Category

Uncategorized

Oct 18
2

Deadline Reminder: Underused Housing Tax Returns Due October 31, 2023

By | News, Newsletters, Uncategorized | No Comments

Some of you may remember our newsletter from last March, when we asked all owners of Canadian residential property to pay close attention to a new Federal vacancy tax with an April 30th filing deadline.  This “Underused Housing Tax” (UHT) had created tax filing requirements for far more property owners than many realized.  It also threatened truly severe penalties for anyone failing to file a return: $5,000 for individuals and $10,000 for corporations.

After public outcry and lobbying by groups like CPA Canada, our government announced a one-time extension to the UHT filing deadline.  For just the first year (calendar 2022), UHT returns could be filed by October 31, 2023 without incurring late-filing penalties.  Of course, we would have preferred a permanent change, but this was better than nothing.

Fast forward to today, and that grace period is nearly over.  If you are required to file a UHT return, please plan to have it submitted by the end of this month (October 2023)!  

 Going forward, keep in mind this was only a one-time extension.  All subsequent UHT filings remain due on April 30th (i.e., the UHT return for calendar 2023 is due April 30, 2024, and so on).

For those who missed our original newsletter, or for anyone who could use a refresher, please read on!  The following is our original March newsletter, mostly the same as before, but with a few important updates.

 

A New April 30th October 31st Deadline: The Underused Housing Tax 

While vacancy taxes are nothing new for B.C. property owners, a new federal version of the tax is catching many by surprise.  The new “Underused Housing Tax” (UHT) was designed to tax foreign owners of Canadian residential properties deemed to be ‘underused’ or vacant. That said, it is not just foreign owners who need to file a UHT return! And this isn’t a return you want to file late – the penalties are some of the highest we have ever seen.

Excluded Owners – who doesn’t have to file a UHT return?

Thankfully, the UHT filing obligations do exclude some residential property owners.  If you fall into any of the following categories, you are considered an Excluded Owner and do not have to file a UHT return:

  • Individuals who are either permanent residents of Canada or Canadian citizens
  • Citizens and permanent residents who own properties through a REIT, SIFT, or mutual fund trust
  • Public Canadian corporations, with stock listed on a designated stock exchange
  • Registered Canadian charities
  • Coop housing corporations
  • Indigenous governing bodies

Affected Owners – who does have to file a UHT return?

If you were the registered owner (on title) of Canadian residential property in 2022 and don’t fall into one of the excluded categories mentioned above, you are considered an Affected Owner.  All Affected Owners will need to file a UHT return by October 31st, 2023 – even if no tax is owing.  Affected owners include, but are not limited to:

  • Individuals who are not permanent residents of Canada or Canadian citizens
  • Canadian controlled private corporations (CCPCs) * this includes most small business corporations, professional corporations, holding companies, and numbered companies
  • Non-Canadian corporations
  • Anyone who owns residential property as a partner of a partnership or a trustee of a trust (other than a representative of a deceased individual)

Please note that you may own property as a trustee of a trust without realizing it.  Individuals who jointly own residential property for estate planning purposes can sometimes be considered a trust, and therefore an affected owner.  A common example of this is when a parent adds their child’s name to title in an effort to streamline the inheritance process.

Who has to pay the tax?

For those required to file a UHT return, many will be exempt from paying tax.  At last count there were 19 different exemptions available.  These include exemptions for:

  • Properties that are the primary residence of either the owner, their spouse, or their children
  • Properties that are occupied for periods of over one month at a time and for at least 180 days of the calendar year, by tenants for who pay rent at fair market rates (many short-term rentals will not qualify for this exemption)
  • Properties owned through a Canadian trust or Canadian partnership, as long as each trustee or partner is a permanent resident or Canadian Citizen
  • Properties owned by Canadian corporations, as long as no more than 10% of the shares are owned by non-permanent resident or non-Canadian citizens.
  • Properties that are seasonally inaccessible, uninhabitable for a period of at least 60 consecutive days due to disaster, or for a period of at least 120 days due to renovations
  • The first year a property is purchased
  • Properties that still require significant construction before being considered complete
  • Properties in certain areas with lower population (check here: Vacation property designation tool)

How much tax?

For Affected Users who don’t qualify for an exemption, taxes are 1% of the property value.  UHT considers your property value to be the higher of either:

  • The assessed value on your most recent (2022) property tax notice, or
  • If the property was sold in 2022, the sales price

I qualify for an exemption – why should I file this?

