Milman & Company Chartered Professional Accountants

Milman & Company Chartered Professional Accountants Public Accounting Firm

12/05/2023

Canada introduces new tax rules 📝 to ease housing shortages by limiting income tax deductions for short-term rentals via platforms like Airbnb and VRBO. Effective Jan. 1, these regulations impact deductions for expenses, such as interest, where short-term rentals are restricted. Major cities like Montréal, Toronto, and Vancouver saw around 18,900 homes used for short-term rentals in 2020, likely increasing since.

Despite reduced Airbnb listings in some cities, similar laws in Australia and Italy could impact profits for such companies. Nathan Rotman, Airbnb's policy lead for Canada, argues most hosts use these platforms to supplement income. The government plans to invest C$50 million ($36 million) over three years for municipal enforcement of these rental restrictions starting in 2024.

Canada's housing supply struggles to meet population growth, leading to soaring prices, especially during the pandemic. Critics like Gabriel Giguère from the Montreal Economic Institute believe that without a substantial increase in housing supply, these measures won't solve housing shortages effectively.

Internationally, places like Florence in Italy and Byron Bay in Australia have implemented strict measures, while British Columbia will enforce registration requirements and fines for rule breaches, limiting rentals to a part of the principal residence from next year. 🏘️🛑🌍

📞 (416) 736-4438

✉️ [email protected]

12/05/2023

🌟Unlocking IRS Form 8812 for Enhanced Child Tax Credit 🧾💰

The IRS Form 8812 is your passport to claiming extra benefits from the Child Tax Credit. Explore the key insights into this form to turbocharge your tax returns! 🚀

Form 8812, dubbed the "Additional Child Tax Credit," holds immense value for families with three or more little champs, aiding in calculating an added credit beyond the standard Child Tax Credit amount.

Here's a snapshot of Form 8812 and the boosted Child Tax Credit in 2023-24:

1. 🎯 Purpose: It pinpoints the additional Child Tax Credit, especially vital for households with three or more adorable munchkins.
2. ✔️ Eligibility: Meeting specific IRS criteria, including income benchmarks and having three or more eligible children, is the gateway to claim this bonus credit.
3. 🌟 Enhanced Benefits: In 2023-24, the Child Tax Credit receives a power-up, and Form 8812 is your guide to snagging that extra credit.
4. 📝 Form Finesse: Following IRS instructions while filling out Form 8812 ensures accurate calculations and compliance to maximize your credit.
5. 📱 E-filing Ease: This form supports electronic filing, ensuring lightning-fast processing and potential refunds.

The IRS underscores the importance of mastering Form 8812, highlighting its significant value for families with multiple qualifying children. Exploring this option during tax prep could lead to a treasure trove of benefits, boosting your Child Tax Credit perks! 💸🏡

📞 (416) 736-4438

✉️ [email protected]

11/25/2023

The Canada Revenue Agency (CRA) has confirmed the prescribed rate for loans to family members will hit 6% in Q1 2024, with overdue tax interest rising to 10% 📈. This uptick from 5% and 9% respectively in the current quarter marks a notable increase.
The prescribed rate last reached 6% back in Q2 2001. Until Q3 2022, it stood at 1%, gradually increasing to its current level. Notably, the CRA charges four percentage points more than the prescribed rate for overdue tax, CPP contributions, and employment insurance premiums.

These rates are pegged to the average of three-month Treasury Bills from the preceding quarter's first month, rounded up to the next highest percentage. This shift may impact prescribed-rate loans, affecting strategies used to distribute investment income to family members in lower tax brackets 🏦.

Additional changes for Q1 2024 include increases in rates for corporate and non-corporate taxpayer overpayments, taxable benefits, and corporate taxpayers' pertinent loans. The specifics can be accessed through the full list of CRA's prescribed interest rates.

