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Child care is a crucial aspect of family life and significantly impacts parents’ ability to work, study, and engage in their communities. In Alberta, both federal and provincial governments provide childcare subsidies to alleviate financial burdens and support families. This blog post aims to clarify the details of these subsidies, their eligibility criteria, and how they benefit families across the province.
The Government of Canada has enhanced support for families through the introduction of the Affordability Grant in 2022. The aim for this grant is to reduce fees by an average of 50%, up to $500 per month for full time care, significantly offsetting the costs of licensed child care.
In addition to federal support, Alberta has its own childcare subsidy program aimed at making licensed childcare more affordable for families. The Alberta Child Care Subsidy (ACCS) is designed to assist families with the costs associated with child care, particularly for those who require care for children aged 0 to 12.
To qualify for the ACCS, families must meet specific criteria, including:
Families interested in applying for the Alberta Child Care Subsidy can do so through the province’s website. The application process is straightforward, requiring families to provide details about their income, the number of children needing care, and the chosen child care provider.
The combined efforts of federal and provincial subsidies significantly reduce the financial burden of child care, allowing families to invest more in their children’s development and education. These programs not only support working parents but also contribute to the overall economy by enabling more individuals to participate in the workforce.
Federal and provincial child care subsidies in Alberta play a vital role in supporting families. By making child care more affordable and accessible, these programs foster an environment where children can thrive, and parents can pursue their professional and personal goals without undue financial stress.
For families navigating the complexities of child care costs, understanding and leveraging these subsidies is essential. As policies continue to evolve, staying informed about available resources will ensure that families can maximize their benefits and secure quality care for their children.
For more information, visit the Government of Alberta’s website or the Canada Revenue Agency’s site for details on how to apply for these vital programs.
Note: The information and content provided to you may include contributions from ChatGPT, an AI language model. It has been reviewed to ensure accuracy and relevance.
Forensic accounting uses accounting, auditing, and investigative skills to examine the finances of a business or individual. Forensic accountants analyze financial information that could be used as legal evidence and often testify in court as a key witness. They must also be able to identify fraud with minimal details, identify the scheme, and use procedures to prove if it exists. The most common industries forensic accountants work in are insurance, financial institutions, and law enforcement agencies.
Some of the responsibilities that fall under the forensic accountant include:
The path to becoming a forensic accountant is similar to a traditional accountant. It is still required to complete a bachelor’s degree in accounting. Once that is complete, the candidate must also complete the Chartered Professional Accountant (CPA) program to become designated. Once designated, accountants can complete the Certified in Financial Forensics (CFF) credential. After the CFF credential is completed, they can pursue careers in this field.
Both careers require the same education and CPA designation but the duties performed vary.
Traditional accounting analyzes routine transactions, prepares financial information as well as ensures the correct accounting standards and follows regulations. Careers in accounting normally fall within organizations which normally include, audit, tax, financial planning and budgeting.
Forensic accounting takes the financial information to identify and uncover any potential fraud then uses procedures to prove whether or not fraud does exist. Skills that are required to perform these careers include attention to detail, strong investigative skills as well as integrity.
While the underlying education is the same as becoming a CPA, the major difference between a forensic accountant and a traditional accountant is that they have to conduct investigations to uncover information, identify anything unusual, track and recover fraudulent activities and report their findings in a way that anyone can understand.
https://www.accounting.com/careers/forensic-accountant/
https://www.investopedia.com/terms/f/forensicaccounting.asp
https://financialcrimeacademy.org/forensic-accountant-responsibilities/
https://integrityforensic.com/forensic-accounting-vs-traditional-accounting-whats-the-difference/
On April 16th, 2024, the 2024 federal budget proposed to increase the capital gains inclusion rate from 50% to 66.67% for corporations and trusts and from 50% to 66.67% on capital gains in excess of $250,000 for individuals beginning on June 25th, 2024. (Chapter 8: Tax Fairness for Every Generation | Budget 2024, 2024).
