Benefits that one can earn by the tax return funds

There are large numbers of ways which have been suggested by the expert professionals in the finance industry to use your tax refund savings. There are five ways which have been discussed here in this article which let you utilize your savings in a best possible way and in an efficient manner so as to have better financial security in the upcoming years.

Pay Down debt

Pay down Debt is considered as the most secure reason for getting higher returns than any other. This is the case if you possess the high-interest credit card debt. Paying all your tax return funding will surely result in a way which is much better to have greater returns. You can million of rupees by just paying off an extra debt. This is one of the options one can consider and utilize it.

Fund your savings

If you do not possess high interest card or debit card, then this is also one of the best option you can consider it while utilizing your tax return. You can every time put your funds of the tax returns into your emergency savings account. This saving account will provide you the necessary help every time you face difficult situations which can be recovered only with the help of finance. This account will not even allow you to lend money from any other external source such as borrowing money from credit card companies or taking a loan from Bank. This emergency saving account will never put you into the jeopardizing situation at the time of emergency.

Save for you betterment of life at the time of Retirement

Retirement is considered as one of the most important phase of the life. Investing your tax return fund into some retirement policy which will after retirement can provide you the better aspects. There are large numbers of policies initiated by the Government in regard with retirement. You can choose any one of them according to your desire and need.

Invest in Real Estate

Investing in Real Estate is the best and worth option for you in respect of investing your tax return fund. This is one of the best options in today’s scenario. It is already been discussed and suggested by the real estate professionals that after some years the homebuyers will receive the greater options in this regard due to the upcoming boon in the Real Estate industry. If you do not possess your own home and have dreamt about it, then it is the right time to consider them and fulfill your dreams and goals by buying or investing in the property that will pay high return.

Saving for your Children’s future

The first and foremost objective of every parent is to make their children’s future secure and bright and this can happen only if you invest money for their studies at the right time. You can any time start the savings account for your children’s higher studies and tuition fees.

These all options are very much beneficial for you and will help you to breathe in the safe atmosphere even at the time of crisis and emergency. So, invest your money at the right place and at the right time.

Beware of tax myths

Canadians and their tax advisers sometimes disagree with the CRA about the meaning of tax laws. These disagreements are normal and can be resolved.

However, over the past few years certain groups have begun publicizing incorrect and misleading advice about tax laws and the legal obligation to pay taxes.

People who accept such incorrect advice and fail to comply with the law could expose themselves to serious financial and legal problems. For more information, see Debunking tax myths.

The CRA and the Department of Finance Canada

When you’re searching government Web sites for tax-related information, your search will be easier if you’re aware of the different roles played by the CRA and by the Department of Finance Canada.

The CRA administers tax laws, but we don’t make or develop fiscal policies or tax laws.

  • As a rule, the CRA Web site is where you’ll find information about what the current tax laws say and how they’re interpreted and applied.

The Department of Finance Canada is responsible for federal tax policy and legislation. The Minister of Finance and Parliament decide on tax amounts and how to calculate them.

  • As a rule, the Department of Finance Canada Web site is where you’ll find information about proposed changes to tax laws, proposed tax cuts or increases, studies about the effects of taxation, and possible future tax policies. You may want to consult that department’s news releases and speeches.
  • Details of legislation proposed or enacted during the current session of Parliament are available on the Parliamentary Web site.

Tax legislation is also developed by individual provinces and territories (Provincial and Territorial Governments page, Canada Site).

You may also wish to consult the Government of Canada Newsroom and the Department of Human Resources and Skills Development News Room.

Due Dates for Corporate Returns & Taxes

A corporation that is resident in Canada, carried on a business in Canada, has a taxable capital gain, or sold taxable Canadian property is required to file a T2 income tax return even if no tax is payable.

Knowing when the return is due, and more importantly when the tax is payable is important to avoid costly interest and penalties.

Be aware that the due date for filing is different than the day the corporation must pay it’s outstanding tax bill.

