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TAX REFERENCE CHECKLIST

 

Content

I. Real Estate Issues
1. Land Transfer Tax & LTT Refund
2. CMHC Mortgage Insurance Premiums
3. Home Buyers Plan Repayments
4. City of Toronto Mill Rates

 

II. Bookkeeping & Compliance Issues
5. Automobile Caps
6. Depreciation - Capital Cost Classes
7. GST Remittance Calculations
8. Personal Income Tax & GST Quarterly Installments
9. C.C.R.A. Interest & Penalties

III. Personal Tax Issues
10. 2003 Personal Income Tax Rates
11. 2003 Non-Refundable Tax Credits
12. Clawbacks and Reductions

   

 

1. LAND TRANSFER TAX & LTT REFUND   2. CMHC MORTGAGE INSURANCE PREMIUMS
The long form for calculating LTT is:
0.5% on the first $55,000; plus
1.0% from $55,001 to $250,000; plus
1.5% from $250,001 to $400,000; plus
2.0% over $400,000.

The short form calculation is:
$55,001 to $250,000 Price x .01 less $275;
$250,001 to $400,000 Price x .015 less $1,525
$400,001 plus Price x .02 less $3,525

The LTT refund is available for first-time buyers of new homes for personal usage. The first $2,000 of LTT , for homes costing up to $227,500, is refundable for offers signed after April 1, 1999.

 

Based on ratio of mortgage to total value:

Up to 65% - 0.50%
Up to 75% - 0.75%
Up to 80% - 1.25%
Up to 85% - 2.00%
Up to 90% - 2.50%
Up to 95% - 3.75%
The total of the premiums may be added to the principal amount of the mortgage.

3. HOME BUYERS PLAN REPAYMENTS
  4. CITY OF TORONTO MILL RATES

Repayments start 2 years after withdrawal over 15 years. Annual amounts:
Loan amount Repayment
$20,000 $1,333
$17,500 $1,167
$15,000 $1,000
$12,500 $ 834
$10,000 $ 667
$ 7,500 $ 500
$ 5,000 $ 333
Non-payment leads to an income inclusion.

 
Property taxes are a product of:
Value of assessment X mill rate.
Current Value Assessment (CVA) was introduced in 1998. The mill rate dropped from 47% of the very low historical property valuations to about 1.26% of 1998 current value assessments.
Year Mill Rate
1997 47% (Historical system)
1998 1.2597% (CVA)
1999 1.2137% (CVA)
2000 1.2137% (CVA)
2001 1.073544% (CVA)
5. AUTOMOBILE CAPS  

6.DEPRECIATION - CAPITAL COST CLASSES

Purchase. Maximum of $30,000 plus GST and PST may be depreciated for a year 2003 purchase. Reduce this by any GST claimed as an ITC. (For cars used 90% or greater for business claim full GST on all auto expenses as an ITC.)

Auto Loan. Interest cap of $10 per day.

Lease. Cap of $800 per month plus taxes. [Deductibility is reduced if 85% of list price exceeds luxury cap of $30,000. ]

 

Only ½ of rate allowed in year purchased.
Class 10.1* Car 30% rate
Class 10 Car 30% rate
Class 10 Computer 30% rate
Class 12 Software 100% rate
Class 8 Equip./Furniture 20% rate

* For cars costing more than $30,000. Only $30,000 may be depreciated and no terminal loss may be claimed.

7. GST REMITTANCE CALCULATIONS  

8. PERSONAL INCOME TAX & GST QUARTERLY INSTALLMENTS GST

Quick Method. For agents with commissions and GST added together totaling no more than $200,000 in a year. Pay 4% on first $30,000, then 5% on excess. In addition, claim the Input Tax Credits (ITCs) on capital purchases.

Simplified Method.
For those with commissions only up to $500,000. To segregate out the GST multiply the expense by 7/107 or take 6.542% of the expense. The total of GST paid is deducted from GST collected. You recover all of your GST paid.

Detailed Method.
For those with commissions exceeding $500,000. GST must be segregated from every expense and commission.

[Typical non-GST expenses: Insurance and banking costs and charges, wages and expenses outside Canada.]

Installments are required if prior year remittance exceeds $1,500. Due one month after each of Mar. 31, Jun. 30, Sep. 30, Dec. 31. Installments are calculated as ¼ of the prior year total remittance.
Personal Tax. Includes Federal and Ontario taxes and CPP premiums. Installments are required if the total figure of these amounts exceeds $2,000 in the prior year. Due on Mar. 15; Jun. 15, Sep. 15, Dec. 15.

[Interest is charged on any deficiency on installments running from the due date. Taxpayers may adjust installments down to reflect decreased revenues but risk interest charges if they under-remit.]

9. C.C.R.A. INTEREST & PENALTIES

  10. 2004 PERSONAL INCOME TAX RATES
Interest. A 'prescribed rate' of about prime plus 4% is set for personal taxes and GST for late or deficient payments. The rate has remained at 10% since April 1, 2000.

Note.
A penalty of 50% may be levied if the interest assessed on late or deficient installments is $1,000 or greater.

Penalties. For late filing of personal taxes, the base penalty is 5% plus 1% per month for 12 months or a 17% maximum. For a second late filing within 3 years, the base is 10% plus 2% per month for 20 months or a maximum of 50%. File on time.
 

(Provincial thresholds are very slightly different than Federal thresholds but we are treating them as identical.)

Personal Tax Rates
 
Federal
Ontario
0 - $8,012
0%
0%
$8,013 - $35,595
16%
6.05%
$35,596 - $71,190
22%
9.15%
$71,191 - $115,739
26%
11.16%
over $115,739
29%
11.16%

[The combined rate from 71,000 to $115,000 is 37.16% due to the effect of Federal and Provincial surtaxes and leads to a peak of 41% at over $115,000.]

11. 2004 NON-REFUNDABLE TAX CREDITS
  12. CLAWBACKS AND REDUCTIONS

Type Dollar Value
Basic personal $8,012
Married $6,803
Married equivalency
(Single Parent) $6,803
Age 65 or over $3,912
Disability $6,000
Disabled dependant $3,500
Caregiver amount $3,500
[All are fully indexed and save taxes at only the lowest combined rate of 22.20%.]

  Net Income of taxpayer/dependant affects:
OAS. 15% clawback at income of $55,309.
GST Credit. Reduces at $26,284.
Age Credit at 65. Reduces at rate of 15% for net income over $26,284.
Medical Expense Credit. Deductibility
reduced by 3% of net income or first $1,678 of such expenses for high earners.
Tuition/Education Transfer. $5,000 amount reduced by excess of student net income over $7,412.


INFORMATION ON THIS WEBSITE IS FOR GENERAL INTEREST ONLY, YOU SHOULD SEEK PROFESSIONAL ADVICE. WE ASSUME NO RESPONSIBILITY FOR THE ACCURACY OF THE CONTENTS. APPLICABLE LAW AND REGULATIONS ARE CHANGED CONSTANTLY.

 

 

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