Personal Tax
Optimize your tax return by using proven methods available to you.
 
 
Tax Services:
Tax Returns for Individuals

When it comes to preparing tax returns for each individual, the Income Tax Act provides limited options. Despite these limitations, MBS Plus will work with you to optimize your tax return by using proven methods during the preparation process. After all, a missed deduction means more costs for you. There are a number of considerations (deductions, tax credits and other benefits), that are always considered when preparing your tax return. We know these, let us help you with them.

These include:

  • Pension Plan Contributions

  • Automobile, travel, supplies and office expenses – if the employer has signed a T2200 for the current year

  • Trade union and professional dues

  • Transportation Employees’ board and lodging– if the employer has provided a TL2 for the current year

  • Legal expenses to recover, or attempt to claim, salary and wages from an employer. This includes fees for dealing with a lawyer when considering either an offer (if the offer is accepted) or termination of employment. This also includes legal fees to get a payment from an insurance plan that is provided via your employer.

  • Tradesperson, and Apprentice, Tool Deductions

  • RRSP deductions

  • Medical expenses

  • Charitable Donations

  • Spousal Support payments

  • Adoption expenses

  • Foreign Pensions and the relevant Tax Treaty implications

  • Disability support and attendant care costs

  • Moving expenses

  • Child care expenses

  • Pension Income Splitting

  • Allocation of Dividend Income between spouses

  • Treatment of stock options

  • Home Buyers Plan and Life-long Learner Plans

  • Student Tuition and Education/Textbook credits

 

Additional items that commissioned sales people may deduct include:
  • Payments made for a client list

  • Employment of an Assistant

  • Possible GST rebate on the expense incurred that are not reimbursed by the employer

 
Sole Proprietorships & Partnerships
Small Business Tax Return Preparation

Many small business owners start off as a sole proprietor or with partnerships, often deciding to incorporate as a company increases in business and profit. An unincorporated small business tax return is reported on additional schedule (s) of your personal tax return. Your revenues and expenses must be reported on a Statement of Business Activities and the accumulated net income is what will be considered when determining your tax liability.

Some examples of revenue and expenses that may be claimed are:

  • Home office – Only applies if you do not have another office location or if more than 50% of your work is exclusively done at home where you regularly meet with clients.

  • Automobile – Only applies for business purposes only. A mileage log should be kept as proof for kilometers driven.

  • HST – Registering and/or collecting HST (on other sales tax) is a requirement once $30,000 in revenue is earned in any consecutive twelve-month period.

 

If you choose to report business income on your personal return (i.e. schedule 2125) then your tax return does not need to be filed until June 15th, however, any amounts owing must be paid by April 30th.

Here at MBS Plus, our team of professionals can file your sole proprietor tax returns to ensure you are able to maximize your earnings, by professionally reducing your tax liabilities. Let us make sure you are legally taking advantage of all tax laws available to you.

 
Partnership Tax Returns

A partnership is not responsible for filing an annual income tax return, however, a partnership is required to file its own tax form, called a T5013, in Canada. In some circumstances, this means that the partners involved are responsible to include their portion of income generated on their income tax return. Ultimately, this requires a clear understanding of the financial reporting and tax requirements for each partner. Due to partnerships having their own unique reporting issues and tax complications, it is important to have a professional tax accountant manage your financial reporting and taxes. This way you can feel confident that you are receiving the necessary tax advice you deserve.

 
Rental Property Owners
Rental Property Tax Deductions

Rental property can be a great investment, however, if your knowledge of the process is insufficient it may become detrimental in the long-term as opposed to beneficial. Additionally, rental property owners are responsible for paying property taxes to the government as well as claiming the income you receive from rent expenses. It is important to understand the positive and negative effects of being a rental property owner and using these tips and tricks to become a productive and successful property owner.

With rental properties we need to be aware of unfavourable sources that the government can use against you:

  • Vehicle expenses

  • Travel expenses provided you own more than one rental property

  • Capital expenses

  • Repair and maintenance

  • Insurance premiums

  • Utilities

 

Unfavourable sources (tricks) that the government can use against you:

  • If you rent out a portion of your home, be careful about the portion of expenses you claim as it could jeopardize the principal residence exemption on the property.

  • Many people claim depreciation on their rental properties. This can be dangerous as it could lead to a potentially large tax bill upon the sale of the property.

