We again have the working from home worksheet for our clients.
Look for our email next month. Or if you are enthusiastic, the form was uploaded into the information folder on the client portal which can be downloaded after you sign into the portal.
Credit Card Processing Fees
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I remind all clients that I still do not charge processing fees for making a payment by credit card.
However, I do appreciate clients who elect to pay by Internet Money Transfer (and information on how to do so is included on all invoices.)
This decision will be reviewed in July 2023 as part of transitioning to a new invoicing system.
Claiming Ontario Staycation in 2022
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The government of Ontario has provided for a new tax credit for 2022. It is the Ontario Staycation.
This credit is for Ontario residents who stay at an Ontario Hotel, Motel, Resort, Cottage, Campground, Bed and Breakfast, or a Vacation Rental Property.
You will need to obtain the appropriate receipts to claim this credit. This are not your bank statements, credit card statements, nor your credit card transaction slips.
To claim this credit, you need to have a receipt which includes the following items:
- The Name and Location of the place that you stayed at,
- The date or dates that you stayed at the place,
- The amount that is related to the accommodation (as opposed to food, activities, rental of equipment, etc.,) and
- The amount of the GST/HST that you paid.
Only those receipts which are for accommodation between January 1, 2022 and December 31, 2022 qualify.
Why you can’t claim 250 days of working at home in 2021…
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The government has permitted people who have to work from home due to COVID-19 to make a claim for up to 250 days at a rate of $2 per day. But claiming the full number of days would be rare assuming that you are a white collar worker, which is the usual claimant for working from home.
Let us check the math…
There are 365 days in 2021, and 52 weeks. That means that there are 52 Saturdays and 52 Sundays… a total of 104 days where you would not work a full day. The count of available days are now 365 days less 104 days, or 261 days.
Now there are public holidays where you are expected not to work. In Ontario, there are a total of nine public holidays. In Quebec, there are a total of eight statutory holidays. Other provinces have comparable holidays, but if your employer offers more holidays than the minimum, your numbers go down further. But just using the standard holidays, that makes 252 (Ontario) or 253 (Quebec) remaining days left. Isn’t that enough? No, it isn’t…
A person is expected to take vacation or have occasional days sick or have medical appointments. If you take more than 3 or 4 additional days off, you are now below 250 days.
Which means, the CRA will probably be looking closely at anyone who makes a claim for exactly 250 days or a $500 deduction. In case you don’t realize it, that $500 deduction will probably only save you $75 of Federal tax.
If you make a claim for 246 days, or $492, your savings is $74 of Federal tax and the odds of a review has significantly dropped. So lose 4 days of the claim and $1 of Federal tax!
Retention of tax information
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This post is specific to Canadian and Quebec Personal tax returns only. There are specific circumstances which require different retention periods. Existing clients may contact if they have a specific situation which is different.
In Canada, retention of tax papers will depend on the date that the associated Notice of Assessment or Notice of Reassessment has been issued.
General Rule
In general, you need to keep the papers for six years AFTER the date of the last assessment or reassessment. I refer to this as the seven year rule. That is, for a 2020 T4 slip, you keep until December 31, 2027, which is the end of the calendar year that is six years after the date of the Notice of Assessment, if it is issued normally. It is possible that you delay filing or there is another delay which caused your Notice to be deferred issuing until a subsequent year.
Please notice that, if you are reassessed, this may result in a longer retention period. For example, if your 2020 return is assessed in 2021, then reassessed in 2022 (the subsequent year), then your retention is extended accordingly.
This covers most individuals resident within Canada.
Exceptions to the General Rule
The following items will have exceptions to the general rule above.
- Execution of a Carry-Back from a Subsequent Year to a Prior Year – In Canada and Quebec, there are occasions where a carryback may modify a prior year. In this instance, the Prior Year would be Reassessed and a Notice would be issued. The reassessment will extend the retention period for the prior year’s return that was changed.
- Execution of a Carry-Forward from a Prior Year to a Subsequent Year – In some circumstances, the CRA may request proof of the Carry-Forward claim, though this is extremely rare and may actually fail if challenged in some instances within the courts. Accordingly, you would need to retain the records for the prior year’s return which gave rise to the opportunity for the Carry-Forward.
- Example: In 2009, Nortel declared bankruptcy and your shares, bought in 1998, became worthless. You declared the loss of those shares in 2009, the year of bankruptcy. In 2026, you have an opportunity to use the unused loss from 2009 on your 2025 tax return. If the CRA asks for proof of the claim on your 2025 return pertaining to the Nortel loss, you will need proof of your purchase of the Nortel Shares in 1998 and your subsequent declaration on your 2009 tax return.
- Proof of Payments – Retain for one year after confirming receipt of the payment with the tax department. (This is not mandated by the act, but is a good practice. However, most people tend to throw out the payment advice documents that the bank issues when you make your payment.)
- Elections and proof of filing of Elections – Review the election to determine what is the associated tax rule that is affected, and base the retention on that,
- Purchase of capital assets and other items subject to capital gains including stocks, bonds, mutual funds, etc. – Retained using the tax return which pertain to when the item is sold,
- Example: You bought WYZ Common Shares in 1998. In 2007, you changed investment firm. In 2024, you sold WYZ Common Shares. You need to keep your paperwork from 1998 for WYZ until December 31, 2031 as it is tied to the 2024 tax return.
Sidebar: It is your responsibility to keep the original purchase papers for the 1998 purchase. Note that when you changed your investment firm in 2007, your new investment firm would not have received the original paperwork from the purchase in 1998.
- Example: You bought WYZ Common Shares in 1998. In 2007, you changed investment firm. In 2024, you sold WYZ Common Shares. You need to keep your paperwork from 1998 for WYZ until December 31, 2031 as it is tied to the 2024 tax return.
- Principal Residences, Principal Residence Elections, other immovables, and real property – Require extended retention periods for the purchase and sale thereof, based on the particulars of that specific situation. This requires a consultation for your particular circumstance.
These exceptions are not complete, but provide you with some direction. Note that some of the above have no basis in the Act, but my experience has suggested that the retention is needed.
Override Rule
If you are or were creative with tax rules and regulations, you may wish to retain the information for a longer period than is given in this post.
In conclusion…
Note that your particular situation may require a different retention period than the ones listed above. Please check with your tax preparer or accountant who is familiar with your situation to provide you with specific advice personalized for you.
