Tax Questions

Income tax policy, rules, problems, strategy and software. Property and consumption taxes too.
BRIAN5000
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Post by BRIAN5000 »

Any capital gains implications shouldn't really apply
I'm sure in a moment someone will point out that they may apply
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AltaRed
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Post by AltaRed »

stick_on_a_carrot wrote: so the only consideration should be the rental income collected during that 10 year period.
Unfortunately that will not be the case. But it would be wise for you to have a formal appraisal done on the date you convert to income producing and then another one when it again becomes a principal residence so that CRA cannot dispute the cap gains during that 10 year period. I have heard (but do not know for sure) that CRA no longer accepts (or may challenge) realty market assessments and municipal assessments for establishing ACB/FMV data points.

It is also my understanding that it is also wise not to claim CCA during the period the property is income producing since declared CCA must be recovered, I believe, as fully taxed income in the year the property is converted back to a principal residence.

Further, I believe the actual cap gains taxes that will be payable upon conversion back to a principal residence can be deferred until you actually sell the property. Refer to CRA IT-120 which probably confirms that.

You may wish to seek the advice of a competent tax accountant.
stick_on_a_carrot
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Post by stick_on_a_carrot »

Thanks again. Such a wealth of information on this forum. I love it. More and more negatives to this strategy though. Oh well, we are still some years off from implementing it in any regard. This is just one route we are considering though. Might sell instead and invest the proceeds in the meantime. Should have some nice contribution room in our TFSAs at that point, so a good chunk would be sheltered from income tax/cap gains etc.
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Post by BRIAN5000 »

More and more negatives to this strategy though
Lots of good things too, but Be prepared for tenants. If you are away who will look after the building and tenants.

The wife and 17 year old were at home the other day and the supply tube from the sink to the hot water decided to depart. It took them a while to figure out how to turn it off :evil: :(

A lot may depend on the property you wish to rent out.
If its a one of a kind ect.
alexvpickering
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Tax Time - my best option?

Post by alexvpickering »

I was just wondering what the cheapest option for me is as far as filling my taxes?

I have very few things to include as I am only 20 years old and was not going to school last year (I was traveling & working). I am looking for a easy and quick preferably online way to file.

Thank you.
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AltaRed
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Post by AltaRed »

Read the QuickTax and UFile threads in this sub-forum. Everything you want to know and more.
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Post by Mavatar »

If you don't owe any money and don't have foreign assets >$100k, the absolute cheapest method would be to not file at all. However, if you choose this option, you may miss out on GST credits and other program amounts.
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AltaRed
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Post by AltaRed »

Mavatar wrote:If you don't owe any money and don't have foreign assets >$100k, the absolute cheapest method would be to not file at all.
That could be the costliest method. If the OP was working for wages, income taxes would have been withheld at source and s/he would get them all back if below the taxable threshold.
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Quick tax question..simple tax question

Post by infopls »

A newbie question..
I 'received' and sold immediately RTS units..(CPF.UN)
Am I correct in assuming my cost base is 0? or do I have to look further when I add my sales in Quicktax?
TIA
Last edited by infopls on 07 Apr 2008 20:36, edited 1 time in total.
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AltaRed
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Post by AltaRed »

That is not really a QuickTax question. You are asking about ACB and whether you have cap gains or losses on your sale.

No one can answer your question without understanding the circumstances you "received" your CPF.UN units.
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Post by infopls »

Sorry...I should not have used 'Quick tax' in the heading...I meant it is a simple tax question...!!! Quicktax usage was just an added note..
BUT..from your response....am I to assume that it is more complicated than I want??
Again..thanks..
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AltaRed
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Post by AltaRed »

It is not necessarily complicated. I would guess the ACB would be the value of the units on the day you 'received' them but you haven't provided any info on what 'received' means.
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Post by jf »

AltaRed wrote:
Mavatar wrote:If you don't owe any money and don't have foreign assets >$100k, the absolute cheapest method would be to not file at all.
That could be the costliest method. If the OP was working for wages, income taxes would have been withheld at source and s/he would get them all back if below the taxable threshold.
And s/he won't get the RRSP room as well.
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Post by infopls »

Thanks Alta for being so understanding re my confusion..
I AM trying to learn..
All I know is I had 3318 CPF.UN RTS units added to my TDW in November...did not want to 'exercise my rights' so was able to sell at .12...so received $398.17-9.99 comm=$388.17 cash added to account.
So...is this a cap gain sale for my 2007 tax return...or something that I have to add to my CPF details?
Hope this makes sense...
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Pickles
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Post by Pickles »

jf wrote:
AltaRed wrote:
Mavatar wrote:If you don't owe any money and don't have foreign assets >$100k, the absolute cheapest method would be to not file at all.
That could be the costliest method. If the OP was working for wages, income taxes would have been withheld at source and s/he would get them all back if below the taxable threshold.
And s/he won't get the RRSP room as well.
It costs only the price of a stamp or two to file a basic return and takes only 15 minutes to fill out a basic federal schedule with a provincial tax credit schedule. Time well spent if you have littleincome and can claim the gst or provincial credits.
Regards,
Pickles
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Post by like_to_retire »

So...is this a cap gain sale for my 2007 tax return
Yeah, because the rights were given to you with a cost base of zero, it's all capital gain (-trade cost).

