties) based on the prescribed interest rate in effect throughout the outstanding period.
  • The interest and penalties can be very expensive, if you're really far behind.
If you didn't file due to extenuating circumstances that were out of your control, contact Team Taxman and we can help you file for taxpayer relief. There is a possibility that you can apply to have some or all of the interest or penalties waived.

Missing out on refunds, rebates or benefits.
  • Once you do file your taxes, if you have a refund coming, the above penalties and interest do not apply.
  • If you have any refunds, there is no good reason NOT to file. You are hurting yourself and giving the CRA 'an interest free loan' from you.
  • You may be missing out on benefits that can only be paid out, once your tax returns are files. These may include GST/HST credit, the Carbon Tax Rebate (formally known as the Climate Action Incentive) or the Canada Child Benefit.
  • You are entitled to these benefits, as a Canadian citizen so take advantage of it. If you don't file, you will stop receiving them. Some are paid retroactively once you are up to date but talk to me about all the details.
  • This is an important one... there are time limits on getting any CPP or EI overpayments back (4 years and 3 years, respectively) so you want to keep that in mind. This is a big deal if you have multiple jobs in the same year, since you tend to overpay in those situations.
  • Catching up is actually quite simple. Gather all your related tax documents and give us a call 416-653-1333. We will make sure that your past returns are prepared and filed, as soon as possible. Then, you can get on with more important things in your life.
How do rental property tax deductions work?
The rent you collect from tenants is considered income and must be reported on your tax return, the good news is, you can deduct eligible expenses first to determine what amount is taxable.

There are two kinds of expenses: current and capital. Here’s what they’re about:
  • Current eExpenses: Expenses to maintain the rental property—for example, repairs—are called current expenses and can be deducted in full in the relevant tax year. These kinds of costs tend to recur regularly.
  • Capital Expenses: Expenses that enhance the value of the property and have a long-lasting life—for example, upgrading flooring—are called capital expenses. New assets you purchase, such as appliances, are another type of capital expense. These expenses have to be added to the value of the property and depreciated over time—they aren’t counted as rental expenses, per se. 
Here are some common rental property write-offs you should know about if you’re a landlord:
  • Advertising - Such as in newspapers and trade publications or on websites.
  • Home Insurance - Premiums paid toward coverage on your rental property.
  • Interest and Bank Charges - You can claim mortgage interest or interest on money you borrowed to finance the purchase of your rental property or to improve it. Unfortunately, you can’t claim a tax deduction for your mortgage principal.
  • Office Expenses - Pens, pencils, paper clips, stationery, or other small items to use for your rental property business can be claimed as office expenses. Larger items, such as computers, printers, chairs, and desks, should be claimed as capital expenses.
  • Professional Fees - If you hire an accountant or other tax expert to help you prepare your return, the fees you pay are a deductible expense. Also, you can deduct expenses related to obtaining your mortgage, such as the cost of the mortgage application and appraisal, as well as legal fees paid to your real estate lawyer.
  • Property Taxes - Taxes paid to your municipality in the current year. Claim only the portion that relates to your rental property.
  • Repairs and Maintenance- You can deduct the cost of repairs on your rental property, including the labour. The expenses have to be current expenses, such as those related to restoring the property to its original condition, not to improving the value of the property.
  • Salaries and Management Fees - Amounts paid to your employees can be deducted. You can also deduct amounts paid to a third party to manage your property. Also, realtor fees related to the sale of a rental property can be claimed to reduce capital gains.
  • Travel - If your rental property is in another municipality, you can deduct travel expenses incurred when going to collect the rent or maintain the property, but only those expenses related to actually managing the property (for example, you can’t deduct boarding or lodging).
  • Utilities - You can claim a tax deduction for the portion of utilities related to your rental property or suite.
     
One important point to keep in mind: If you’re renting part of your primary residence, claim only the portion of expenses that pertain specifically to the rental unit. For example, if you rent out your basement and pay the water bill for the entire home, you can’t claim the total amount of that bill on your taxes—just the portion that applies to the basement.
What is an Audit?
A CRA audit is a tax assessment where the CRA reviews your financial records to confirm you are:
  • Fulfilling your tax obligations
  • Following tax laws
  • Receiving the eligible benefits and refunds
What can trigger a CRA audit?
  • Claiming unreasonable expenses compared to revenue or industry norms. For instance, $20,000 in car expenses on $60,000 in sales can trigger an audit.
  • Using rounded-off numbers on tax returns, such as $2,500 instead of $2,486.32, suggests imprecise record-keeping and increases audit risk.
  • Operating in high-risk sectors like restaurants, construction, and retail are more likely to be audited due to higher cash transaction risks.
  • Overpaying salaries to family members above market rates can prompt an audit to verify the legitimacy of the payments.
  • Reporting losses for multiple years can attract an audit to investigate the sustainability and legitimacy of the business operations, also is there a realistic expectation of profit.
What does the CRA examine in an audit?
The auditor generally examines the following records:
  • Tax slips filed with your tax return, such as T4 slips, T5, T2125, T776, T777 and more
  • Business records such as ledgers, invoices, contracts, receipts, and bank statements
  • Personal records like bank statements, mortgage documents, and credit card statements
  • Records of other individuals or entities such as spouses, family members, corporations, partnerships, or trusts
  • Adjustments made by a bookkeeper or accountant for tax purposes
How far back can the CRA go with an audit?
CRA can assess a return within 3 years from the date it sent the original notice of assessment (NOA). This means that the CRA can audit your tax returns for any of the past 3 years. The CRA audit time limit can extend to 4 years if you fail to report more than 25% of your income on the tax return. If the agency believes that you’re involved in fraud or misrepresentation, there is no limitation on the assessment period. In such cases, they can audit your tax returns for any past year.
Are there rights for a taxpayer?
The Taxpayer Bill of Rights guarantees 16 rights that you’re entitled to receive when working with the CRA. These rights ensure the CRA serves you accurately, professionally, courteously, and fairly. The Taxpayer Bill of Rights also includes 5 additional commitments to small businesses to make your CRA business audit effective and efficient.

Besides these rights, there is a separate federal law—the Privacy Act—that safeguards how the CRA handles your personal information. This Act gives you the rights to:
  • Access the information that the CRA holds
  • Request corrections of personal information
  • File a complaint with the privacy commissioner of Canada

CONTACT

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Phone: (416) 653-1333
Email: hello@teamtaxman.ca