June 2017 Newsletter

The Income Tax Act gives the CRA wide powers to access your accounting records, bank records, and any other documents it can find or demand.

An auditor can ask for records about you from you, your bank, your accountant, your employer or almost anyone else you deal with, such as investment dealers, casinos, insurers, customers or credit-card issuers.

The March 22, 2017 federal Budget has eliminated the 15% credit for buying public transit passes.

This move was expected, as the Liberal government is doing away with a number of the tax credits introduced by the Conservatives during their 10 years in power.

The March 22, 2017 federal Budget has added a special rule allowing in vitro fertilization costs as a medical expense, eligible for a 15% federal credit (subject to a threshold of a base amount of medical expenses in the year), plus a provincial credit.

Such costs were already allowed as a medical expense where needed for medical reasons, due to infertility.

If you own or manage a business, you occasionally end up in disputes with customers or suppliers over the terms of a contract or payment. Sometimes these disputes have to be referred to lawyers, and sometimes they end up in court.

A settlement or award for breach of contract will normally be considered tax-included if the following conditions are met:

Should you transfer shares that you already own to your RRSP?

The prospect can be attractive. The shares you transfer are considered a contribution to your RRSP. If you have unused RRSP contribution room, you can thus get a substantial tax deduction for shares that you already own. If you have not been making maximum RRSP contributions, you may have substantial accumulated contribution room since 1991. (This contribution room can be carried forward indefinitely.)

Collecting GST/HST on a sale of commercial real property

On a sale of commercial real property, GST/HST usually applies, but the vendor normally does not (and should not) collect the tax from the purchaser, if the purchaser is GST-registered. Instead, the purchaser “self-assesses” the tax (and in most cases claims an offsetting input tax credit so that the tax actually costs nothing).