Tax documentation checklist, 2007

(January 2008) In the tax universe, 2007 is the year of the family. With a number of new rules introduced in the federal budget, advisors have a great opportunity to discuss new tax efficiencies.

Click here to download this two-page checklist. (pdf)

Income sources

Employment

T4 slips

commissions

research grants

directors’ fees

details of casual income earned

Public Pension Benefits

OAS: clawed back when income exceeds $63,511

CPP: retirement; disability; death; survivor; child

Private Pension Benefits

superannuation, eligible pension and other annuity income

RRSP or RRIF

eligible pension income split from spouse

Foreign Pensions

USA

Other

Benefits

employment insurance benefits: clawed back when net income is over $48,750

universal child care benefits — $100 per month per child under 6

Taxable Dividends

T3 slips and T5 slips: eligible dividends are subject to a 45% gross-up and other than eligible dividends are subject to a 25% gross-up; each will have a different dividend tax credit. Note: With T3 slips, Return of Capital amounts (box 42) affect adjusted cost base of the investment only; not other wise reported on the tax return

self-reported amounts

investment income from foreign sources

Interest Income

T3 and T5 slips

self-reported amounts, including interest from inter-spousal loans

investment income from foreign sources

Partnership Income or Losses

statements / T5013 slips

resource investment statements

income from certified films and productions

Rental Income

gross income

expenses

capital asset acquisitions and dispositions

Support Payments

gross and taxable income

agreement details

RRSP-earned income may be affected

Capital Gains

proceeds of disposition on capital assets (self-reported)

T4PS, T3, T5, T5013 slips

adjusted cost base and expense details

mortgage foreclosures; conditional sales repossessions

capital gains reserves (form T2017) and capital gains elections (form T664) (February 22, 1994)

capital loss detail (prior years dating back to 1972)

new tax treaty rules help emigrants who keep final documentation avoid double taxation

Other Income

lump sum pension benefits

resource losses

payments from DPSP

Recovery of exploration and development expenses

taxable patronage payments

taxable RESP or spousal RRSP withdrawls

exempt scholarships include elementary and secondary school scholarships in 2007

RESP educational assistance paymments or Accumulate Income payments

Apprenticeship Incentive grants

reportable but not taxable: worker’s compensation, social assistance, supplements

Self-Employment

gross income

expenses

capital asset acquisitions; dispositions

Deductions

RRSP—current and prior year contributions; discuss new age elegibility rules

union or professional dues—don’t forget to claim the GST/HST rebate

RPP: discuss new phased-in retirement rules

pension income split to spouse

other employee expenses on Form T777—includes deductions for tools bought by tradespersons

Form T2200 must be signed by the employer. Also qualify for GST/HST rebate if employer is registrant.

family: child care; child support; moving expenses

disability supports expenses

business investment losses

carrying charges: interest; safety deposit box; investment counsel; management; accounting fees

exploration and development costs; depletion allowances

stock option and shares deduction

other: refund of RRSP; other RRSP/RRIF deductions; repayment of government benefits; legal expenses; CCA on Canadian feature films; foreign tax deductions; depletion allowances

non-capital loss carry-overs: if losses are incurred after 2005, the carryforward increases to 20 years with the exception of the non-capital loss components of Allowable Business Investment Losses (ABILs)

capital gains deduction: the new $750,000 amount now extends to qualified fishing property, farm property and small business corporation shares disposed of after March 19, 2007

15% of U.S. Social Security benefits

foreign child support received

new meal benefit for truckers

Tax brackets, rates and credits

federal tax brackets are increased through indexing

discuss retroactive changes to Basic Personal Amount and 15% tax rate applied at lowest bracket

Personal amounts are increased; spousal amount enhanced

personal amounts are indexed

discuss new credit for minor children

Canada Employment Credit increased to $1,000 for those with employment income of at least that amount

the amount for public transit passes has been enhanced, keep receipts

disability credit for those with multiple medical restrictions, or those requiring extensive life-sustaining therapy, or those with certain memory impairments

tuition / education / texbook amounts

A new children’s fitness credit requires receipts for sporting activities of those under 16; 18 if disabled.

medical expenses include a host of eligible expenses, including the cost of drugs purchased under the Special Access Program and medical marijuana

charitable donations will include tax-free rollovers of publicly listed securities to private foundations after March 18, 2007

political contributions

labour-sponsored investment funds

quarterly tax installments. Note new 30,000 threshold in 2008.

Transferable provisions

From Spouse

CPP spousal assignment

eligible pension income

unused minor child

children’s fitness credit

moving expenses

safety deposit box

dividend tax credit (if spouse has low income)

adoption tax credit

public transit pass amount

age, pension, disability, tuition / education / textbook amounts

medical expenses

charitable donations

political contributions

labour-sponsored funds tax credit (if in spousal RRSP)

From Child

tuition / education / textbook

medical expenses

public transit pass amount From Other Dependent Adults

medical expenses; max. of $10,000 per dependant

Provisions available for multi-year carry-over

Self-Employed & Some Commission Agents

undeducted home office expenses until net business income reported; then apply

undeducted CCA balances until asset is disposed of; note new rules for small tools under $500

All Taxpayers

undeducted RRSP contributions indefinitely to offset future income

undeducted moving expenses until there is net income from actively earned sources at new location . capital losses three years back, carry forward indefinitely

non-capital losses three years back, carry forward 20 years if incurred after 2005; except ABILs in which carry-forward period stays at 10 years

undeducted student loan interest five-year carry-forward . undeducted tuition, education, textbook amounts indefinite carryforward

undeducted medical expenses best 12-month period ending in the tax year; final return: best 24-month period including date of death

undeducted donations five-year carry-over; final return claim up to 100% of net income in year of death and immediately preceeding year

minimum taxes paid seven years forward for recovery when regular tax exceeds Alternative Minimum Tax

Evelyn Jacks is president of The Knowledge Bureau. evelyn@knowledgebureau.com. What do you think? Let us know by sending your letters to feedback@advisor.ca.

(01/02/08)