Heather Kohlen

Chartered Professional Accountant

Joint title situations & bare trust rules - NEW for 2023+

Common situations such as where a person is put on joint title to a property or bank account for probate purposes, or to help a child get a mortgage, now fall under new reporting rules. A T3 Trust tax return is required to be filed for such bare trust arrangements. These rules catch any situation where a legal owner on title is not one of the beneficial owners of the property (ie. would not get any of the sales proceeds if it were to sell or cannot use the money in the bank account). Penalties for not filing max out a $2,500/year.

Income splitting - NEW for 2018 onwards

Gone are the days of optimizing income taxes by sharing corporate income with a spouse who is not involved in the business.  Effective Jan. 1/18, dividends paid to such a shareholder must meet reasonability tests.  The consequence of going offside creates a tax bill at the highest marginal tax rate on that income.

Principal residence sales - NEW for 2016 & 2017 onwards

Starting in 2016, personal tax returns must report that a sale of a principal residence took place, even though it may be tax exempt.  Failure to do so could result in CRA considering it a taxable capital gain. Further, starting in 2017, the designation must be officially disclosed by filing a T2091 form with the personal tax return.

Disability tax credit

Ensure you apply for the Disability Tax Credit with CRA if there's a chance you might qualify due to physical or mental impairment.  Substantial tax savings are available if CRA approves a form T2201 signed by your doctor.  Even time spent for diabetes monitoring activities in excess of 14 hours per week can qualify.

Foreign reporting

Ensure you are onside to avoid $2,500 per year potential penalties on late-filing or failing to file a T1135 Foreign Income Verification Statement form.  Foreign company stocks in a non-registered Canadian broker account are specified foreign property and must be reported if their total cost base is over $100,000 in total.  Watch this in both corporate and personal investment portfolios.