- GST/HST audits
- Income tax audits
- Defend your return in a review request
- Schedule & attend all audit appointments
- Review your tax return for additional problem areas
- Review your documentation before the CRA sees it
- Handle all audit correspondence
- Provide assistance with all other income tax queries or correspondence
SRED Tax Incentives – What’s New
The Canada Revenue Agency has prepared a What’s New page on its web site for information on the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program Support for scientific Research and Development (R&D) in Canada.
The SR&ED program is a federal tax incentive program, administered by the Canada Revenue Agency (CRA), that encourages Canadian businesses of all sizes, and in all sectors to conduct research and development (R&D) in Canada. It is the largest single source of federal government support for industrial R&D.The SR&ED program gives claimants cash refunds and/or tax credits for their expenditures on eligible R&D work done in Canada.
Â For information on what’s new with the SRED program, please see:
CRA Tax Tip: Apprenticeship job creation tax credit
Did you know…That businesses with an eligible apprentice may be able to claim the apprenticeship job creation tax credit? This is a non-refundable tax credit equal to 10% of the eligible salaries and wages payable to eligible apprentices for employment after May 1, 2006. The maximum credit is $2,000 per year for each eligible apprentice.
For more information about the credit, visit cra.gc.ca/individuals and select “A” from the drop-down menu for “Apprenticeship job creation tax credit.”
CRA Tax Tip – Service Complaints
The following tax tip is available from the Canada Revenue Agency web site.
Did you know that…The Canada Revenue Agency has introduced a new complaint resolution process? If you have a service-related complaint that has not been resolved through our normal channels, you have the right to make a formal complaint about mistakes, undue delays, poor or misleading information, or staff behaviour through CRA â€“ Service Complaints.
For more information, visit the Canada Revenue Agency Web site at cra.gc.ca/complaints.
Smart tax tips:
Overcontributing to your RRSPâ€”be mindful of the penalty tax
Did you know that youâ€™re permitted to overcontribute a cumulative lifetime total of $2,000 to your RRSP without incurring a penalty tax? While this overcontribution is not deductible from income in the current year, the advantage lies in the fact that youâ€™re able to inject extra cash into your RRSP, where it can compound on a tax-deferred basis for as long as it remains in the plan. Overcontributions may be deducted in a subsequent year when your actual RRSP contribution is less than the maximum allowed.
However, you should be careful with overcontributions. A penalty tax of 1% per month applies to the amount of any overcontribution in excess of $2,000. The actual amount of tax owing is calculated on Form T1-OVP Individual Tax Return for RRSP Excess Contributions, and is due and payable within 90 days after the end of the year. This form is supposed to be completed and remitted for each year that there is an excess amount in your RRSP. If the form is not completed and filed, it never becomes statute barred and therefore remains open to reassessment by the CRA beyond the normal three year assessment period.
The CRA has become more stringent in going after taxpayers who have overcontributed to their RRSPs in excess of the allowable amount. If youâ€™re in this position, you have the option of withdrawing the amount within a certain time frame. You should consult with your tax adviser to determine your options and the steps you need to take.
Smart tax tips:
Working from home? Consider all your available deductions
Many Canadians now work out of their homes and if youâ€™re among this rapidly increasing section of the population, you may be able to deduct a portion of your home office expenses. There are, however, specific rules that must be followed.
If youâ€™re self-employed, the home office expenses that you can deduct must relate to a workspace that is either your â€œprincipalâ€ place of businessâ€”where â€œprincipalâ€ is generally interpreted as more than 50% of the timeâ€”or be used exclusively for the purpose of earning income from the business. For the latter to apply, the space must also be used on a regular and continuous basis for meeting clients, customers or patients.
You can deduct a portion of the operating costs of your home if you qualify to claim home office expenses. For example, if your home office takes up 10% of the total square footage of your home, you can claim as a deduction from your business income 10% of your mortgage interest (not principal), property taxes, heat, hydro, water, home insurance and maintenance costs. Any expenses directly related to the home office can be deducted in full.
You should note that home office expenses can only be deducted from the business carried on in the home and cannot be used to create a business loss. Eligible expenses youâ€™re unable to use in the year that theyâ€™re incurred can be carried forward to subsequent years and deducted from income generated by the business at that time, as long as the business use criteria discussed above are still met.
There are a different set of rules that apply to employees that wish to deduct home office expenses. Generally speaking, the ability to deduct these expenses is more restricted.
Itâ€™s not a good idea to claim depreciation on the portion of your home used for business purposes, since there may be negative tax implications if you ever sell your home. If you do not claim depreciation, your entire house may be regarded as your principal residence. This way, any gain realized on the eventual sale of your house may be tax-free.
Itâ€™s important to keep a well-organized file of all receipts and records of paymentsâ€”and then go over them with your tax adviser to see if theyâ€™re eligible deductions for your at-home business.