Corporate Filing Due Date

The due date to file your corporate income tax return is six (6) months following your corporation’s year end.

For example, if you have a

  • December 31st year-end –> Return is due June 30th.
  • March 31st year-end –> Return is due September 30th.

When Corporate Taxes Must be Paid

Existing corporations are required to pay tax by installments throughout the year if their income tax bill is more than $3,000. New corporations are exempt from the installment requirements in their first year.

If you have a new corporation, or if you will have a balance owing, knowing your due date will help ensure you avoid costly penalties.

Due Date for CCPC

The due date for a Canadian controlled private corporation, claiming the small business deduction and whose taxable income is less than $500,000, is three months following the corporations’ year-end.

  • December 31st year-end –> Balance is payable by March 31st.
  • June 30th year-end –> Balance is payable September 30th.

For all other corporations, the due date is two months following their year-end.

Penalties

The penalty for remitting taxes late is 5% of the unpaid amount and 1% per month on any past due amounts.

A tax bill of $10,000 can result in a penalty of $500 if remitted late.

When To Meet With Your Accountant

It’s important to plan filing your corporate tax return before the end of the corporation’s fiscal year.

If you have a fiscal year-end that does not fall on December 31, you should meet with your accountant around December 31st to ensure that your annual tax slips are prepared and filed on time.

Our Services

If you’re looking for help filing your corporate tax returns and related tax-slips, please give us a call at 905-858-0775 to get started. We can help you reduce the amount of tax you will pay by taking full advantage of the corporate structure.

Questions and answers – Answers to common questions about donating to a charity in Canada.

1. What is a registered charity?
A registered charity is a charitable organization, public foundation, or private foundation that was established in Canada and is resident in Canada. It is operated exclusively for charitable purposes (i.e., the relief of poverty, the advancement of education, the advancement of religion, or other purposes that benefit the community in a way the courts have said are charitable) and must devote its resources to charitable activities. A registered charity has received a registration number from the Canada Revenue Agency and is exempt from paying tax on its revenue. It can issue official donation receipts for income tax purposes for gifts that it receives.

2. How do I verify if a charity is registered?
Ask the charity for its registration number, and confirm its status by consulting the CRA Charities Listings, or by calling the Canada Revenue Agency at 1-800-267-2384.

3. What is the main difference between a non-profit organization and a registered charity?
Registered charities must fit into one of four categories of charitable purposes: the relief of poverty, the advancement of education, the advancement of religion, or other purposes that benefit the community in a way the courts have said are charitable. Non-profit organizations may not fit into one of the four categories of charitable purposes but may have purposes such as social welfare, civic improvement, pleasure, or recreation. Non-profit organizations cannot issue official donation receipts for gifts that they receive.

4. Can a registered charity lend its registration number to another registered or non-registered charity?
No. Under no circumstances should a registered charity lend its registration number to another organization for receipting purposes. A charity that lends its registration number risks losing its charitable registration. A donor who accepts a falsified official donation receipt will risk having the tax credit disallowed and may be subject to fines.

5. Is a charity required to issue an official donation receipt?
No. However, the Canada Revenue Agency advises charities to notify potential donors of any circumstances in which they will not issue an official donation receipt. Donors cannot claim a charitable tax credit or deduction unless they have an official donation receipt.

6. To whom must an official donation receipt be addressed?
Generally, the official donation receipt can only be issued to the true donor of the gift to a charity. If a donation is made by a cheque in both spousal names, an official donation receipt can be issued in either name. If a corporation sends a donation to a charity, the official donation receipt can be made to the corporation owner only if he has sent a personal cheque. If the corporation is donating money that has been collected from its employees, and there is a written declaration to prove this, the charity can issue the official donation receipt in each donor’s name.