Penalties for not filing a return by the extended October 31, 2023 due date are very steep, even when no taxes are payable.  An owner who fails to file a return by October 31, 2023 can be charged a minimum penalty of:

  • $5,000 for property owners who are individuals
  • $10,000 for property owners who are corporations

In addition to this, property owners who still haven’t filed a return by December 30th can have their exemptions denied.  This would leave an otherwise tax-exempt owner stuck with the penalty listed above PLUS a UHT tax bill of 1% of their property value.

The Takeaway

If you own Canadian residential property and do not fall into one of the excluded categories listed above, please plan on filing an Underused Housing Tax return (one for each property) by no later than October 31, 2023 (and then April 30th of each year going forward).  The penalties for missing the filing deadline are significant!  If you do not have a Canadian tax ID number, you will need to get started on your return ASAP, since you will need to register for an ID.

Resources

Apr 11
2

The T1 Deadline Looms!

By | Newsletters, Uncategorized | No Comments

We’ve noticed that many clients have yet to send in their personal tax material.

Please help us out by getting your material in to us as quickly as possible – even if one or two items are missing. Send us what you have now, so we can at least get a preparer assigned to the job.

This year’s filing deadline is Monday, May 1st. If we do not receive your information by April 15th, we cannot guarantee that we will be able to complete the required filings by the filing deadline.

Please send your information to us electronically and use our Portal, if possible.  If you need to drop off information you can do that too and we will scan your information for you.

Refer to checklist and other information available on our website: https://www.lohncaulder.com/checklists/

Feel free to contact your Lohn Caulder representative if you have any questions or concerns.

Cheers!

The Lohn Caulder T1 Team

Mar 07
1

A New April 30th Deadline: The Underused Housing Tax

By | Uncategorized | No Comments

While vacancy taxes are nothing new for B.C. property owners, a new federal version of the tax is catching many by surprise.  The new “Underused Housing Tax” (UHT) was designed to tax foreign owners of Canadian residential properties deemed to be ‘underused’ or vacant.  That said, it is not just foreign owners who need to file a UHT return!  And this isn’t a return you want to file late – the penalties are some of the highest we have ever seen.

Excluded Owners – who doesn’t have to file a UHT return?

Thankfully, the UHT filing obligations do exclude some residential property owners.  If you fall into any of the following categories, you are considered an Excluded Owner and do not have to file a UHT return:

  • Individuals who are either permanent residents of Canada or Canadian citizens
  • Citizens and permanent residents who own properties through a REIT, SIFT, or mutual fund trust
  • Public Canadian corporations, with stock listed on a designated stock exchange
  • Registered Canadian charities
  • Coop housing corporations
  • Indigenous governing bodies

Affected Owners – who does have to file a UHT return?

If you were the registered owner (on title) of Canadian residential property in 2022 and don’t fall into one of the excluded categories mentioned above, you are considered an Affected Owner.  All Affected Owners will need to file a UHT return by April 30th, 2023 – even if no tax is owing.  Affected owners include, but are not limited to:

  • Individuals who are not permanent residents of Canada or Canadian citizens
  • Canadian controlled private corporations (CCPCs) * this includes most small business corporations, professional corporations, holding companies, and numbered companies
  • Non-Canadian corporations
  • Anyone who owns residential property as a partner of a partnership or a trustee of a trust (other than a representative of a deceased individual)

Who has to pay the tax?

For those required to file a UHT return, many will be exempt from paying tax.  At last count there were 19 different exemptions available.  These include exemptions for:

  • Properties that are the primary residence of either the owner, their spouse, or their children
  • Properties that are occupied for periods of over one month at a time and for at least 180 days of the calendar year, by tenants for who pay rent at fair market rates (many short-term rentals will not qualify for this exemption)
  • Properties owned through a Canadian trust or Canadian partnership, as long as each trustee or partner is a permanent resident or Canadian Citizen
  • Properties owned by Canadian corporations, as long as no more than 10% of the shares are owned by non-permanent resident or non-Canadian citizens.
  • Properties that are seasonally inaccessible, uninhabitable for a period of at least 60 consecutive days due to disaster, or for a period of at least 120 days due to renovations
  • The first year a property is purchased
  • Properties that still require significant construction before being considered complete
  • Properties in certain areas with lower population (check here: Vacation property designation tool)

How much tax?

For Affected Users who don’t qualify for an exemption, taxes are 1% of the property value.  UHT considers your property value to be the higher of either:

  • The assessed value on your most recent (2022) property tax notice, or
  • If the property was sold in 2022, the sales price

I qualify for an exemption – why should I file this?

