Frequently Asked Questions
The most common questions experienced while working with clients.
1. What are the individual income tax deadlines?
For individuals the general tax deadline is April 30th for your income tax return, if you are self-employed the returns deadline is June 15, but the tax owing is still April 30. If you are common-law or married your spouses will share your filing deadline.
2. Do I have to pay tax on my hobby?
Unfortunately yes, if your hobby is intended to make money and is being run as a business you will be subject to income tax and possibly consumption tax (RST/GST). If your hobby does not earn income and mainly breakeven you may be able to support you are not trying to earn income but have a hobby.
3. How long until we have to file common-law?
For tax purposes common-law occurs based on one of the following three situations:
1. This person has been living with you in a conjugal relationship for at least 12 continuous months;
2. This person is the parent of your child by birth or adoption; and,
3. This person has custody and control of your child and your child is wholly dependent on them for support.
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Make sure to inform CRA immediately as this can have effect on benefits you receive and may result in back pay with interest.
4. Should I make contributions to my RRSP or TFSA?
There is no black and white answer to this question. It involves a good understanding of your individual situation and what you are hoping to use the funds for. As well, what your earned income and cashflow needs are.
5. What is the difference between a TFSA and RRSP?
A TFSA (Tax-Free Savings Account) is an investment account that you can put after tax money into. It can hold a range of investments and not just a savings account. Any income or gains are tax-free as long as several conditions are met. New room is made available on January 1 of every year based on a government release.
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A RRSP (Registered Retirement Savings Plan) is an investment account that you can put pre-tax money in through a work retirement plan, or after tax money in which you will receive a tax refund. The money can grow in the RRSP tax deferred until withdrawn. At age 71 the RRSP converts to a RRIF (Registered Retirement Investment Fund) where annual withdrawals must be made on prescribed rates.
6. What is the difference between a deduction, non-refundable credit and refundable credit?
A deduction reduces income and lowers total tax that is payable. For example if you earn $50,000 and you put $2,000 into your RRSP, your taxable income is now $48,000. Other deductions are employment expenses, carrying charges and the new enhanced CPP.
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A non-refundable credit reduces the tax you pay on your taxable income. If your credits exceed your tax owing you will not receive the difference in a refund.
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A refundable credit reduces the tax you pay on your taxable income. If your credits exceed your tax owing you will receive the difference in a refund.
7. Why does my donation to a GoFundMe campaign not count as a donation?
Only donations to registered charities count towards the donation credit on your income tax return. These registered charities will provide you a donation receipt which will contain their business number which contains RR (ie. 12345 6789 RR 0001). "Donations" to campaigns such as GoFundMe are considered gifts. For a full list of registered charities you can visit CRA's website.
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8. Do I have to pay or file for the Underused Housing Tax (UHT)?
Reasons you may need to file:
1. Co-own rental property
2. Co-own vacation home
3. Own residential property in a corporation
4. On title for probate or helping children obtain a mortgage
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