7. How can I replace a lost official donation receipt?
If you lose your official donation receipt, you can ask the charity to issue a replacement. You should receive a replacement receipt which contains all the required information plus a note to the effect that it “cancels and replaces receipt No. (the serial number of the lost receipt is inserted here)

8. If the charitable status of a charity to which I have recently made a donation has been revoked, can I still claim my tax credit?
If the organization was registered during the time of your donation, and if your receipts genuinely reflect the amount you gave, you can still claim your tax credit. Please note that when a charity is revoked, the organization may donate its assets to another eligible donee; otherwise, the assets are collected as tax.

9. What if I get something in return for my donation?
When a registered charity provides you with something of value in return for making a donation, the eligible amount of your donation for income tax purposes is generally reduced. This amount will be reflected on your official donation receipt. For example: You donate $1,000 to the Anytown Ballet Company, which is a registered charity. In gratitude, the company provides you with three ballet tickets worth $50 each, for a total value of $150. These tickets are considered an advantage of $150. The eligible amount of your donation for calculating your tax credit is therefore $850 ($1,000 – $150).

10. Can a charity return a donation?
In most cases, a registered charity cannot return a donor’s gift. At law, a gift transfers ownership of the money or other gifted property from the donor to the charity. Once the transfer is made, the charity is obliged to use the gift in carrying out its charitable purposes. On occasion, though, a charity may be obliged by law to return gifts to donors. This can happen, for instance, when a charity asks the public to contribute to a special project and later events make it impossible to carry out the project.

11. Do I have to claim donations the same year that I make them?
No. You can carry forward any donations you do not claim in the current year and claim them on your return for any of the next five years, but you can only claim donations once. You have to claim tax credits for gifts you carried forward from a previous year before you claim tax credits for gifts in the current year. If you are claiming a carryforward, attach a note to your return indicating the year of the return in which you submitted the official donation receipt, the portion of the eligible amount you are claiming this year, and the amount you are carrying forward.

12. What is the current tax credit rate for donations?
See Charitable donation tax credit rates.

13. I’ve been invited to participate in a donation program that will make me a profit. Is it safe to participate?
There are serious risks associated with this type of program – See What are donation schemes and why should I avoid them? to learn more.

14. How do I report charity fraud?
Report fraud to the Canadian Anti-Fraud Call Centre by calling 1-888-495-8501. You can also call the CRA’s toll free numbers in Canada: 1-800-267-2384 (English) or 1-888-892-5667 (bilingual).

15. Is it safe to donate online?
Any charity that solicits donations online should be responsible for protecting your information. Read the charity’s privacy policy before making a donation online. Only give donations through secure Web pages. If you are unsure about donating online, contact the charity and ask them for other ways to donate.

Ontario Trillium Benefit and tips

 Ontario Sales Tax credit (OSTC), Ontario Energy and Property Tax credit (OEPT) and Northern Ontario energy credit (NOEC) are credits for Ontarians earning low and moderate  income. These programs will be combined as Ontario Trillium Benefit (OTB) from July 2012. These benefits are now paid quarterly and will be paid monthly from July 2012.

 

Ontario Sales Tax Credit

You could get up to $265 for 2011 for each adult and child in your family to help with the sales tax you pay on goods and services. This amount is adjusted for inflation each year.

Ontario Energy and Property Tax Credit

If you pay rent or property tax, you could get up to $917 for 2011 to help with the sales tax you pay on energy and the property taxes you paid and qualifying seniors can get up to $1,044 for 2011.

Northern Ontario Energy Credit

Families living in Northern Ontario can get up to $204 for 2011 to help with their home energy costs, as it is often higher in the North due to more severe winters. If you are single, you can get up to $132.

These amounts will be adjusted for inflation each year.

 

Eligibility:

You must be eligible to at least one of the benefits (OSTC, OEPT or NOEC) to eligible to receive OTB.

Application:

You must complete Ontario Form ON-BEN which is part of the 2011 T1 General Income Tax and Benefit Return package and file it with the Canada Revenue Agency (CRA).  If file your individual tax returns later than April 30th may result in delay in receiving OTB payments.