Tax Tip: The More Obscure Medical Expenses

Are you claiming all the medical expenses you or your clients might be entitled to? 

CRA has issued a new form T1213 ó Request to Reduce Tax Deductions at Source, which is used to request a reduction of taxes withheld from a lump sum or salary. This is particularly important for those who expect to have tax deductions like RRSP contributions, child care expenses, tax deductible spousal support payments, employment expenses like auto expenses, home office or cost of an assistant, costs associated with your investments like interest on your investment loans, also known as carrying charges or other significant tax deductible costs like moving expenses, medical expenses or charitable donations. To use this opportunity, taxpayers must have submitted all tax returns that are due to be filed. Now is a good time to review errors and omissions on prior filed returns, as the statute of limitations for tax year 2000 will end on December 31. Bringing those files up to date and requesting a reduction in tax withholdings, could increase cash flow before year end to help provide new money for RRSP contributions and other tax wise investments like TFSA deposits The new form is available now in EverGreen Explanatory Notes.

In a press release dated September 17, 2010, CRA announced that, for fiscal years ending after 2010 small partnerships with "simple structures and modest financial activity will no longer be required to file a partnership return." The terms "simple" and "modest" have yet to be defined. In addition, a revised information return and tax guide will be issued for 2011. In years prior to 2011, the requirement that a partnership file a separate tax return was based on the number of partners. Partnerships with more than five members were required to file form T5013 annually and issue T5013 slips to the partners. For more information see The Knowledge Bureauís Advanced Tax Preparation and Research and Tax Preparation for Proprietorships courses by self study.

The Knowledge Bureau and the Association of Professional Accounting and Tax Consultants (APATC) are pleased to announce their strategic alliance which will bring professional development opportunities to APATC members through certificate courses leading to the prestigious Distinguished Financial Advisor (DFA) and Master Financial Advisor (MFA) designations in specialized studies including tax, retirement, investment and business services. "We are delighted to work more closely with APATC members on their educational needs and look forward to their participation in Distinguished Advisor Workshops, Distinguished Advisor Conferences and the certificate self study programs offered by The Knowledge Bureau,î says Evelyn Jacks, President of The Knowledge Bureau. "These programs are ideal for in-office team training in advance of the busy tax season as well as tax efficient business succession and retirement planning at the highest national standards.î David Jex, Executive Director of the Association of Professional Accounting and Tax Consultants, responded by saying "We are excited to be working with a respected organization like The Knowledge Bureau. This partnership will provide a wealth of educational opportunities for our members. At the same time, our organization offers the students and graduates of The Knowledge Bureau all the benefits of joining a professional organization for accounting and tax practitioners such as representation to government, networking with fellow practitioners and participation in our Errors and Omissions Insurance Group Plan.î Members of APATC can begin their learning experiences with a complimentary subscription to The Knowledge Bureau's national e-newsletter, Knowledge Bureau Report. "KBRî brings up-to-the-minute interpretive news reports on legislation and industry changes that affect daily business matters of interest to tax and accounting professionals. Summer School opportunities are also available on a 24/7 access basis for individual practitioners and in-office study groups. Knowledge Bureau Liaison for APATC is member Alan Rowell, DFA, Tax Services Specialist, who will provide educational consultations to members interested in the various programs. He can be reached at 904-664-1010 x 229 or by email arowell@theaccountingplace.net. Students and graduates of The Knowledge Bureau can apply for membership in the APATC by contacting admin1@apatcinc.com or by completing the application at http://www.apatcinc.com/. The normal application fee of $30 plus GST/HST will be waived. ABOUT THE KNOWLEDGE BUREAU The Knowledge Bureau is a national designated education institute and publisher, which provides excellence in financial education to tax and financial advisors and their clients. The Knowledge Bureau's programs lead to certification and designation at a post-secondary level, as well as CE accreditation by most regulators and professional associations. For more information, please visit http://www.knowledgebureau.com/ or call 1-866-953-4769. ABOUT THE ASSOCIATION OF PROFESSIONAL ACCOUNTING AND TAX CONSULTANTS: The APATC is a national not-for-profit organization representing self-employed practitioners in the fields of accounting, bookkeeping and tax. Formed in 1982, the organization has been providing members with such benefits as information seminars on advanced tax and accounting issues, building and marketing a practice, and hiring and developing a professional staff. The APATC's Errors and Omissions Insurance Group Plan is among the most comprehensive available for non-designated practitioners. The Association also represents their members as an advocate with various levels of government.

