Tag Archives: Montreal

2011 Brings Many Tax Increases

Allan | January 10, 2011 - 3:47 pm

Make sure to count all your pennies because you are going to need them!

As of January 1, 2011 there have been a broad range of tax increases for all Quebecers and those individuals who live on the island of Montreal. Below is a list of all increases:

  • The Provincial sales tax rate (QST) increased to 8.5%. The combined GST/QST rate stands at 13.925%
  • QPP contributions will be calculated on the first $48,300 of earnings in 2011, up from $47,200 in 2010, so that the maximum payable by Quebecers will rise to $2,217.60 from $2,163.15 in 2010.
  • For the Quebec Parental Insurance Plan, the earnings threshold rises to $64,000 from $62,500 and the employee contribution rate increases to 0.537% from 0.506%, boosting the maximum payable to $343.68 from $316.25 in 2010.
  • Employment Insurance dues will be calculated at 1.41% on the first $44,200 of income, up from 1.36% on the first $43,200 in 2010, raising the maximum annual cost to $623.22, up from $587.52 in 2010.
  • The Quebec prescription drug insurance plan, also had its maximum annual premium increased to $600 from $585, though Quebecers who use the plan won’t face that cost until they file their provincial income-tax returns in early 2012.
  • A new provincial health contribution was announced in the last Quebec budget: $25 for all tax filers on 2010 returns, $100 in 2011 and $200 in 2012.
  • Individuals living on the island of Montreal will be subject to a new “car tax” which will be capped at $50 per vehicle owned. This new tax will be collected at the time of payment of the vehicle registration.
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How to Calculate the Montreal Welcome Tax

Allan | November 23, 2010 - 8:08 pm

The “Welcome Tax” is a land transfer tax or in French, commonly referred to in Montreal as the “taxe de bienvenue”.

Since January 1, 1992, every Quebec municipality must collect duties on the transfer of any immovable situated within its territory. This tax is payable by the buyer and is calculated as follows:

  • 0.5% of the first $50,000;
  • 1% of the next $50,000 to $250,000;
  • 1.5% of the next $250,000 to $500,000.
  • 2% of any portion exceeding $500,000

Example:

If a property is sold for $429,000. The taxes payable to the municipality will be:

  • 0.5% of the first $50,000 = $250
  • 1% of the next portion $50,000 to $250,000 = $2,000
  • 1.5% of the portion exceeding $250,000 = $2,685
  • 2% is not applicable in this case

Total taxes payable is $4,935.

Full details, please refer to the City of Montreal’s Website Duties on transfers of immovables.

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Start Your Tax Planning Today

Allan | November 8, 2010 - 10:27 am

For most people, tax planning is at the bottom of their to-do list.  While we all complain about paying income taxes, we should also put in the effort to reduce our income taxes payable come tax filing next year.

Right now, things are quiet and you can go through things without a panic.  When we’re in tax season, we become stressed and tend to overlook things which can cost us money.

Here are some year-end tax planning tips:

  1. Add up your taxable income from all sources. Include employment income, investments, RRSPs, etc… There may be ways to reduce your income tax bill but you will be limited after December 31.
  2. Get organized. If you haven’t already, start an envelope or folder to hold all your tax slips and receipts.
  3. TFSA withdrawals. If you plan on making a withdrawal from your tax free savings account, you should do so prior to December 31. You will then have the opportunity to recontribute as of January 1.
  4. Pool medical expenses. Medical expenses can be claimed in any 12 month period and the family’s expenses should be pooled together on to one tax return.
  5. Review your stock portfolio. It can be a wise decision to sell some stocks to lock in a capital loss or gain. Capital losses can be carried back three years or carried forward indefinitely.
  6. Don’t forget your renovations. You may have some receipts from early 2010 that are eligible for the home renovation tax credit (HRTC). The HRTC was available to be claimed only in 2009, so if you have receipts, you need to file an adjustment to your 2009 income tax return.
  7. Plan your moving day. Check the provincial income tax rates before in the province before you move. You are subject to provincial tax based on where you reside on December 31. So if there is a substantial difference in tax rates, you may want to speed up your move or defer it until the next year. For example, if you plan on moving from Toronto to Montreal, you should wait until after January 1 to avoid an extra tax bill.
  8. Purchase new computer equipment. If you are in business, you have until February 2011 to take advantage of the 100% capital cost allowance on your income tax return.
  9. Make an RESP contribution. To take advantage of the government’s Canada Education Savings Grant for 2010, you must make a contribution to your child’s RESP before December 31.
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How is an Internet Business Taxed in Canada?

Allan | July 27, 2010 - 9:28 am

Essentially, Internet businesses are taxed in the same way that all businesses are taxed. The Canada Revenue Agency, or CRA, does not base its system of taxation on the way in which a business chooses to go about its operations, or the medium through which it does its business. Instead, it is based on the form of business that is being operated. This applies not just to income taxes, but to sales taxes. Even on the Internet, Canadian businesses must charge local Provincial Sales Taxes (PST) and the Federal Goods and Services Tax (GST). An Internet shop that is run out of Montreal pays the same taxes as a physical shop in Montreal.