A capital gain can occur through the disposition of capital property. The Government of Canada website defines capital property as “Depreciable property, and any property, which, if sold, would result in a capital gain or a capital loss. You usually buy it for investment purposes or to earn income. Capital property does not include the trading assets of a business, such as inventory” (Capital Gains – 2023, 2024). Some common examples of capital property are land, buildings, vehicles, equipment used for rental operations or business purposes, and second homes such as vacation properties or cottages.
A capital gain occurs when the proceeds received from the disposition of the disposed asset are greater than the adjusted cost base (cost of the asset plus any expenses incurred to acquire it). A capital gain is calculated by taking the proceeds of disposition less the assets adjusted cost base and any expenses that were incurred to sell the property.
At this time, the inclusion rate is 50%, meaning that only 50% of any capital gain is taxable to an individual, corporation or trust.
Prior to June 25, 2024, only 50% of a capital gain is included when calculating the corporation or trust’s net income for tax purposes. The 2024 budget proposes that as of June 25th, 2024, 66.67% of the capital gain will be included when calculating your net income effectively resulting in a higher taxable income and higher taxes on the sale of capital property. For example, if a corporation sold land that had originally cost the corporation $200,000 for $300,000, with the 50% inclusion rate, only $50,000 of this amount would be taxable (($300,000-$200,000)*50%). With the new proposed inclusion rate of 66.67%, $66,670 of the capital gain will be taxable.
For individuals, as of June 25th, 2024, the current 50% inclusion rate will increase to 66.67% for any capital gain in the year that exceeds the limit of $250,000. This means that if your capital gains realized in the year are under the $250,000 limit, the 50% inclusion rate will still apply; but for any amount over $250,000, the 66.67% inclusion rate applies. The legislation does not allow for the averaging of capital gains over multiple years to stay under the $250,000 threshold or any carry-over of any unused threshold.
It is important to note that, the principal residence exemption remains unchanged, meaning that capital gains that arise when selling your principal residence, such as your house, remain exempt from tax and are unchanged.
For individuals, common examples where capital gains could apply are the sale of a second house such as a cottage or rental property, vehicles, and investments.
With the proposed change to the capital gains inclusion rate for all capital gains realized after June 24th, 2024, from 50% to 66.67% for corporations and for capital gains over $250,000 for individuals, we recommend reviewing your investments to determine if you have any unrealized gains. For most individuals, it will be important to manage these gains from year to year to ensure that you can keep them under $250,000 to avoid additional tax. But for corporations and trusts with accrued unrealized capital gains, it may be prudent to speak with your investment broker and tax advisors to determine if triggering some of these gains before June 25, 2024, to minimize the impact on your taxes on the eventual sale makes sense for you.
Note that there is no provision at this time for a deemed disposition election to trigger gains before the new rate applies. The actual disposition must occur.
Capital gains reserves will enter into income on the first day of the taxation year, meaning those starting before June 25, 2024, will be subject to the 50% inclusion rate. Later years will follow the prevailing rate of 66.67%. If you have a capital gains reserve that you are bringing into income, it will be important for you to discuss with your tax advisor the implications of continuing it going forward or realizing the remaining amount in 2024.
Under current rules, if you receive a stock option benefit, the full amount of that benefit is taxed as employment income in the year it is received; however, the employee may claim a deduction of 1/2 the stock option benefits if they meet certain conditions. Under the proposed changes, the stock option deduction will change from 1/2 to only 1/3 of the stock option benefit for any options exercised after June 24, 2024, with the $250,000 limit applied to the combined total of stock option benefits and capital gains.
When a taxpayer incurs a business investment loss from the disposition of shares or debts from a small business corporation or the deemed disposition of bad debts or shares of a bankrupt small business corporation, they have been able, under the current rule, to deduct 50% of that loss against other income (such as employment, business and property income) and carry it back 3 years or forward 10 years. Beginning June 25, 2024, ABILs will be deductible at 66.67% even if the amount is carried back to a period prior to June 25, 2024.