Changes introduced in Canada's Economic Plan under An Act to amend the Employment Insurance Act and to increase benefits which started on October 25, 2009, officially ended on September 11, 2010. The federal government will no longer be extending the additional five weeks of EI benefits and the extra 20 weeks of employment insurance available toemployees who had long service, this despite continued high unemployment in certain areas of the country. Now is a good time for tax and financial advisors to be of service. The January 27, 2009 Federal budget, extended regular EI benefit entitlements by the five extra weeks. In addition, that budget increased the maximum benefit entitlement period to 50 weeks from 45 weeks. These extended benefits were available for long-tenured workers who had accessed EI benefits on a limited basis in the past, and were designed to help them transition back into employment. In difficult times, employees and executives are often given opportunities to "package outî of their workplaces. Advisors and their clients should familiarize themselves with changes to the availability of income benefits from Employment Insurance (and when these changes are removed) and the possibility of a related clawback of those benefits at tax time. RRSP contributions as part of a severance reinvestment plan can help avoid the clawback.   For more information on EI benefits available, visit the Service Canada website by linking here.   Educational Resources:   Taking the Knowledge Bureau's certificate course Introduction to Personal Tax Preparation Services is a great way get your start earning a second income as a tax services specialist. See www.knowledgebureau.com for more information on our courses and how to enroll.

It is, and will continue to be, very common for you or your clients to do some part time work if laid off from employment or for a portion of their retirement years. Now's a good time to review tax rules relating to home office expenses; particularly attractive because you will find that you can get a tax deduction for a portion of the expenses you must incur anyway, e.g. monthly utilities, rent, or mortgage interest. For costs to be deductible, you must ensure your workspace meets one of two tests.   Let's assume that your client runs a small business out of their home during retirement or they do some occasional consulting work. Just because it is their principal residence, and since their principal residence is non-taxable on sale in the future, can he still deduct some of the housing costs as business expenses? If you operate your business from your home, you can deduct the portion of the expenses related to maintaining the home office workspace. This is particularly attractive because you will find that you can get a tax deduction for a portion of the expenses you must incur anyway, e.g. monthly utilities, rent, or mortgage interest. For costs to be deductible, you must ensure your workspace meets one of two tests. 1. Under the first test, the workspace must be the chief place where your business is carried out. For example a contractor who uses his home to receive work orders, complete invoicing, bookkeeping, and prepare payrolls would qualify to claim a home office. 2. You may still qualify to deduct home office expenses if your workspace is used exclusively to carry out your business activities. In addition to using the space exclusively for these activities, you must use the space on a "regular and continuousî basis for meeting customers or others associated with carrying out your business. A percentage of the following home expenses are deductible against business income earned: Electricity, heat and water Maintenance costs, condo fees Rent Property tax Insurance on your home or apartment Mortgage Interest (but not mortgage principal) Please note that capital cost allowance should not be claimed on a principal residence that is also used to operate a business as you will lose your principal residence exemption on the portion of the property upon which this deduction is claimed.     Eductional Resource: Excerpted from Tax Efficient Retirement Income Planning, one of the courses that is part of the MFA,Retirement Income Services Specialist program. Register now and save.  

The prescribed rates have been announced by CRA for the final quarter of 2010 and the trend of low interest rates continues on the same path we have seen for the past seven quarters.  These low prescribed rates - a 1% rate for certain taxable benefits and loans provides a great opportunity to use low-taxed corporate dollars to fund family income splitting, the purchase of new vehicles, new investments or to fund employer-required moves. Advisors should also consider speaking to their clients about opportunities for inter-spousal and shareholder loans with the rates that are currently available.   The Canada Revenue Agency announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporate and non-corporate taxpayers. These rates are calculated quarterly in accordance with applicable legislation and will be in effect from October 1 to December 31, 2010.   Income tax The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance Premiums will be 5%. The interest rate paid on overpayments by corporate taxpayers will be 1%. The interest rate paid on overpayments by non-corporate taxpayers will be 3%. The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%. Other taxes The interest rate on overdue and overpaid remittances for the following taxes will be: Tax and Duty Overdue remittances Overpaid remittances Corporate/Non-Corporate GST 5% 1% / 3% HST 5% 1% / 3% Air Travellers Security Charge 5% 1% / 3% Excise Tax (non GST) 5% 1% / 3% Excise Duty (except Brewer Licensees) 5% 1% / 3% Excise Duty (Brewer Licensees) 3% N/A Softwood Lumber Products Export Charge 5% 1% / 3%   <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" />  Educational Resource:   For more information on tax planning provisions enroll in our Tax Efficient Retirement Income Planning, course one of the six courses that is part of the MFA, Retirement Income Services Specialist program. Register now and save.