Penalties for not filing a return by the April 30th due date are very steep, even when no taxes are payable.  An owner who fails to file a return by April 30th can be charged a minimum penalty of:

  • $5,000 for property owners who are individuals
  • $10,000 for property owners who are corporations

In addition to this, property owners who still haven’t filed a return by December 30th can have their exemptions denied.  This would leave an otherwise tax-exempt owner stuck with the penalty listed above PLUS a UHT tax bill of 1% of their property value.

The takeaway

If you own Canadian residential property and do not fall into one of the excluded categories listed above, please plan on filing an Underused Housing Tax return (one for each property) by no later than April 30th.  The penalties for missing the filing deadline are significant!  If you do not have a Canadian tax ID number, you will need to get started on your return ASAP, since you will need to register for an ID.

Resources

Mar 03
2

Welcome to the 2022 Personal Tax Filing Season!

By | News, Newsletters, Uncategorized | No Comments

It’s time again to file your personal tax returns. This year, 2022 tax returns must be in the hands of the Canada Revenue Agency by no later than Monday, May 1, 2023.

We’d like to deliver the finished product as quickly and efficiently as possible – and we’re sure that many clients will, as of today, already possess all the information that’s needed. So, we’d like to encourage everyone to consider the “practical” deadline as really being early April  – there’s little reason for any later than that!

This issue of the newsletter includes the following:

1. (Very Important): Our T1 engagement letter which must be included with the material you send us;

2. Our abbreviated, ‘Simplified’ T1 checklist;

3. Our more Comprehensive T1 Checklist, including explanatory information.

Extra copies of these checklists can be obtained at our website – www.lohncaulder.com/checklists

Submitting information to us through Portal

Clients will, by now, be familiar with our system of document submission, which uses our portal.  Based on prior years’ trends, we expect that at least 85% of our clients will use this system.  It’s popular because it’s easy to use, it’s secure, and is not restricted as to file size, which is generally a problem with e-mail attachments these days.

To access the service, you need an account set up.  You can get that by contacting portal@lohncaulder.com.

We look forward to speaking with you in the near future.

The Lohn Caulder Team
Jan 12
1

Congratulations Graham Caulder!

By | News, Thought Leadership, Uncategorized | No Comments

Lohn Caulder LLP is excited to announce Graham G. Caulder, CPA, CA as our new Partner at the firm. Congratulations Graham!

 

Graham obtained his Bachelor of Arts degree from the University of British Columbia in 2009.  Subsequently, having earned a Diploma in Accounting from the Sauder School of Business, he joined Deloitte LLP as an articling student in 2011, receiving his Chartered Accountant designation in 2014.  Since joining Lohn Caulder in 2015, Graham has specialized in both personal and corporate tax planning and compliance.  As a graduate of the In-Depth Taxation Program and BKR Leadership Institute, he has used his expertise to help owner-managed businesses grow and thrive.

Jun 27
1

Let’s Chat!

By | Uncategorized | No Comments

Lohn Caulder would like to invite you to a coffee date!

Are you interested in a successful career in accounting? Do you wonder if you’re a good fit for a mid-sized firm? Are you curious about life at Lohn Caulder? We want to give you answers!

We will be setting up short one-on-one virtual meetings between July 19th – 20th, 2022 to answer your questions and get to know you. If you are interested in this opportunity please fill out a sign up sheet by clicking here and submit it via e-mail to tlee@lohncaulder.com.

Mar 04
1

Welcome to the 2021 Personal Tax Filing Season

By | News, Uncategorized | No Comments

Welcome to the 2021 Personal Tax Filing Season !

It’s time again to file your personal tax returns.  This year, 2021 tax returns must be in the hands of the Canada Revenue Agency by no later than Monday, May 2, 2022.

We’d like to deliver the finished product as quickly and efficiently as possible – and we’re sure that many clients will, as of today, already possess all the information that’s needed.   So, we’d like to encourage everyone to consider the “practical” deadline as really being early April  – there’s little reason for any later than that!

This issue of the newsletter includes the following:

1. (Very Important): Our T1 engagement letter which must be included with the material you send us;

2. Our abbreviated, ‘Simplified’ T1 checklist;

3. Our more Comprehensive T1 Checklist, including explanatory information.

Extra copies of these checklists can be obtained at our website – www.lohncaulder.com/checklists

Submitting information to us through Portal

Clients will, by now, be familiar with our system of document submission, which uses our portal.  Based on prior years’ trends, we expect that at least 80% of our clients will use this system.  It’s popular because it’s easy to use, it’s secure, and is not restricted as to file size, which is generally a problem with e-mail attachments these days.

