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Personal Taxes

Canadian Personal and Trust Tax Returns

At KMA Chartered Professional Accountants, we prepare everything from the simplest to some of the most complex personal returns. Our goal is to ensure that your return is prepared properly and accurately. We take the time to go over your return to try and ensure that you get every deduction or credit to which you are entitled.

Our clients select our firm as they trust that they are getting the best value for their dollar. When you chose to use a Chartered Professional Accountant you realize that tax preparation is more than just banging numbers into a computer. It takes knowledge, experience and professional judgement to help you deal with your more complex reporting matters. It is not always what is presented that is important, it takes these skills to recognize when something is missing.

Many families have trusts for a variety of reasons. We prepare a large number of trust returns each year and can help you with your filing needs.

Final and Estate Returns

When a loved one passes, the surviving family usually has a series of questions and concerns. A surviving spouse is concerned about money, taxes all at a time when he/she is dealing with the trauma of losing a loved one.

Dealing with the final return and the estate raises a number of questions and concerns for the family and the person administering the estate. The reason that there are so many questions is that most people have to deal with an estate once in a lifetime. Below is a list of the typical set of questions:

  • Who do I need to let know that the person has passed?
  • When do I have to have the final return filed?
  • How much tax is this going to cost?
  • Do I need to have the estate probated?
  • When does this all need to be done by?
  • The beneficiaries of the estate are asking when they will get their money?
  • How long will this take?
  • Do I really need to have professional help with these matters?

Professionals such as Chartered Professional Accountants and lawyers deal with these questions many times each year as they provide advice and assistance on estates each year. At KMA we strongly encourage anyone dealing with an estate to seek out legal advice and the help of a CPA.

What Is the Impact of Someone Passing?

While Canada does not have an inheritance tax, as there is in the US, there are a number of tax consequences that happen when assets such as business, property, stocks and bonds are transferred to the next generation. There is a deemed sale of all of your assets when you pass away. If you have been holding assets for a long time, there may be a significant tax bill associated with that asset.

So there are two separate periods to consider. The period up to the date of passing and then the period after the passing.

Foreign Reporting

Canada, like many other countries, has what is referred to as “Foreign Reporting.” Foreign Reporting is when a Canadian resident, or a Canadian company, owns non-Canadian assets. For many individuals, owing and renting out a US vacation property will trigger these reporting requirements.

The rules that determine what is a foreign asset are detailed and it is typical that individuals need assistance in identifying what are the reportable assets, and what other information must be reported. These forms do not generate income. They are designed to ensure that you are reporting your worldwide income.

If your company has a foreign affiliate or you are part of a non-resident trust, you may also have a foreign reporting requirements. KMA can help you identify if you have a reportable

Canadian Tax Filings for Non-Residents

If you do not live in Canada, but have income from Canada, you may be required to file a Canadian tax return. Or you may decide to file an optional tax return, in order to lower your overall Canadian tax liability.

What are some typical non-resident tax returns?

  • You own a rental property in Canada. In Canada, you would be required to use a rental agent. This is an individual or company that is required to collect and submit to CRA (the Canada Revenue Agency – Canada’s tax authority) 25% of the gross rents. In order to get some or all of it back, you will need to file an elective return, called a Section 216 return, so that you pay income tax on your net income, not the gross.
  • You are selling your Canadian property. There are several tax withholding and filing requirements that you should be aware of. The first is that when you are not a Canadian resident, (even if you are a Canadian citizen) there is a 25% of the gross sales price withholding requirement. This means that if you sell your vacation property for $400,000, then the lawyer handling the conveyance of title is required to withhold $100,000.

    In order to reduce the amount withheld, a clearance certificate request must be filed with CRA within 10 days of the sale. A clearance certificate is a request made to the Canadian tax authorities to reduce the amount of taxes that would otherwise be withheld. In the case of a real estate sale, the clearance certificate allows the amount to be withheld to be 25% of the profit on sale. If filed late, the certificate carries a penalty of $25 per day, up to a total of $2,500. Therefore, contacting KMA when you list the house is a step to ensure that there are no delays in processing the request for the certificate.

    If there are two of you title, then you both need to file a request for a clearance certificate.

  • You receive Canada Pension Plan, Old age security, a Canadian Pension or other retirement related payments, it may sense for you to file a Sec 217 return. This is an optional return where if your taxes that you would have otherwise paid is less than the statutory withholding rate, then it may be filed. It is a mandatory return if you have filed form NR-5 (election to reduce withholding taxes) for every year it is in effect.
  • If you have worked in Canada, or carried on a business in Canada in the year, through a “permanent establishment” (such as an office) you may have to file a Canadian tax return in order to establish your actual Canadian tax liability.

There are timing requirements as to when these returns must be filed, so we suggest that you consult with KMA as to your filing requirements.

Estate Planning

What Is Estate Planning?

Estate planning is developing a plan that will deal with your affairs after you are gone. While this may sound simple, it is surprising how often simple planning saves the family a great deal of anger and frustration. Good Estate planning doesn’t come from a generic out of the box solution. It should be developed for each family and takes into consideration that family’s unique situation.

We believe that estate planning is a process that takes time and the input of different experts. For example, a lawyer experienced in dealing with family law and writing wills that provides for effective administration of the estate. While people may joke about insurance salespeople, insurance can play a very effective role in an estate plan.

At KMA Chartered Professional Accountants, our team of experienced Chartered Professional Accountants can bring their taxation expertise to help you develop a plan or restructure your holdings to minimize the tax impact of this transfer.

A Bit Of Common Sense Can Go A Long Way

Some matters in estate planning don’t require the advice of an expert. Common sense and a bit of forethought will save a lot of grief. For example, asking family members what special piece of furniture or collectible they would like can save a lot of anger later on. At KMA Chartered Professional Accountants, we suggest that all families sit down and consider matters such as this.

Business Valuations

When you are selling or buying a business, the question of “what is it worth?” will come up. Ultimately, what a business is worth is no more than what someone else is willing to pay for it. The KMA Chartered Professional Accountants team can assist you in come up with a valuation for your business, or what to offer a business.

Valuing a business starts with what a review of its operations to identify what it will earn for the new owner. To do this, it takes knowledge and experience to identify what will change, when owners change. Our team will ask the questions for you to consider in the purchase.

Assistance With Financing

Once you have decided that you want to buy the business, or you need money for your current business, our team of Chartered Professional Accountants can help you. When you are buying the business, one important question to ask, is will this business make you enough money to live on? KMA Chartered Professional Accountants can prepare the analysis that will help to answer this and other questions.

If you are looking for financing for your current business, and need someone to discuss it with, start by discussing this with one of our Chartered Professional Accountants. We can discuss what a bank will look for, help you assemble the necessary information and answer many of the questions that you have. We will also work with you and the bank to gather any other information needed.

Contact

We look forward to hearing from you regarding any tax or account questions you may have.

Phone
1 (250) 390-4131
Fax
1 (250) 390-2982
Email
[email protected]
102-7184 Lantzville Road Lantzville, BC V0R 2H0
Mailing Address
PO Box 70 Lantzville, BC V0R 2H0