As an added service to our clients and website visitors, The Montana Group regularly publishes helpful, free tips for tax planning for the applicable years. Check in periodically for updates.

Specific tax tips for 2011

The Canada Revenue Agency's Tax-Free Savings Account

Of the nearly 6.7 million Canadians who have a Tax-Free Savings Account (TFSA), more than 98 per cent have managed their TFSA accounts within the Canada Revenue Agency's (CRA's) guidelines. This year, fewer than 1.5 per cent of TFSA holders will be receiving a letter from the CRA them to provide further information about their accounts, according to the CRA.

If you have questions about your TFSA, contact Maureen at The Montana Group (or contact the CRA directly at 1-800-959-8281 or visit their website at www.cra-arc.gc.ca). You can see the complete release at www.cra-arc.gc.ca/nwsrm.  

Indexation adjustment for 2011 announced for personal income tax and benefit amounts

Each year, certain personal income tax and benefit amounts are indexed to inflation using the Consumer Price Index data as reported by Statistics Canada. The full Canada Revenue Agency (CRA) announcement is available at Indexation Adjustment.

Canada Revenue Agency announces maximum pensionable earnings for 2011

The Canada Revenue Agency (CRA) announced November 1 that the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2011 will be $48,300 - up from $47,200 in 2010. A CTA news release reported that the new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada. For more details, see the CRA website Announcement.

General tax tips

Subscribe to the CRA mailing list to receive information on the latest tax news   The CRA issues a series of tax tips during the year to help you determine which credits, deductions, and benefits you may be able to claim. To get notification by e-mail when news releases, fact sheets, tax tips, and tax alerts are added to the CRA's website, you can subscribe to their electronic mailing list.   Make the most of your business income tax deductions save all your business-related receipts for your tax advisor - and remember, the CRA requires you save them for six years make sure you have a record of all your business taxes, and business-related memberships, subscriptions and dues any funds borrowed to run your business that incur interest and related fees are deductible discuss other deductibles with your tax advisor, such as insurance, administration, office supplies, maintenance and repair expenses see our Resources page for checklist of allowable auto expense tax deductions

Ask us about income-splitting loans with a spouse or common-law partner

For couples where one spouse or common-law partner is in a higher tax bracket than the other - ask us about an income-splitting loan for the future.  

Keep on donating

Charitable organizations are feeling the pain of the recession. Discretionary spending is often the first to go when companies look at ways to cut expenses. Think about the potential impact of cutbacks to corporate giving : Canadians are more and more considering corporate ethics of companies when making their purchasing and hiring decisions. Surveys show that consumers would display brand loyalty through the recession if the company supports a good cause, and this even if a lower-priced brand were available. Involving your staff in fundraising and volunteer efforts is a low-cost way to lift their spirits, build rapport and foster teamwork - The Montana Group not only talks about this - it put this into action every day.

Why not take advantage of the tax savings available from your generosity? Here are some tips:

• your first $200 of donations only qualifies you for a 15% tax credit; however, you receive 29% for everything over that - why not save your donations up for a few years as the $200 reduced rate will be applied only once? You can save up the donations for as long as four years.
  
  
• consider claiming your and your partner's donations on only one of your returns as the reduced rate for the first $200 will apply only once.
  
  
• restrict your donations to registered Canadian charities: see list here. There are certain exceptions for donations to foreign universities and colleges, and for those who report U.S. income on their returns - ask us about these exceptions. Also ask us about capital property donations.

If you donate to a gifting tax shelter, expect to be audited

Each year, Canadian taxpayers participate in gifting arrangements that result in donation receipts worth three or four times the actual amount donated by the taxpayer. The Canada Revenue Agency (CRA) continues to warn Canadians against these gifting arrangements and audits those who participate.

To date, the CRA has denied over $4.5 billion in tax shelter gifting arrangement donations and reassessed over 130,000 taxpayers who have made donation claims through a gifting scheme. For most claims, the CRA has denied the gift entirely.

The CRA audits gifting arrangement tax shelters that provide donation receipts three or four times the out-of-pocket cost. For more details, go to Tax Alert.

And, if you're looking for independent advice, ask The Montana Group before getting involved in a tax shelter gifting arrangement.

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Revised August 31, 2011