To access the service, you need an account set up.  You can get that by contacting portal@lohncaulder.com.

We look forward to speaking with you in the near future.

The Lohn Caulder Team

Feb 24
2

Taxation on Cryptocurrencies

By | News, Thought Leadership, Uncategorized | No Comments

As you know, it is time to start preparing for the filing of your 2021 personal income tax returns. For some of you, this tax season may look different for one specific reason: cryptocurrencies.

Given that cryptocurrency adoption increased exponentially over the last year, we wanted to reach out to those of you with cryptocurrency income to provide some guidance.

Please note that as of February 2022, in-depth guidance has yet to be provided by CRA on many forms of cryptocurrency transactions. Understanding this, CRA’s stance on the tax treatment of cryptocurrency transactions may evolve over time.

General Cryptocurrency Trading 

In general, cryptocurrency trading can be considered either a source of business income or capital investment depending on your situation. CRA has yet to provide clear situational guidelines on where the line between capital investment & business income treatment of cryptocurrency lies. When considering the appropriate treatment, the following factors should be considered:

  • Whether your primary intention is to profit on cryptocurrencies through trading
  • Your ability & intention to profit from cryptocurrencies through means other than trading
  • The duration cryptocurrencies are held before trading
  • The volume & frequency of your transactions
  • The time spent engaged in cryptocurrency activities
  • Any financing used to support your cryptocurrency activities
  • Any relationship between your cryptocurrency transactions and ordinary business
  • The proportion of your cryptocurrency income to your total annual income

Examples:

  • You purchased several cryptocurrencies on a centralized exchange like Binance. Throughout the year, you regularly swapped them for other cryptocurrencies earning significant profit on their relative increases and decreases in value without taking them off exchange. CRA may consider this a source of business income since your primary intention was to sell cryptocurrencies for profit through frequent trading over the year.
  • You purchased cryptocurrencies such as Polkadot or Atom on Binance and then transferred them to a private wallet to stake them and earn additional tokens. To sell these tokens, they would need to be un-staked which requires a 14-28 day un-bonding period. CRA may consider your cryptocurrency to be a capital investment since it cannot be sold immediately if it suddenly increases in value, demonstrating a commitment to profit primarily by accumulating staking rewards.

Other things to consider with respect to cryptocurrency trading:

  • Many Investors frequently swap cryptocurrencies for other cryptocurrencies. It is important to note that swapping one cryptocurrency for another is considered a taxable sale as if they were sold for cash and reinvested.
  • If cryptocurrencies are exchanged for goods/services, it is considered a taxable event as if they were sold for cash and then used to pay for those goods/services.

Please contact us if you need assistance in assessing the appropriate treatment for your cryptocurrency trading income.

Cryptocurrency Mining Income

Like trading, the tax treatment of mining cryptocurrencies can be treated as either a source of business income or a capital investment. This treatment depends on your intention to mine cryptocurrencies for profit like a business venture, or if you mine for enjoyment as a hobby.

When assessing your situation, we would generally consider your investment in mining hardware and total income earned. Additionally, we would also consider many of the factors with cryptocurrency trading.

If considered a business activity, cryptocurrencies are taxed as income when initially mined and then treated as inventory. Once the cryptocurrencies are removed from inventory via a sale or transfer, further taxable income or losses will be reportable. Deductions can be made against business income for items such as: hardware purchased to mine cryptocurrencies, maintenance costs, electricity, and other costs related to the mining operation.

If considered a hobby, cryptocurrencies are not taxed when mined, but are taxed as a capital gain when sold.

Examples:

  • You purchased several retail graphics cards to build an Ethereum miner earning $20 CAD equivalent per day. CRA may consider this to be a venture undertaken in a business-like manner since hardware was purchase for the purpose of generating cryptocurrency income.
  • You purchased a high-end PC to play video games in 2020 and learned it could be used to mine cryptocurrencies in 2021. You then installed a program that rents your computing power to a mining pool when idle, earning you an equivalent of $5 CAD per day. CRA may consider this hobby mining since your primary intention when purchasing the hardware was personal enjoyment and it is used to mine only when it would otherwise be idle.

Staking Income

Some cryptocurrencies can be staked to passively earn additional cryptocurrency. CRA has not provided any guidance on this activity but, as with mining cryptocurrencies, the receipt of additional cryptocurrencies through staking is likely to be considered a source of taxable income.