📞 (416) 736-4438

✉️ [email protected]

11/23/2023

Budget 2022: A Plan for Affordable Housing in Canada🏡

Housing Affordability: A Key Focus

In Budget 2022, the Canadian government prioritizes making housing accessible across the country. Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland highlighted crucial measures:

Key Measures in Budget 2022:

- Doubling Housing Construction:
An investment of $4 billion launches the Housing Accelerator Fund to create 100,000 new units in five years.
- Curbing Unfair Practices:
Imposing a two-year ban on foreign capital and ensuring property flippers pay their fair share.
- Support for First-Time Home Buyers:
Introducing the Tax-Free First Home Savings Account, doubling the First-Time Home Buyers’ Tax Credit, and extending incentives.
- Buyer and Renter Protection:
Developing a Home Buyers’ Bill of Rights and ending blind bidding via a national plan.
- Combatting Homelessness:
Investments to provide $500 payments, extend housing initiatives, and support vulnerable Canadians.
- Indigenous Housing Support:
Allocating $4.3 billion over seven years for improving Indigenous housing.

Additional Highlights:

- Multigenerational Home Renovation Tax Credit:
Offering up to $7,500 for constructing secondary suites for seniors or adults with disabilities.
- Co-op Housing Expansion:
Allocating $1.5 billion to support co-op housing projects, marking a significant investment in over 30 years.
- Northern Housing Support:
Budgeting $150 million for affordable housing and related infrastructure in the North.

National Housing Strategy (NHS):

Budget 2022 complements the existing NHS, aiming to create a more inclusive housing landscape across Canada. Since its inception, over $24.2 billion has been allocated to create and repair housing units for various demographics in need.

Driving Canada's Economic Future:

The budget emphasizes affordable housing as a cornerstone to build stronger communities, improve accessibility, and foster economic growth for all Canadians. This commitment aims to address the fundamental need for safe and affordable housing across the country.🌟

📞 (416) 736-4438

✉️ [email protected]

11/22/2023

🏢 Canadian Government Targets Short-Term Rental Regulations: Key Highlights

The Canadian government is intensifying its oversight of short-term rentals, following in the footsteps of provincial initiatives like those in British Columbia and Vancouver. 🍁🏠

Recent reports suggest federal plans to enforce tax-based measures, aiming to reduce deductions for short-term rental operators flouting local regulations. The goal is to prompt higher income claims and increased taxes, discouraging non-compliance. These changes are expected to roll out in 2024, focusing on operators not complying with provincial and municipal rules.

Driven by concerns over housing shortages, especially in urban areas, Finance Minister Chrystia Freeland emphasized the need to convert short-term rentals into long-term accommodations.

This aligns with B.C.'s recent moves to limit operators to one suite or bedrooms, provided they reside in the property. Municipalities will receive support to enforce short-term rental bylaws. However, compliant operators won't be affected, retaining tax deductions on rental income.

The decision reflects a larger housing conversation, signaling a step toward regulating rentals and addressing housing challenges. 🏘️📊

Keep an eye out for details on these imminent tax changes, poised to reshape Canada's rental landscape. 🔄🇨🇦

📞 (416) 736-4438

✉️ [email protected]

11/18/2023

The CEBA repayment deadline is near—what are your options?

📅 Key Dates: As of Jan 18, 2024, unpaid CEBA loans convert to a 3-year, 5% interest term, losing forgivable portions. Pay interest only till Dec 31, 2026, for principal repayment. Refinance by Mar 28, 2024, to maintain forgivable status if the application is in by Jan 18, 2024.

✊ CFIB Advocacy: We're advocating for an extended forgivable portion deadline. Join our petition & contact MPs. Still, consider exploring options in case of no extension.

💼 Your Options: Each business's financial situation differs, making the choice complex. Consider these:

1️⃣ Refinancing: Check available options and terms. Read agreements carefully; easier money often comes with higher long-term costs.

2️⃣ Self-financing: Review personal savings or available credit before opting for loans. A line of credit offers flexibility in repayments compared to term loans.

3️⃣ Community Support: Seek assistance from family, friends, or local community financial institutions that may offer favorable terms.

4️⃣ Financial Institutions: Engage with your CEBA loan provider or banks. Good payment history might aid in renegotiating refinancing terms.

