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Ali Raza Jaffer, Chartered Accountant Mississauga, Greater Toronto Area

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Dear Valued Clients & Friends,

As we approach March break for school children, it is a reminder that we are one week away to the end of winter (we hope 😊)!  Wishing you all a happy and healthy spring season.  We are excited of our new Portal launch which we outline below.   As you prepare for spring cleaning, you will likely come across some income tax documents that you can gather with your tax package to submit to us.  Our professional staff are here to serve you and committed to providing exceptional service in completing your personal tax returns and answering tax related inquiries.  In this edition of our newsletter, we review some tax changes in 2022 that you may want to note as you prepare your documents.  The most notable of these changes is a new filing requirement called the Underused Housing Tax for Property Owners.

Attached, you will find an income tax return checklist to help you prepare your documents for the upcoming tax season. Please do not hesitate to contact us, should you require any assistance or have any queries.

In our Spring edition of our newsletter, here are the topics that will be reviewed:

  1. Google Reviews
  2. Introduction of our New Portal
  3. 2022 Personal Income Taxes
  4. CRA Tax Changes
  5. Underused Housing Tax (UHT)
  6. Important CRA Deadlines
  7. CRA Audit Focus Areas
  8. CRA My Account
  9. Digital Grant
  10. Life Insurance & Estate Planning, Loan applications, Advisory, Tax Planning and Cash Flow Planning

Please connect and follow the links to my social media at your convenience (Facebook, Twitter, LinkedIn, Instagram) to stay fully updated on COVID-19 and tax planning tips for individuals & businesses.

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Sincerely,

Ali Raza Jaffer

  1. Google Review 

The past 3 years have been quite challenging for everyone.   During that period, we have been working very hard in providing personal tips & accounting, tax, and business content on social media.   We would love your feedback on our services and newsletters.  If you get an opportunity, we would be grateful if you can please provide a google review available at the following link:

AR Jaffer Professional Corporation Chartered Professional Account Google Review

  1. New Portal

As communicated earlier this week, We are excited for the launch of our New Client Portal.  Our Portal services include the following:

· Ability to upload documents securely and share with us.

· Ability to digitally sign important tax documents.

· Ability to view documents and reports that are shared with you.

The ARJ Portal employs the very latest tried and tested security innovation. In addition, it also uses multi-factor authentication as an added security measure, assuring that that no one else is intercepting the documents or reports shared through the portal.

In the coming weeks, you will receive an email invitation from arjcpa@cchifirm.ca to register for your unique and exclusive channel on the new ARJ Portal.  For your ease, the invitation email will also contain a video link on how to complete registration and use the portal.

If you wish to register for the portal service sooner, please contact us @AR Jaffer Professional Corporation  – Client Care, clientcare@arjcpa.ca.

The link for the portal is @ https://arjcpa.cchifirm.ca/clientportal

Feel free to reach out to us if you have any questions about our new portal.

  1. 2022 Personal Income Taxes

There are a few tax changes which we outline below.  As you gather your documents, you have the option of uploading the documents on the ARJ Portal

You also have the option of sending your files digitally (either via dropbox, google drive, box, or secured email).  Please do not hesitate to contact us should you require any assistance.  I have attached the income tax checklist as a pdf.

You can also access the checklist at the link:   2022 Personal Tax Checklist

  1. CRA Tax Updates and Changes

For 2022, here are some notable changes for your personal taxes:

a.    Underused Property Tax Filing Requirements (see section 5) below).

b.    First-time home buyer’s tax credit:   The amount used to calculate the first-time home buyers’ tax credit has increased to $10,000 (from $5,000) for a qualifying home purchased after December 31, 2021.

c.    Home accessibility tax credit:  The annual expense limit of the home accessibility tax credit has increased to $20,000; the maximum non-refundable tax credit is $3,000.

d.    Immediate write off of capital property for Self-Employed Individuals:  If you carried on an unincorporated business and acquired capital property in 2022, you may be eligible to claim a 100% deduction of the expenditure this year. Certain capital cost allowance classes are not eligible for the enhanced deduction.

e.    Ontario Staycation credit:  This is a one-time, refundable tax credit allows Ontario taxpayers to claim 20% of accommodation expenses in an Ontario hotel, cottage, or campground during 2022, up to a maximum of $1,000 for individuals and $2,000 for families. This credit is only available for 2022.

f.     Home office expenses:  The temporary flat rate method of $2 per day up to a maximum of $500 still applies if you worked more than 50% of the time from your home for at least four consecutive weeks.  You may also be eligible to claim the actual expenses paid using form T2200(S)

 

For a full list of tax changes, please click on the links:

Individual Tax Changes:  https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/whats-new.html

Business Tax Changes: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/whats-new-corporations.html

  1. Underused Housing Tax 

The Underused Housing Tax (UHT) is an annual 1% tax on vacant or underused residential housing in Canada that came into effect on January 1, 2022.   Here is outline of the tax and filing requirements for those affected:

    1. The UHT impacts private corporations, trusts, partnerships, and non-residents/citizens who own residential properties in Canada.   Under the UHT rules, a ‘residential property’ generally includes:
        1. detached houses (or similar buildings) with no more than three units. This includes cottages, cabins, and chalets unless they are considered commercial property.
        2. semi-detached houses, row houses, condominium units, and similar separate or divided premises such as a coach house or laneway house
    1. Excluded owners have no obligations or liabilities under the UHT. These include:
      1. individual Canadian citizens or permanent residents holding property in their own name.
      2. individuals who own a residential property through a mutual fund trust, real estate investment trust, or specified investment flow-through trust (SIFT)
      3. publicly traded Canadian corporations
      4. registered charities
      5. cooperative housing corporations
    1. Affected owners include privately held Canadian corporations, partnerships, trusts and trustees (except those specifically excluded above), non-profit corporations, and individuals who are not Canadian citizens or permanent residents.
    1. If you are an affected owner, you must file an annual Underused Housing Tax return by April 30 for each residential property owned in Canada on December 31 of the previous year (beginning December 2022). The underused housing tax is also applicable unless your ownership qualifies for an exemption for the calendar year.  The amount of UHT equal to 1% of the taxable value of your ownership percentage of the property by April 30. Exemptions can be based on type of owner, availability of the residential property, location and use of the residential property, or the occupant of the residential property.  Even if an affected owner meets an exception and is not required to pay the UHT, they still must file a return to declare the exemption.
    1. There are significant penalties if you are an affected owner and fail to file a UHT return by its due date. Affected owners who are individuals are subject to a minimum penalty of $5,000. Affected owners that are corporations are subject to a minimum penalty of $10,000.
    1. Further information is available at https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html

As this is a new filing requirement, there are still many questions that CRA is addressing.  However, if you are an affected owner as outlined above, please contact us and we can assist you in the filing of the Underused Housing Tax return.  Remember, the deadline is April 30th, 2023.

  1. Important CRA Deadlines

Listed below are the upcoming CRA deadlines:

  • April 30, 2023 – Deadline for filing & payment of taxes owing for 2022 Personal Tax Returns
  • April 30,2023 – Deadline for payment of HST payable for Self Employed
  • April 30, 2023 – Deadline to file the Underused Housing Tax (not this is a new form that must be filled out as outlined in section 5) above).
  • April 30, 2023 – Deadline for payment of taxes owing for Self Employed Individuals
  • June 15, 2023 – Deadline for filing Tax Return for Self-Employed Individuals
  • June 15, 2023 – Deadline for filing of HST for Self-Employed Individuals
  1. CRA Audit Focus Areas in 2023

CRA often conducts random reviews and audits for various areas of an individual or business tax returns.  Here are some common areas to review while preparing your documents and bookkeeping:

    1. Real Estate – Focused on property flipping, unreported GST/HST and rebates.
    2. COVID-19 Relief payments will result in audits over the next couple of years.  The focus areas will be:

i.   Canada Emergency Wage Subsidy (CEWS)

ii.   Canada Emergency Rent Subsidy (CERS)

iii.   Canada Recovery Hiring Program (CRHP)

iv.   Tourism and Hospitality

v.   Recovery Program (THRP)

vi.  Hardest-Hit Business Recovery Program (HHBRP)

    1. Credits & Deductions:   Tuition credits, Spousal support deduction and disability tax credit eligibility are continuing to be common audit areas.
    2. GST/HST:  CRA focuses on input tax credits (ITCs), allocations of ITCs and supporting documentation for business registered with an HST account.  Late filers or those with outstanding balances will have a greater chance of an audit.
    3. Personal Service Businesses (PSBs):  CRA is contacting businesses that potentially hire PSBs to assist with compliance determination.  CRA will ask for accounting books, records, and contracts.   For now, PSBs and incorporated individuals will not be contacted. 
  1. CRA My Account

CRA Provides updates on tax changes, webinars, individual and business deductions, and credits and HST information on a regular basis.  You can access the information with update to date information at the following link:  CRA Updates

If you have not done so already, a reminder to sign up for your My account (individuals) or My business account (for business owners).  Details can be found at:

Individual Account:   https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html

Business Account:   https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html

CRA Processing Times:  CRA is still short staffed, so processing times are delayed.  Here is a resource to review processing times on any submissions to CRA.  This includes updates on tax returns and tax related requests:   https://www.canada.ca/en/revenue-agency/corporate/contact-information/check-cra-processing-times.html.

  1. Canadian Digital Adoption Grant

If you own a small or medium sized Canadian business, you may be eligible for a grant up to $15,000.  The eligibility criteria are as follows.

  1. you’re an owner or director.
  2. your business:
  1. is Canadian owned.
  2. is for-profit.
  3. has 1 to 499 employees.
  4. has had at least $500,000 in annual revenue in 1 of the last 3 years.

For further information, please click on:  https://ised-isde.canada.ca/site/canada-digital-adoption-program/en/boost-your-business-technology-grant

Let us know if you require assistance in applying for this grant if you are eligible based on the criteria.

  1. Life Insurance & Estate Planning, Loan applications, Advisory, Tax Planning and Cash Flow Planning

If you are looking at long term planning strategies, whether you are an individual taxpayer, sole proprietor, or corporate business owner, there are several approaches that we can assist you with.  As part of our commitment and service delivery to our clients, we have been working with our clients on the following to achieve your financial goals:

1)    Life Insurance Planning and recommendations to brokers

2)   Business Financing which includes

a.   $100k BDC working capital loan application

b.   Bank loan proposals & applications

c.   Lines of credit applications

d.   Preparation of business plans and cash flow projections

3)   Cash Flow Planning & Budgeting

4)   Tax Planning and Corporate Restructuring (Holding companies, Estate Freezes, Trusts)

5)    Net Worth Analysis and Planning

6)   Strategies to achieve your short-term and long-term goals

Please see our website for further details at https://www.arjcpa.ca/business-advisory-services/

Have a nice March break and spring season!

Best regards,

 

Ali Raza Jaffer, CPA, CGA, MBA, BComm

President, AR Jaffer Professional Corporation

Chartered Professional Accountant

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