 

Let MBS Plus provide you with the knowledge needed to be a successful rental property owner.
Our team of professionals strategize and create a plan that outlines all the tricks and or disadvantages to avoid and all the tips and/or advantages you deserve.

 
Investors
Investors Tax Returns & Deductions

Capital gains, dividends, interest and foreign tax credits can become complex. Ensuring that your tax advantageous filings are used where suitable (i.e. stock options, allowable business investment losses, capital gains exemption) is highly important when structuring your investments to earn one type of income over another (i.e. capital gains vs. dividends).
 

Knowing which investments attract less tax and can be used as deductible for tax purposes is equally significant (i.e. investment loans). When investing, avoiding all complications with the CRA is a must. Often, the CRA will expect the income to be split between taxpayers regardless of whether the taxpayers contributed equally to the underlying investment. If you have joint slips (T5 and T3), it is advisable to have the taxpayers returns prepare together. There are countless strengths and weaknesses for investors. Let our team of professionals work hard to prepare your returns, deal with the CRA and most importantly, provide you with options for smart investment choices.

 
Tax Planning
Tax planning services

The undertaking of legitimate transactions or arrangements with a view to avoiding or minimizing the payment of taxes.  Be aware, aggressive Tax Avoidance is not tax planning. Let us take the guesswork away and develop a tax planning strategy that is legal and works for you.

Depending upon your situation one or more tax planning opportunities may be reasonable.  Come tax planning transactions include, but are not limited to:

  • Tax deferred sale of certain assets to a corporation (a section 85 rollover)

  • Recapitalization of a corporation to minimize punitive taxes such as tax on split income “TOSI”

  • TFSA versus RRSP

  • Salary versus dividend compensation

  • Division of assets in a tax deferred manner (so called Butterfly transactions)

  • Family Trusts

 
Deceased Taxpayers
Taxes as a result of death
 

Whether a loved one has passed away or if you are interested in being proactive in managing your affairs, it is advisable to consult with MBS Plus LLP in addition to your lawyer to navigate complex issues relating to the death of a taxpayer. The following is a general overview of some of the taxation related items to be considered and acted upon when someone dies. When someone passes away the Estate ensures all prior tax returns have been filed. This will allow for a final return to be prepared for the deceased taxpayer. The final return of the deceased taxpayer will include all components that fall within their personal tax return, however, this tax return covers the period from January 1st, to the date of death. This is known as the Final Return although in most cases, it is not the last return that needs to be filed. The final tax return is due on April 30th of the year following death unless the taxpayer passed away in November or December. In this case, the Estate has a maximum of six months to file this personal tax return. There are two Optional Personal Tax Returns that may be advisable:

  1. A Return for Rights or Things personal tax return must be completed if there is income after death from items and/or investments held by the Estate. This covers the period from the date of death to the first anniversary (or sooner) of death.

  2. Another personal tax return that must be filed is if the deceased had, or was a partner of, an unincorporated business that generated income after the taxpayer’s death. This tax return is due on April 30th of the year following death unless the taxpayer passed away in November or December. If this is the case, then the Estate has a maximum of six months to file the personal tax return. Personal tax returns are required to be filed each year following the taxpayer’s death in which the Estate retains ownership in the business and that business generates income. Generally speaking, when a person dies and the Estate holds a valid will, the will creates what is called a testamentary trust. This is an important tool with respect to taxation as this allows the Estate to file tax returns as a trust. However, unlike a normal trust a Testamentary Trust has progressive tax applied to it, similar to an individual.

  3. If tax returns are prepared using the trust, then the trusts tax year end will be the anniversary of the taxpayer’s death and must be filed within 90 days of that date. A major advantage of using a trust is that the Estate can be taxed in by the Estate, the beneficiaries or a combination. If this is the case, the amount of tax paid on the inheritance can often be much lower than if the Estate does not use the trust mechanism.

 

Some of the advantages of Testamentary Trusts include:

  • Ability to reduce the total income tax payable on the future income earned on the inheritance for the first 36 months post death (prior to the 2016 tax year this was applicable for so long as it is held within the trust.)

  • Help protect the inheritance from creditors of the beneficiaries, potentially even from family and/or property claims so long as it is held within the trust.

  • Avoids guardianship and/or curatorship’s rules being applied to the inheritance of a minor or incapacitated beneficiary. This only applies as long as it is held within the trust.

 

To ensure the Estate is properly positioned to minimize the tax and probate fees that may apply, it is always advisable to hire MBS Plus as soon as practical.

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