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Tax Questions

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1. Who has to file a Canadian Income Tax Return?

  • You have to file tax return if any of the following situations apply:

  • 1. You have to pay tax.

  • 2. Canada Revenue Agency sent you a request to file a return.

  • 3. You and your spouse or common-law partner elected to split pension income.

  • 4. You received Working Income Tax Benefit (WITB) advance payments
  • .
  • 5. You disposed of capital property (for example, if you sold real estate or shares) or you realized a taxable capital gain (for example, if a mutual fund or trust attributed amounts to you).

  • 6. You have to repay any of your Old Age Security or Employment Insurance benefits.

  • 7. You have not repaid all of the amounts you withdrew from your registered retirement savings plan (RRSP) under the Home Buyers' Plan or the Lifelong Learning Plan.

  • 8. You have to contribute to the Canada Pension Plan (CPP).

  • 9. You want to apply for the GST/HST credit.

  • 10. You or your spouse or common-law partner, want to begin or continue receiving Canada Child Tax Benefit payments.

  • 11. You have incurred a non-capital loss in previous year that you want to be able to apply in other years.

  • 12. You want to carry forward or transfer the unused portion of your tuition, education, and textbook amounts.

  • 13. You want to report income for which you could contribute to an RRSP, in order to keep your RRSP deduction limit for future years up to date.

  • 14. You want to carry forward the unused investment tax credit on expenditures you incurred during the current year.

  • 15. You receive the Guaranteed Income Supplement or Allowance benefits under the Old Age Security Program. You can usually renew your benefit simply by filing your return by April 30.

2. What are deadlines for taxes?

    • RRSP contributions
    • Personal Tax returns
    • Self Employed Persons
    • 60 days after January
    • April 30
    • June 15
  • However, if you have a balance owing, you still have to pay it on or before April 30.
  • Note: If you file your return after April 30, 2009, your GST/HST credit, Canada Child Tax Benefit (including those from certain related provincial or territorial programs), and Old Age Security benefit payments may be delayed.

3. How can I pay my balance owing?

  • You can make your payment in several ways:
  • 1. You may be able to pay electronically using your financial institution's Internet or telephone banking services, OR

  • 2. You can attach to the front of your paper return a cheque or money order made out to the Receiver General. Please write your social insurance number on the back of your cheque, OR

  • 3. You may use the remittance form in your personalized tax package or Form T7DR(A), which you can get from Canada Revenue Agency.

4. What income do I need to report?

  • As a Canadian resident, you have to report your income from all sources, both inside and outside Canada.

  • You have to report the following income:

  • 1. Employment Income

  • 2. Commissions

  • 3. Self-employment income

  • 4. Rental income

  • 5. Employment Insurance and other benefits

  • 6. Universal Child Care Benefit

  • 7. Taxable amount of dividends from taxable Canadian corporations

  • 8. Interest and other investment income

  • 9. Net partnership income: limited or non-active partners only

  • 10. Capital gains

  • 11. Support payments received

  • 12. Registered retirement savings plan (RRSP) income

  • 13. Old Age Security pension

  • 14. Amounts you receive under the Canada Pension Plan Act or the Quebec Pension Plan Act

  • 15. Other pensions or superannuation

  • 16. Elected split-pension amount

  • 17. Registered disability savings plan (RDSP) income

  • 18. Workers' compensation benefits

  • 19. Other employment income. It could be
  • * Employment income not reported in T4, such as tips

    * Net research grants

    * Foreign employment income

    * Income-maintenance insurance plans

    * Veterans' benefits

    * Certain GST/HST and QST (Quebec sales tax) rebates. For example, if you claimed a rebate on your 2007 return and we allowed your claim and issued a notice of assessment for that return in 2008, you have to report the rebate on your 2007 return. Royalties

    * Amounts you received under a supplementary unemployment benefit plan

    * Taxable benefit for premiums paid to cover you under a group term
    life-insurance plan

    * Employee profit-sharing plan

    * Medical premium benefits

    * Wage earners protection plan

    * Other income
    * Scholarships, fellowships, bursaries, stu

    dy grants, and artists' project grants

    * Retiring allowance

    * Lump-sum payments

    * Death benefits (other than Canada or Quebec Pension Plan death benefits)