5️⃣ Alternate Financing: Explore avenues like credit unions, business development banks, or crowdfunding.

6️⃣ Expert Guidance: Seek legal advice before signing any contract; understand obligations, renewal clauses, interest rate changes, and terms clearly.

🔍 Preparation Steps: Analyze your business finances for better decisions:

📊 Financial Statements: Review balance sheets, income statements, and cash flow statements.

📈 Key Performance Indicators: Track essential KPIs for your industry to gauge performance.

💵 Budget & Forecast: Plan future income, expenses, and cash flow.

💳 Debt Assessment: Understand outstanding debts, liabilities, and repayment terms.

📉 Cost Management: Identify cost-cutting measures to improve profitability.

🏦 Cash Flow Management: Ensure sufficient working capital for operational expenses.

❓ Turnaround Plan: Have a plan in place if told you're ineligible for CEBA forgiveness. Review financial statements, forecast cash flows, and seek professional advice.

📞 (416) 736-4438

✉️ [email protected]

11/18/2023

🔍 New Trust Reporting Rules on the Horizon 📝

🗓️ Implementation Overview: From tax years ending December 30, 2022, onwards, an expanded reporting regime will impact resident Canadian trusts and non-resident trusts filing T3 returns. The focus is on closing information gaps and ensuring robust data collection.

📝 Who's Affected? Most trusts fall under this new regime, except those with specific exemptions. It's vital to identify all affected trusts, including bare trust arrangements and trusts previously exempted. These include assets of $50,000 or less, certain government-funded trusts, and more.

📊 Enhanced Reporting Requirements: Schedule 15, Beneficial Ownership Information of a Trust, demands detailed data on "reportable entities," spanning trustees, beneficiaries, settlors, and those exerting control over trust decisions. Accurate information includes names, entity types, addresses, and tax identifiers.

🚩 Penalties for Non-Compliance: Late filing penalties, gross negligence penalties, and penalties for false statements are on the horizon for non-compliant trust returns. These penalties carry significant financial consequences, emphasizing the importance of accurate reporting.
🔍 Practical Considerations & Tips for Advisors:

1️⃣ Trust Identification: Meticulously identify trusts now required to file, including dormant or asset-holding trusts that previously evaded filing requirements. Scrutinize estate freeze trusts, personal-use property trusts, and those holding non-traditional assets.

2️⃣ Thorough Documentation: Review trust documents meticulously to ensure all involved parties, including contingent beneficiaries and settlors, are accurately identified. Uncover potential settlors via loans and non-arm's length transfers.

3️⃣ Client Communication: Inform clients about these new obligations and communicate effectively to gather the necessary information. Reach out to individuals unaware of their trust interests, ensuring comprehensive data collection.

4️⃣ Exemption Caution: Exercise caution with the $50,000 exemption, as certain conditions apply. Assumptions regarding exemptions might lead to inadvertent non-compliance and subsequent penalties.

Understanding these new regulations and taking proactive steps to gather comprehensive trust information will be key to compliance and avoiding hefty penalties. Stay informed, communicate effectively, and ensure accurate reporting for your clients' trusts as the reporting landscape undergoes significant shifts.

📞 (416) 736-4438

✉️ [email protected]

11/16/2023

Navigating the tax implications of your 2023 investments is crucial. Here's a simplified guide:

📈 IRA & Taxable Accounts: No tax impact on account fluctuations. Taxation kicks in upon withdrawal, especially for Roth IRA after 59½.

🔄 Gains & Losses: Taxwise, realized gains and losses matter during the year, not unrealized ones.

📉 Net Loss: If losses exceed gains:

Categorize short-term and long-term losses.
Use the net capital loss deduction, up to $3,000 ($1,500 if married filing separately).
Apply remaining losses to offset future gains.
📈 Net Gain: If gains surpass losses:

Categorize short-term and long-term gains.
Short-term gains taxed at regular income rates.
Long-term gains taxed at lower federal rates, depending on thresholds.
🔍 NIIT: Watch for the 3.8% Net Investment Income Tax if income surpasses specific thresholds.