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Post by infopls »

Thanks LTR...for confirming my first instinct! Have not had to deal with RTS sale before..so now I know!
Thanks to you and Alta..
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Post by crystals »

If you drop your filled paper forms at a tax office, you save the stamp as well.

Another way of saving the stamp is to use the free efile from http://www.studiotax.com/en/main.htm
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Post by HardWorker »

AltaRed wrote:Read the QuickTax and UFile threads in this sub-forum. Everything you want to know and more.
Yeah read those. I'm pretty sure UFile lets people under a certain income file for free. Its not free for just being a student, I know as I have used them in the past.
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Tax Time - Foreign Property

Post by dereklola »

Instructions are to include foreign property owned at any time during the year.

What if -
- I owned property A which cost me $50,000
- I sold it, so I then owned cash which 'cost' me $50,000
- I then bought property B which cost me $50,000

Obviously my Foreign Property total was only ever $50,000.
But CRA tells me I have to include each of those three - ie. $150,000.

Any observations? Other experiences? Maybe even advice?

Thx - Derek
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AltaRed
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Post by AltaRed »

I don't think it matters much. Unless the form has changed this year, I would put an X in the <$100k box in each of "Funds" and "Real Property" lines.
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Arby
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Re: Tax Time - Foreign Property

Post by Arby »

dereklola wrote:But CRA tells me I have to include each of those three - ie. $150,000.
I think the instructions refer to the total amount of foreign property owned at any point during the year. In your example, at any point during the year you owned a maximum of $50K in foreign propery, therefore you shouldn't have to complete the form (since you're below the $100K limit).
nirvana_1959
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Post by nirvana_1959 »

Hi Dan and other experts,

Read the bulletin (see link below) and your comments.

http://www.cra-arc.gc.ca/E/pub/tp/it238 ... 8r2-e.html

I didn;t find any reference in the bulletin regarding "fees paid for general financial planning, subscriptions to financial publications, trading commissions, and any investment fees otherwise deductible that are paid in respect of tax-deferred trusts (i.e. RRSP, RRIF, and other provincial version thereof) are specifically excluded from 20(1)(bb). '

Further, paragraph 9 of the bulletin states "9. The fact that part or all of a taxpayer's investment income is exempt from tax does not affect a deduction under paragraph 20(1)(bb) that is otherwise allowable".

I am in a situation where my RSP's are managed by a management fund and I pay them management fee (apart from RSP admin fees). I was planing to take the deduction. Please let me know if I have misunderstood the bulletin.

Thanks,
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Post by DanH »

nirvana_1959 wrote:Hi Dan and other experts,

Read the bulletin (see link below) and your comments.

http://www.cra-arc.gc.ca/E/pub/tp/it238 ... 8r2-e.html

I didn;t find any reference in the bulletin regarding "fees paid for general financial planning, subscriptions to financial publications, trading commissions, and any investment fees otherwise deductible that are paid in respect of tax-deferred trusts (i.e. RRSP, RRIF, and other provincial version thereof) are specifically excluded from 20(1)(bb). '
From IT 238R2...

3. Fees paid for other types of advice such as general financial counselling or planning are not within the provisions of paragraph 20(1)(bb) even though the principal business of the advisor or counsellor otherwise qualifies. Also, where the principal business of the person providing the service does not meet the requirements specified in 1 above, fees paid for advice on buying or selling a specific share or security of the taxpayer or for the administration of the shares or securities of the taxpayer are not deductible under paragraph 20(1)(bb).

The second half of this tells you that even where the services provided fit exactly with 20(1)(bb), that the person providing the services also has to be primarily involved in the provision of such services - or else no deduction.
nirvana_1959 wrote:Further, paragraph 9 of the bulletin states "9. The fact that part or all of a taxpayer's investment income is exempt from tax does not affect a deduction under paragraph 20(1)(bb) that is otherwise allowable".
But back up two paragraphs in IT 238R2 to find...

7. Fees charged by the trustee of a registered retirement savings plan directly to the annuitant are not deductible by the annuitant pursuant to the provisions of paragraph 20(1)(bb), as the shares or securities of the plan belong to the [RRSP] trust and not the annuitant.

And it's always good to look at what the law actually says on this...
ITA paragraph 20(1)(bb) wrote: 20. (1) Notwithstanding paragraphs 18(1)(a), 18(1)(b) and 18(1)(h), in computing a taxpayer’s income for a taxation year from a business or property, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto

Fees paid to investment counsel

(bb) an amount other than a commission paid by the taxpayer in the year to a person

(i) for advice as to the advisability of purchasing or selling a specific share or security of the taxpayer, or

(ii) for services in respect of the administration or management of shares or securities of the taxpayer,

if that person’s principal business

(iii) is advising others as to the advisability of purchasing or selling specific shares or securities, or

(iv) includes the provision of services in respect of the administration or management of shares or securities.
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Post by nirvana_1959 »

Thanks Dan.

In my case my counsel does the buying and selling for me and charges a percentage every quarter. He even provides a receipt. The portfolio he is managing only consists of RRSP's and RESP. In this situation can I deduct this as carrying expense? Basically this translates to tax deferral as I am allowed to pay the fees out of my RSP accounts any way (which is pre-tax money).
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