Other Cryptocurrency Income Sources & Decentralized Finance

Due to the emerging nature of the cryptocurrency industry, there are many other types of transactions that are likely taxable which CRA has not provided any guidance on proper treatment. Please consult us if you require guidance on any of the following activities:

  • Airdrops
  • Liquidity Pool rewards
  • NFT purchases/sales
  • Loss of cryptocurrencies through theft or loss of keys
  • Cryptocurrency lending

Foreign Reporting (T1135)

Generally speaking, CRA considers cryptocurrencies to be foreign assets. For which, a T1135 (foreign income verification statement) filing may be required if the total cost of your foreign assets, cryptocurrency & other, exceeds $100,000 (CAD).

Closing Comments

If any of the above situations apply to you, we recommend reaching out to our team at Lohn Caulder to discuss the proper treatment & reporting of your cryptocurrency income.

Additionally, if you utilize decentralized finance applications beyond centralized exchanges, please be sure to let us know prior to submitting your tax documents.

Joseph Gonsky – Jgonsky@lohncaulder.com

and/or

Torin Lynskey –Tlynskey@lohncaulder.com

Jan 25
1

B.C. PST Rebate on Select Machinery and Equipment

By | News, Thought Leadership, Uncategorized | No Comments

In March of 2021, the B.C. provincial government announced the B.C. PST Rebate on Select Machinery and Equipment program (PST rebate program). The temporary rebate program was introduced to help corporations recover from the financial impacts of COVID-19.

The PST rebate program allows you to recover the PST paid on the purchase or lease payments, of machinery and equipment.

The B.C. provincial government recently announced that the PST rebate period has been extended by six months. The extension allows you to recover the PST paid on select machinery and equipment, purchased between the period of September 17, 2020, to March 31, 2022. The PST rebate program is also available on machinery and equipment that you leased. You can recover the PST paid on lease payments of machinery and equipment, made between the period of September 17, 2020 to March 31, 2022.

The PST rebate program is available to most incorporated businesses, you do not need to be a PST registrant to be eligible for the PST rebate program. Unfortunately, the PST rebate program is not available to unincorporated entities, such as sole proprietors.

The list of goods that qualify as machinery and equipment under the PST rebate program is expansive and includes goods that fall within the commonly used capital cost allowance classes.

Examples of some of the goods that qualify for the PST rebate program include:

  • Computer hardware and computer software
  • Photocopiers
  • Furniture and appliances
  • Dental chairs
  • Machinery and equipment use to manufacture or produce goods
  • Most zero emission vehicles and electric vehicles charging stations

The PST rebate applications must be received by September 30, 2022.

If you are interested in applying for the PST rebate program, Lohn Caulder LLP would be happy to assist. Please contact us if you require assistance in applying for the PST rebate program.

Additional information about the PST rebate program can be found at www.gov.bc.ca

Jan 05
1

2021 T4 Income Tax and CPP Remittance

By | News, Thought Leadership, Uncategorized | No Comments

In the course of preparing the 2021 financial statements for your organization, you may recall that it was necessary to declare management salaries in addition to any salaries or wages you may have paid to regular employees.

If you have not made any payroll remittances for 2021 for your management salaries, please contact Ryan Lore at the email address or phone number listed below.  If required, we recommend a nominal payment be made to The Receiver General of Canada by January 10, 2022. The remittances should be made to your company’s payroll “RP” account.  They will be incorporated into your 2021 T4 slips.

If you plan to remit only a nominal amount of income tax, you should be aware that CRA now places a heightened emphasis on assessing interest on the difference between the tax actually paid and the theoretical amount to be remitted according to the Canada Revenue Agency’s published withholding guides.  Consequently, in today’s tax environment, it is preferable to make regular monthly remittances throughout the year, rather than a single payment once a year (whether nominal or otherwise).  Please contact us if you require further assistance on this matter.

In order for Lohn Caulder LLP to prepare your 2021 T4s, we will require the necessary information by no later than the end of January 2022.  This information would include a summary of your calendar-year payroll records.  The filing deadline for T4s is February 28, 2022 and it is your responsibility to ensure that this filing deadline is met to avoid penalties.

Electronic filing of T4s is now mandatory. Therefore, once we have received and processed your information, we will electronically file the T4 Information Returns to the CRA. The copies which you later receive from us will be strictly for your own files, and your employees if applicable.

Mr. Ryan Lore of our office is in charge of T4s – please contact him if you have any questions.  Ryan’s email is rlore@lohncaulder.com, and his direct dial telephone is 604-408-3079.

Thank you in advance for your assistance and cooperation!