5. What deductions are available to me?

  • A tax deduction affects a taxpayer's income tax. A tax deduction represents an expense incurred by a taxpayer. They are variable amounts that you can subtract, or deduct, from your gross income. It is subtracted from gross income when the taxpayer computes his or her income taxes. As a result, the tax deduction will lower overall taxable income and thus lower the amount of tax paid.
  • There are two kinds of deductions available to personal tax returns in Canada:
  • Net Income Deductions and Taxable income deductions:

    1. Pension adjustment

    2. Registered pension plan deduction (RPP)

    3. RRSP deduction

    4. Saskatchewan Pension Plan deduction (SPP)

    5. Deduction for elected split-pension amount

    6. Annual union, professional, or like dues

    7. Universal Child Care Benefit repayment

    8. Child care expenses

    9. Disability supports deduction

    10. Business investment loss

    11. Moving expenses

    12. Support payments made

    13. Carrying charges and interest expenses

    14. Deductions for CPP or QPP contributions on self-employment and other

    15. Deduction for provincial parental insurance plan (PPIP) premiums on
        self-employment income

    16. Exploration and development expenses

    17. Employment expenses

    18. Clergy residence deduction

    19. Social benefits repayment

    20. Your spouse or common-law partner's net income
  • Taxable income deductions:

    1. Canadian Forces personnel and police deduction

    2. Employee home relocation loan deduction

    3. Security options deductions.

    4. Other payments deduction

    5. Limited partnership losses of other years

    6. Non-capital losses of other years

    7. Net capital losses of other years

    8. Capital gains deduction

    9. Northern residents deductions

    10. Additional deductions

    11. Taxable income

6. What are tax credits?

  • A tax credit reduces the tax owed, rather than reducing taxable income. This amount of tax savings is not dependent on the rate the taxpayer pays. Federal and Provincial tax credits are available for Canadian tax return.

  • Federal and Provincial tax credits:

    1. Basic personal amount

    2. Age amount

    3. Spouse or common-law partner amount

    4. Amount for an eligible dependant

    5. Amount for infirm dependants age 18 or older

    6. CPP or QPP contributions through employment

    7. CPP or QPP contributions on self-employment and other earnings

    8. Employment Insurance premiums

    9. Adoption expenses

    10. Pension income amount

    11. Caregiver amount

    12. Disability amount (for self)

    13. Disability amount transferred from a dependant

    14. Interest paid on your student loans

    15. Tuition, education, and textbook amounts

    16. Tuition, education, and textbook amounts transferred from a child

    17. Amounts transferred from your spouse or common-law partner

    18. Medical expenses for self, spouse or common-law partner, and your dependent children born in 1991 or later

    19. Allowable amount of medical expenses for other dependants

    20. Donations and gifts

    21. Total federal non-refundable tax credits

    22. Canada employment amount

    23. Public transit amount

    24. Children's fitness amount

    25. Amount for children born in 1991 or later

    26. Provincial Parental Insurance Plan (PPIP) premiums paid

7. Who qualifies for Child Tax Benefit?

  • The Canada Child Tax Benefit is a tax-free monthly payment made to eligible families to help them with the cost of raising children under age 18.

  • To receive the CCTB, all the following conditions must be met:

  • 1. You must live with the child, and the child must be under 18 years of age.

  • 2. You must be the person primarily responsible for the care and upbringing of the child. We define primarily responsible above.

  • 3. You must be a resident of Canada for tax purposes.

  • 4. You or your spouse or common-law partner must be:

    * a Canadian citizen;

    * as defined in the Immigration and Refugee Protection Act, a "permanent resident";

    * as defined in the Immigration and Refugee Protection Act, a "protected person"; or

    * as defined in the Immigration and Refugee Protection Act, a "temporary resident" who has lived in Canada throughout the previous 18 months, and who has a valid permit in the 19th month (other than one that states "does not confer status" or "does not confer temporary resident status"). If this is your situation, you should not apply before the 19th month.
  • Note: We pay Children's Special Allowances for children under 18 years of age who are under the care of a government department, agency, or institution. You cannot receive the CCTB for a child for any month in which Children's Special Allowances are payable for that child.

