February 21, 2022,
Dear Valued Clients & Friends,
Happy Family Day to all! Family day is always a good time to spend quality time with you loved ones after a long winter season. The long weekend is also a sign of warmer weather to come! Sending blessings to all and hope 2022 has gone well with you so far and you were able to spend quality time with your loved ones this weekend. With tax season approaching, it is good time to start assembling your documents to have them ready to ensure your taxes are filed on time.
In this edition of the newsletter, I will be discussing the following topics:
- 2021 Personal Income Taxes Update
- Important CRA Deadlines
- Home Office Expenses & CRA Updates
- RRSP Strategies
- Investment Property Strategies
- Advisory, Tax Planning and Cash Flow Planning
If you have missed any editions of the newsletter, please click on the following link: AR Jaffer PC Newsletter Archives
We have been working very hard in providing personal tips & accounting, tax, and business content on social media. Please connect and follow the links to my social media at your convenience (Facebook, Twitter, LinkedIn, Instagram) to stay fully updated on CRA Updates and tax planning tips for individuals & businesses.
If you get an opportunity, please also provide a google review available at the following link:
AR Jaffer Professional Corporation Chartered Professional Account Google Review
1. 2021 Personal Income Taxes Update
Similar to last year, you 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. Let me know if you would like templates to track your sole proprietorship or partnership income or a template for any rental properties you may have.
You can access the Personal Income Tax checklist at the link: 2021 Personal Tax Checklist
2. Important CRA Deadlines
Listed below are the upcoming CRA deadlines:
- February 28, 2022 – T4 & T5 Filing Deadline
- March 1, 2022 – RRSP contribution deadline for 2021
- April 30, 2022- Deadline for filing & payment of taxes owing for 2020 Personal Tax Returns
- April 30,2022 – Deadline for payment of HST payable for Self Employed
- April 30, 2022 – Deadline for payment of taxes owing for Self Employed Individuals
- June 15, 2022 – Deadline for filing Tax Return for Self-Employed Individuals
- June 15, 2022 – Deadline for filing of HST for Self-Employed Individuals
3. Home Office Expenses & CRA Updates
1. Home Office Expenses:
In 2021, CRA allowed for taxpayers who were working from home to claim a home office expense deduction. For those claiming the Temporary Flat Rate Method, note that the deduction has been increased from $400 in 2020 to $500 in 2021.
Here is a summary of the methods:
2.Temporary Flat Method
- Deduction of $2/day, up to a maximum of $500.
- To calculate work days, individuals must use days that they worked full-time or part-time hours from home, but not days off, vacation days, sick leave days or other days of absence.
- You must have worked more than 50% of the time from home for at least four consecutive weeks in the year.
- Multiple people working from the same home can each make this claim.
3. Detailed Method
- Obtain a simplified T2200S form from your employer (form T2200S is a simplified version of the T2200 form).
- Individuals must have supporting documents in the event of a CRA review.
- Employee can claim specific eligible expenses.
- Eligible expenses include electricity, heating, water, maintenance, and rent, but not mortgage interest, property taxes or home insurance (unless a commission employee).
- employee’s deduction for the allowable expenses is limited to the employment use of the work space.
- eligible employees can also include a deduction for office supplies (e.g., postage, stationary, ink cartridges) and other expenses (e.g., the employment use of a cell phone,
- long distance calls for employment purposes).
- Employees cannot claim any expenses that were or will be reimbursed by their employer.
4. CRA My Account: Enrol in your My Account to view your assessments and tax returns status: https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html.
5. CRA Processing Times: CRA publishes processing times on their website. 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.
6. CRA Tax Changes: There were very minimal other tax changes for 2021. Please visit the CRA link to see if any changes apply to you: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/whats-new.html
4. RRSP Strategies
There is one more week left to contribute to your RRSPs, as the March 1stdeadline is fast approaching! Depending on your financial situation, this is a good time to review whether it would be beneficial to contribute to your RRSP, TFSA or put a lump sum into your mortgages. All are excellent strategies, but each has its tax benefits. Let me know if you would like to discuss these further. Here are some tips to consider for RRSPs:
- Invest the income tax refund you receive into your TFSA, your RRSP, a lump sum on your mortgage or a non-registered investments.
- Open a spousal RRSP account allowing for a more balanced income at retirement.
- Defer the tax deduction. Depending on your income tax bracket, you may want to defer the tax deduction to future years when you are in a higher tax bracket.
- Donate an RRSP to reduce taxes. This will reduce the taxes paid by your estate.
- Encourage your children to create RRSP room by starting a small business or seeking part time employment.
5. Investment Property Strategies
As you grow our various investment and savings portfolios, whether they be bonds, stocks, crypto currencies or properties, our ultimate goal is to increase our net worth via optimal tax planning strategies. One strategy that you can use to continue to grow your portfolio is to refinance your existing properties and invest in additional properties. There are many tax advantages in doing so including the additional interest deductibility while filing your income tax returns. For further details, please contact me and I can walk you through the tax benefits of leveraging to invest.
I was recently invited as a guest speaker on a strategy to allow you to grow your net worth by taking out the equity in your existing properties and investing in additional properties. Let me know if you would like further details and I can share the video and presentation with you.
6. Advisory, Tax Planning and Cash Flow Planning
Whether you are an individual taxpayer, sole proprietor, or corporate business owner, many of us have experienced a challenging past couple of years. As part of our commitment and service delivery to our clients, with the recent pandemic, we have been working with our clients on the following:
1) Business Financing which includes
- $100k BDC working capital loan application
- Bank loan proposals & applications
- Lines of credit applications
- Applications to various government loan programs in response to the COVID-19 pandemic
- Preparation of business plans and cash flow projections
2) Life Insurance Planning Strategies
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
Let me know if you have any questions on these strategies and we can set up a call or meeting.
Please see our website for further details at https://www.arjcpa.ca/business-advisory-services/
Have a safe and happy family day!
Sincerely,
Ali Raza Jaffer, CPA, CGA, MBA, BComm
President, AR Jaffer Professional Corporation
Chartered Professional Accountant
We appreciate your referrals!