📅 Year-End Tax Results: Finalize your 2023 tax situation based on trades executed by year-end.

Being prepared for tax implications ensures a smoother ride through the investment landscape! 📊💡

📞 (416) 736-4438

✉️ [email protected]

11/13/2023

IRS Unveils Tax Adjustments for 2024: What You Need to Know! 📊💵

Get ready for changes in the tax landscape! The IRS has rolled out adjustments for the tax year 2024. Here are the highlights:

🏠 Hazardous Substance Superfund Rate:

Inflation-adjusted rate for crude oil and petroleum products: $0.26 cents a barrel.

💰 Standard Deduction:

Married couples filing jointly: $29,200 (+$1,500).
Single taxpayers and married individuals filing separately: $14,600 (+$750).
Heads of households: $21,900 (+$1,100).

📊 Marginal Rates:

Top tax rate remains 37% for individual single taxpayers with incomes over $609,350.
Other rates range from 10% to 35%, depending on income.

💼 Alternative Minimum Tax (AMT):

Exemption amount for 2024: $85,700, phasing out at $609,350.

👨‍👩‍👧 Earned Income Tax Credit (EITC):

Maximum amount for 2024: $7,830 for three or more qualifying children.

🚗 Transportation Fringe Benefit:

Monthly limitation increases to $315.

🌡 Health Flexible Spending Arrangements:

Employee salary reduction limit: $3,200.
Maximum carryover amount for plans with carryover: $640.

💼 Medical Savings Account (MSA):

Self-only coverage deductible: $2,800 to $4,150.
Family coverage deductible: $5,550 to $8,350.
Maximum out-of-pocket expense for self-only coverage: $5,550.

🌍 Foreign Earned Income Exclusion:

$126,500 for tax year 2024.

💸 Estate Tax:

Basic exclusion amount for decedents dying in 2024: $13,610,000.

🎁 Gift Tax:

Annual exclusion increases to $18,000 for 2024.

👶 Adoption Credit:

Maximum credit allowed: $16,810 for tax year 2024.

📉 Items Unaffected by Indexing:

No personal exemption for tax year 2024.
No limitation on itemized deductions.
No adjustment for the modified adjusted gross income amount used for the Lifetime Learning Credit.

Stay informed and navigate the tax terrain wisely! 💡📅

📞 (416) 736-4438

✉️ [email protected]

11/10/2023

Introducing the First Home Savings Account (FHSA) 🏡💰

Struggling with the dream of homeownership? The Canadian government has your back with the Tax-Free First Home Savings Account (FHSA) introduced in the 2022 budget.

Key Features:

💸 Tax-Free Savings: Save up to $40,000 tax-free with an annual contribution limit of $8,000.
📈 3% Tax-Free Interest Rate: Watch your savings grow with a 3% tax-free interest rate.
💡 Investment Options: Opt for FHSA Guaranteed Investment Certificates (GICs) for higher interest rates.
How FHSA Works:

🏦 Like an RRSP: Contributions are tax-deductible, offering financial benefits.
🏠 Tax-Free Withdrawals: Withdraw funds tax-free for your first home, or transfer unused amounts to an RRSP or RRIF.
FHSA Rules & Eligibility:

🇨🇦 Canadian resident, 18 years or older, not owned property in the last four years.
📅 Annual contribution limit: $8,000; Lifetime limit: $40,000.
🔄 Unused contributions carry forward, up to $8,000.
🚫 No repayment requirement like the Home Buyer's Plan.
Opening and Closing:

🤔 Careful consideration needed; no mandatory repayment.
How to Open FHSA:

📞 Contact qualified issuers (banks, credit unions) – Questrade is an early adopter.
Why FHSA?

🏡 FHSA offers tax benefits, providing a boost for first-time homebuyers.
Eligibility:

🚀 Resident Canadians without recent property ownership, aged 18-71.
Secure your homeownership journey with FHSA! 🌟🔐

📞 (416) 736-4438

✉️ [email protected]

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