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Changes to Changes to Canada Deposit Insurance

Posted by David Gobeil on

Changes to Changes to Canada Deposit Insurance

The Government of Canada has amended the Canada Deposit Insurance Corporation (CDIC) Act to modernize and enhance Canada’s deposit insurance framework. Changes will come into force in two phases.  Changes as of April 30, 2020 are:  expanded coverage of eligible deposits held in foreign currencies; extended coverage of eligible deposits with terms greater than 5 years; and elimination of coverage for travellers’ cheques because travellers’ cheques are no longer issued by CDIC member institutions.  Changes originally scheduled for April 30, 2021 have now been postponed until April 30, 2021: separate coverage for up to $100,000 in eligible deposits held under Registered Education...

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The Home Buyers’ Plan and Breakdown of Relationships

Posted by David Gobeil on

The Home Buyers’ Plan and Breakdown of Relationships

The Home Buyers’ Plan (HBP) is a provision of the Income Tax Act that would allow you and your spouse/common-law partner to each borrow funds from an RRSP to buy or build a qualifying home (ITA 146.01). An excluded withdrawal is an amount that you would have received out of your RRSP under the HBP, which is not included in computing your income for the year (ITA 146.01(1); excluded withdrawal).  If you have a spouse/common-law partner at the time of the HBP withdrawal, you are considered to be a first-time home buyer only if neither you nor your spouse/common-law partner owned...

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The Basic Personal Amount spawned The New Basic Personal Amount – Part 2.

Posted by David Gobeil on

On December 9, 2019, the Department of Finance released a Notice of Ways and Means Motion to amend the Income Tax Act and related Regulations. As of February 8, 2020, these changes have not received Royal Assent, but they are expected to become law effective for 2020. As a continuation from Part 1: The Maximum New Basic Personal Amount is for the 2020 taxation year, $13,229; for the 2021 taxation year, $13,808; for the 2022 taxation year, $14,398; and for the 2023 and subsequent taxation years, $15,000. The amount of $15,000 is indexed for inflation for the 2024 and subsequent...

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Emilio files his tax return

Posted by David Gobeil on

Emilio files his tax return

For 2020, Emilio is self-employed, and he expects that his business income will be $82,000. His marginal tax rate (MTR) is 38%. The federal conversion rate for the CPP contribution tax credit was 15%. He lived in a province with a conversion rate for the CPP contribution tax credit of 9.8%.  Emilio will have to pay base CPP contributions of $5,464.80, calculated as:  (((the lesser of (contributory earnings and YMPE)) - YBE) × employee and employer’s contribution rates for base CPP); or (((the lesser of ($82,000 and $58,700)) - $3,500) × (95% + 4.95%)).  Emilio will have to pay first additional...

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With 2 Canada Pension Plans, tax relief for contributions is more interesting

Posted by David Gobeil on

With 2 Canada Pension Plans, tax relief for contributions is more interesting

The base CPP pension is the original CPP retirement pension introduced in 1965 that provides a retirement benefit of 25% of your average monthly pensionable earnings. The First Additional Pension is an enhancement to the Base CPP pension introduced in 2019 that increases your retirement pension by 8.33% of your average monthly pensionable earnings. As an employee, your contributions to the base portion of the CPP result in non-refundable federal and provincial tax credits but your contributions to the enhanced portion of the CPP will be deductible for income tax purposes. This sort of partially corrects a penalty or anyone who's taxable...

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