For 2024, the tax year will be split into two periods for applying different inclusion rates:
Taxpayers will need to net capital gains against capital losses for each period to determine the applicable inclusion rates.
If you would like us to review your investment portfolio or if you have further questions regarding the capital gains inclusion rate changes, please contact our office.
*The information contained in this post reflects the proposed change at the date posted and may or may not be relevant at future dates
Capital Gains – 2023. (2024, January 23). Canada.ca. Retrieved June 7, 2024, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4037/capital-gains.html
Chapter 8: Tax Fairness for Every Generation | Budget 2024. (2024, April 16). Canada.ca. Retrieved June 7, 2024, from https://budget.canada.ca/2024/report-rapport/chap8-en.html
How do you calculate capital gains and capital losses? (2024, January 23). Retrieved June 7, 2024, from https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/completing-schedule-3/publicly-traded-shares-mutual-fund-units-deferral-eligible-small
Tax Fairness for Every Generation. (2024, April 16). Canada.ca. Retrieved June 7, 2024, from https://www.canada.ca/en/department-finance/news/2024/04/tax-fairness-for-every-generation.html
In our experience as an accounting firm based in Alberta, we have noticed that many of our clients are not fully aware that they can claim the provincial portion of the Harmonized Sales Tax (HST) as an Input Tax Credit (ITC) when HST is paid on goods.
This lack of awareness can lead to missed opportunities, especially when dealing with transactions involving provinces where HST is applicable. Understanding these nuances is crucial for businesses in Alberta to ensure that all GST/HST Input Tax Credits are claimed appropriately.
It is important note that HST and Provincial Sales Tax (PST) are not the same. The HST merges the federal Goods and Services Tax (GST) with PST, applied in provinces like Ontario and Nova Scotia, and administered federally by the Canada Revenue Agency (CRA). Conversely, the PST, separate from GST and known as QST in Quebec, is levied in provinces like British Columbia and Saskatchewan, with each province setting its rates and handling its administration. The primary difference lies in HST’s amalgamation and federal oversight, contrasting with PST’s independent provincial management.
Firstly, it’s important to know which provinces charge HST and their respective rates. As of now, the following provinces have HST:
| Province | HST Rate |
| New Brunswick | 15% |
| Newfoundland and Labrador | 15% |
| Nova Scotia | 15% |
| Ontario | 13% |
| Prince Edward Island | 15% |
For businesses in Alberta (which typically have GST at 5%) the tax implications can be complex, especially when transactions involve provinces that do.
A common scenario to consider is when goods are purchased from an HST province (New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, or Prince Edward Island) and delivered to Alberta. This situation should prompt a review of the source documentation to determine if HST (and not just GST) was paid on the invoice.
What type of sales tax (GST or HST) is charged is determined generally by the place of supply. The place of supply is determined on where legal delivery of the goods occur. When legal delivery of the good occurs is typically outlined in the terms of the agreement for the sale of goods.
A manufacturer in Ontario sells a good to a corporation in Alberta. Legal delivery of the good occurs in Ontario at the manufacturer’s premises as per the terms of the sales agreement. The corporation regularly purchases goods from the manufacturer and establishes freight terms with a common carrier for the regular transportation of goods from the manufacturer’s premises to Alberta whenever required. The corporation instructs the manufacturer to contact the carrier directly to advise the carrier whenever goods are ready for pick-up. The carrier invoices the corporation for any transportation service that is provided pursuant to their arrangement.
The good is delivered to the purchaser in Ontario. Therefore, the supply is made in Ontario and is subject to HST at a rate of 13% all of which can be claimed as an ITC.
A corporation in Ontario sells a good to a purchaser in Alberta. Based on the terms of delivery in the agreement for the supply of the good, legal delivery of the good to the purchaser occurs in Alberta.
