UPDATES FOR QUEBEC RESIDENTS

ELIMINATION OF THE HEALTH CONTRIBUTION FOR LOW-AND MIDDLE-INCOME INDIVIDUALS AS OF 2016

Québec's Finance Minister announced on March 28, 2017, that the health contribution would be eliminated retroactively for low- and middle-income taxpayers. As a result, individuals whose net income (line 275 of the income tax return) is $134,095 or less no longer have to pay the health contribution. Individuals whose net income is greater than $134,095 must pay a health contribution equal to 4% of the portion of their net income that exceeds that amount—the $175 minimum contribution has been eliminated, while the $1,000 maximum contribution remains unchanged.

Revenu Québec will correct the 2016 income tax returns of individuals affected by the change by adjusting the refund or balance due and, where necessary, will issue new notices of assessment. If you have already filed your income tax return.





*information source: Revenue Quebec

LIMITS AND RATES RELATED TO THE USE OF AN AUTOMOBILE FOR 2017

LIMITS AND RATES RELATED TO THE USE OF AN AUTOMOBILE FOR 2017

The limits and rates for the deduction of automobile expenses and the calculation of the taxable benefits related to the use of an automobile for 2017 are as follows: 

• For purposes of capital cost allowance (CCA), the maximum capital cost of passenger vehicles remains unchanged at $30,000 (plus GST and QST) for vehicles purchased after 2016. 
• The limit on the deduction of leasing costs remains unchanged at $800 per month (plus GST and QST) for leases entered into after 2016. Under a separate restriction, deductible leasing costs are prorated where the value of the passenger vehicle exceeds the maximum capital cost. 
• The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes remains unchanged at 54 cents per kilometre for the first 5,000 kilometres and 48 cents for each additional kilometre. 
• The limit on the deduction of interest paid on amounts borrowed to purchase a passenger vehicle remains unchanged at $300 per month for loans related to vehicles acquired after 2016. 
• The prescribed rate used to determine the taxable benefit respecting the portion of operating expenses which relates to an employee's personal use of an automobile provided by the employer has been reduced to 25 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate has been reduced to 22 cents per kilometre.

Disclaimer: None of the content is or should be construed as tax advice. We disclaim any liability to anyone arising from reliance on any content of this. Pauls & Associates can review your unique situation and determine appropriate plan to minimize your tax liabilities.

Non Taxable Income

Client frequently asks us what type of income is Non-taxable. Generally, all types of income are taxable, the following are exceptions:

-          Allowance received under the shelter allowance program
-          Property or money received as inheritance
-          Amount received under a life insurance policy
-          Amount received from province or territory if you were a victim of a criminal act or motor vehicle accident
-          Any tax credits such as (solidarity, GST, Working income tax benefits, work premium, child tax benefits)
-          Lottery winning
-          Strike pay
-          Benefits received under a wage loss replacement plan or income from insurance plan, other than a plan to which your employer made a contribution to
-          Income from TFSA account
-          Elementary and secondary school scholarships and bursaries
-          Certain post-secondary scholarships, fellowships, and bursaries 


Disclaimer: None of the content is or should be construed as tax advice. We disclaim any liability to anyone arising from reliance on any content of this. Pauls & Associates can review your unique situation and determine appropriate plan to minimize your tax liabilities.

TAXPAYER BILL OF RIGHTS:

Did you know that as a tax payer you are entitled to following rights?

TAXPAYER BILL OF RIGHTS:

1. You have the right to receive entitlements and to pay no more and no less than what is required by law.

2. You have the right to service in both official languages.

3. You have the right to privacy and confidentiality.

4. You have the right to a formal review and a subsequent appeal.

 5. You have the right to be treated professionally, courteously, and fairly.

6. You have the right to complete, accurate, clear, and timely information.

7. You have the right, unless otherwise provided by law, not to pay income tax amounts in dispute before you have had an impartial review.

8. You have the right to have the law applied consistently.

9. You have the right to lodge a service complaint and to be provided with an explanation of our findings.

10. You have the right to have the costs of compliance taken into account when administering tax legislation.

11. You have the right to expect us to be accountable.

 12. You have the right to relief from penalties and interest under tax legislation because of extraordinary circumstances.

13. You have the right to expect revenue agencies to publish our service standards and report annually.

14. You have the right to expect revenue agencies to warn you about questionable tax schemes in a timely manner.

15. You have the right to be represented by a person of

Family Income Splitting | Pension Income Splitting

One of the tax breaks that Liberal government would not change that only benefit the rich higher income pension recipients is called “Pension Income Splitting”. This allows the rich pensioner to split up to half of their pension income with their lower-earning spouse. Even though, the lower-earning spouse will pay the taxes but will fall in lower tax brackets. This tax break cost Canadians about $2.2 billion per year as per parliamentary budget. Therefore, if canceling Family Income splitting makes the Canadian tax system fair, then why should the rich pensioners get a pass?


Disclaimer: None of the content is or should be construed as tax advice. We disclaim any liability to anyone arising from reliance on any content of this. Pauls & Associates can review your unique situation and determine appropriate plan to minimize your tax liabilities.

Death of a taxpayer: Transfer of property to a spouse

Section 70(6)

This section of Income tax Act(ITA) allows a deceased taxpayer to transfer certain property at Cost for non-depreciable or at UCC for depreciable property.

Implications:

When your spouse dies, and you have a rental property, this section could apply to you. You can rollover (transfer) your property at cost, therefore, your spouse defers the capital gain tax on his death.  Often time, you need to let your notary know that you want the transfers to be done at cost or UCC. We have seen more than one situation where notary/financial institution did not know about the tax laws and transfer the property at $0(as a gift) without electing FMV for transferee. This action could have adverse tax implication for the dead spouse and the surviving spouse.  The dead spouse deems to dispose it at Fair market value; therefore, pay taxes on Capital gain upon death and surviving spouse’s cost for the property become $0. Therefore, when the surviving spouse sales the property, he/she will incur capital gain, and taxed on whole disposition amount.  On the other hand, if the transfer was done at cost or UCC, on death the transfer would not generate any capital gain or loss, recapture, terminal loss, and the surviving spouse would assume the same property value as those carried by the deceased spouse.  This section of ITA is to allow deferring the capital gains or recapture until the surviving spouse dispose of the property or dies.  

Disclaimer: None of the content is or should be construed as tax advice. We disclaim any liability to anyone arising from reliance on any content of this. Pauls & Associates can review your unique situation and determine appropriate plan to minimize your tax liabilities.

Property Owners: RL-31 slips

If you are a rental property owner and would like to issue RL-31 tax slips to your tenants, Pauls & Associates can assist you. You must issue RL-31 slips for any dwelling such as a house, a room or an apartment in a duplex, apartment building or condominium building that you rent out in Quebec.

Quebec Tax Administration Act requires you to file the RL-31 slip on time. If you fail to complete the required information regarding RL-31 slip you may liable for a minimum penalty of $100 per lease.