If your business is a sole proprietorship, you are required to fill out a Statement of Business Activities (Form T2125). This form can be found in the T1 Income Tax Form. If, on the other hand, you own a business which is incorporated, you must report your income through a T2 Income Tax Return. You may want to hire an accountant to help you with this. An accountant can help to make your job a lot easier, saving you time and possibly money in the process.

As with any other business, you will be able to claim business expenses. Business expenses are costs that you have incurred in order to keep your business going. You will want to be careful with what you choose to claim. If you don’t claim enough, you are paying more taxes than you need to. But if you are claiming too much, the CRA may end up choosing to audit you, which can make your life difficult. This is another reason to consider having an accountant help you with the process.

As with any business, Internet businesses in Canada are required to keep records that can be made available to the CRA upon request. The required records are the same as for any other business, must go back six years, and they need to be maintained in Canada. In addition, Internet businesses are required to keep electronic records in addition to physical paperwork.

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My Business Is Incorporated; Do I Still Need To File A Personal Income Tax Return?

Allan | June 28, 2010 - 9:35 pm

Taxes can be confusing when it comes to separating your personal income from your business income. When your business is incorporated, it becomes an entity itself, capable of being taxed, sued, and all other things that can be done to an individual. Do you still have to file a personal return, even though your corporation’s income is already taxed?

The short answer is: yes. In Canada, filing a tax return on income from your corporation does not excuse you from filing a tax return on your personal income. Of course, there are many caveats to this simple rule.

First, the type of corporation you run determines the type of return you must file. If you are a non-profit corporation, organized for charitable purposes, your corporation is not subject to the same tax consequences as a for-profit business, although your personal tax liability may be the same. Further, your tax consequences will be different if you are organized as a private corporation or a public corporation. In Canada, a Canadian-controlled private corporation enjoys a significantly larger tax advantage than foreign-owned corporations. Be sure to talk to your accountant about possible tax advantages from types of incorporation when you file your corporate papers.

Further, the area in which you do business will affect your tax liability and initial start-up costs. If you are doing business only in Montreal as a sole proprietorship, it makes sense to incorporate provincially, which is less expensive. However, if you are doing business in other provinces and Montreal is only your home base, then you should consider federal incorporation.

Another consideration when filing your taxes is your corporate structure. Your corporation’s income may or may not be tied to your personal income, depending on how you pay yourself. If you are an employee of the company, your salary will be taxed under your personal income tax, and the corporation’s income will be taxed under the corporate return. It pays to discuss with an accountant the options you have for financial setup when you incorporate. You can save significant money by paying yourself in certain ways.

However your corporation is set up, you should always file your personal income on a T1 return and your corporate income on a T2 return.

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On Your Side – Tips for filing taxes

Allan | April 26, 2010 - 8:13 pm

The following newsclip was aired on CTV Montreal News at 6pm today Monday April 26, 2010.  Please take a couple minutes to view this clip on e-mail fraud and penalties if you do not file your income taxes on time.

CTV News

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How to get subsidized as a First Time Home Buyer

Allan | February 11, 2010 - 11:52 am

For most young Canadians, purchasing their first home can be very overwhelming and financially intimidating.  Knowing that you are bound to mortgage payments to the bank for the next 25 or 30 years seems out of reach for most individuals in their mid-twenties and/or early thirties.

Depending on where you live in Canada, you may be able to get subsidized by all three levels of Government (Federal, Provincial and municipal).

The Federal Government offers some tax incentives to first time homebuyers: 

Provincial incentives:

Municipal incentives

  • If you live in Montreal and are looking to buy your first home, then you’re in luck!  There was a first time home buyer subsidy of a minimum $6,000.  The subsidy will increase if you have one or more children.  Unfortunately this subsidy expired December 31, 2009 but the good news is that a new program will be announced in early March! http://ville.montreal.qc.ca/portal/page?,16347780&_dad=portal&_schema=PORTAL
  • For other municipalities, please check with your local city hall to see if they offer similar rebate programs.
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The taxman cuts us some slack – for now

Allan | January 2, 2010 - 9:45 am

There was a very interesting article which appeared in today’s Montreal Gazette.  Ottawa and Quebec won’t dig deep into your pocket this year, but 2011 could be a different story. 

Both Federal Provincial Governments joined together to provide Canadians with much needed tax breaks and social spending to help us come out of the recession of 2009.  Now that we are out of the recession we need our Government to get back on track, eliminate the deficit and focus on paying down the debt.  2010 will not provide much tax relief to the average Canadian however we cannot predict what can happen in 2011.

For the full story: http://www.montrealgazette.com/news/taxman+cuts+some+slack/2398936/story.html

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