8. What childcare expenses can I use as a deduction?

  • Child care expenses are amounts you or another person paid to have someone look after an eligible child so that you or the other person could:

  • 1. earn income from employment;

  • 2. carry on a business either alone or as an active partner;

  • 3. attend school under the conditions described in Educational program; or

  • 4. carry on research or similar work, for which you or the other person received a grant

  • The child must have lived with you or the other person when the expense was incurred for the expense to qualify. Usually, you can only deduct payments for services provided in Canada by a Canadian resident.

9. How can I write off employment expenses?

  • You may be eligible to claim a deduction for employment expenses if you keep a copy of Form T2200, Declaration of Conditions of Employment, that has been completed and signed by your employer and incurred any of the following expenses:

  • 1. Accounting and legal fees

  • 2. Advertising and promotion

  • 3. Allowable motor vehicle expenses
    * fuel (gasoline, propane, oil);

    * maintenance and repairs;

    * insurance;

    * license and registration fees;

    * capital cost allowance;

    * eligible interest you paid on a loan used to buy the motor vehicle

    * eligible leasing costs
  • 4. Meals and Entertainment

  • 5. Lodging

  • 6. Parking

  • 7. Supplies

  • 8. Work-Space-in-the-Home Expenses:

  • * Electricity, heat and water

    * Maintenance

    * Insurance (commission employees only)

    * Property taxes (commission employees only)

    * Other expenses
    To help you filing Employment Expenses, you can fill in T777 form Statement of Employment Expenses.

10. What expenses can I claim as a self-employment individual?

  • As self employed person you can claim the following expenses:

  • 1. Advertising

  • 2. Meals and Entertainment

  • 3. Bad debts

  • 4. Insurance

  • 5. Interest

  • 6. Business tax, fees, licenses, dues, memberships, and subscriptions

  • 7. Office expenses

  • 8. Supplies

  • 9. Legal, accounting, and other professional fees

  • 10. Management and administration fees

  • 11. Office Rent

  • 12. Maintenance and repairs

  • 13. Salaries, wages, and benefits (including employer's contributions)

  • 14. Property taxes

  • 15. Travel (including transportation fees, accommodations, and allowable part of meals)

  • 16. Telephone and utilities

  • 17. Fuel costs (except for motor vehicles)

  • 18. Delivery, freight, and express

  • 19. Business-Use-Of-Home Expenses
    * Heat

    * Electricity

    * Insurance

    * Maintenance

    * Mortgage interest

    * Property taxes

    * Rent
  • 20. Motor Vehicle Expenses

    * Fuel and oil

    * Interest

    * Insurance

    * License and registration

    * Maintenance and repairs

    * Leasing

    * Business parking fees

    * Other Expenses

    To report your business and professional income and expenses, you need to complete Form T2125.

11. What is a Terminal Return or Final return for a deceased person?

  • On the final return, report all of the deceased's income from January 1 of the year of death, up to and including the date of death. Report income earned after the date of death on a T3 Trust Income Tax and Information Return.

  • Due date for the final return:

    • Period when death occurred
    • January 1 to October 31
    • November 1 to December 31
    • Due date for the return
    • April 30 of the following year
    • Six months after the date of death

  • If the deceased or the deceased's spouse or common-law partner was carrying on a business, the following due dates apply:

    • Period when death occurred
    • January 1 to December 15
    • December 16 to December 31
    • Due date for the return
    • June 15 of the following year
    • Six months after the date of death

12. When are installments due?

  • Installments are periodic income tax payments that individuals have to pay to the Canada Revenue Agency (CRA) on certain dates, to cover tax that they would otherwise have to pay in a lump sum on April 30 of the following year. Installments are not paid in advance; they are paid throughout the calendar year in which you are earning the taxable income.

  • Installment payments for 2009 are due March 15, June 15, September 15, and December 15, 2009..

13. Who has to register for GST?

  • You have to register for GST/HST when you no longer qualify as a small supplier because your total worldwide taxable supplies of goods and services exceed the small supplier limit of $30,000 in a single calendar quarter or in four consecutive calendar quarters. When you register you may request that any refunds or rebates be directly deposited into your account

Tax information provided is very generic to all tax situations. However each individual case is unique and should be handled thoughtfully. Call or e-mail