Because legal delivery of the good to the purchaser occurs in Alberta, the supply is made in Alberta and is subject to GST at a rate of 5%.
*Note – the above place of supply rules do NOT apply to specified motor vehicles. Specified motor vehicles are generally all motor vehicles except racing cars and any prescribed motor vehicles.
For specified motor vehicles, the place of supply is determined by where the vehicle was registered (other than on a temporary basis).
If HST is paid by a registrant business or individual in Alberta and it was incurred for commercial goods used in a commercial sense, then the HST (including the provincial portion) can be claimed as an Input Tax Credit (ITC). This is a significant aspect for businesses as it allows for the recovery of HST paid on business-related purchases.
-Always review source documentation for transactions involving provinces with HST to determine tax implications.
-Generally, where the good is legally delivered is the place of supply and that is the relevant GST/HST tax rate that should be used.
-If you are a GST/HST registrant and have paid HST on a business-related item you can claim the full amount of HST (including the provincial portion) on your GST return.
For any further questions or clarifications, please contact our office at 780-532-4641 or e-mail office@fulcrumgroup.ca
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Cryptocurrencies have taken the financial world by storm, offering new and exciting opportunities for investors and businesses. However, as with any financial asset, it’s essential to understand the tax implications involved, especially in the ever-evolving landscape of Canadian tax law. In this blog post, we’ll explore the key considerations and guidelines for handling cryptocurrencies from a tax perspective in Canada.
Transactions with Cryptocurrencies like Bitcoin, Ethereum, and others may result in either business income (loss) or capital gain (loss)for tax purposes in Canada. As there is nuance in determining how crypto transactions should be recorded it is important to understand the basics before entering into these transactions.
Business Indicators:
Per CRA, “The following factors may indicate that you are carrying on a business:
When the factors indicate that you are carrying on a business the full amount of the gain on the disposition of crypto will be included as business revenue. You will be able to deduce and expenses related to the business against this revenue to reduce your taxable income.
Buying and Selling Cryptocurrencies as Investment:
When you purchase or sell cryptocurrencies, it triggers a capital gain or loss. The capital gain or loss is calculated based on the difference between the purchase price (adjusted cost base) and the selling price. This applies when there is no indication of business income. The advantage is only ½ of the capital gain is included in income for tax purposes.
Cryptocurrency Mining:
For individuals or businesses involved in cryptocurrency mining activities, the mined coins are considered income at their fair market value at the time they are acquired. Subsequently, any future selling of these coins would result in capital gains or losses.
Cryptocurrency as Payment:
If you accept cryptocurrencies as payment for goods or services, the fair market value of the cryptocurrency received needs to be reported as income for tax purposes.
Annual Reporting:
Canadians are required to report their cryptocurrency transactions on their annual tax returns. This includes detailing each transaction, the date of acquisition or disposition, the amount involved, and any associated costs.
Keeping Records:
It’s crucial to keep meticulous records of all cryptocurrency transactions, including receipts, invoices, and details of wallet addresses. This information will be invaluable when reporting to the Canada Revenue Agency (CRA).
Foreign Exchange Gains and Losses:
Cryptocurrency transactions involving foreign exchanges may also result in foreign exchange gains or losses, which should be reported for tax purposes.
Capital Losses and Offsetting Gains:
Consider strategic planning to offset capital gains from cryptocurrency transactions with capital losses from other investments, helping to minimize overall tax liability.
Use of Tax-Advantaged Accounts:
Explore the possibility of holding cryptocurrencies within tax-advantaged accounts like Tax-Free Savings Accounts (TFSAs) or Registered Retirement Savings Plans (RRSPs) to defer taxes.
As cryptocurrencies continue to gain prominence, understanding the tax implications becomes increasingly important. It’s recommended to consult with a qualified tax professional to ensure compliance with Canadian tax laws and to develop effective tax planning strategies. Stay informed, keep accurate records, and navigate the complexities of cryptocurrency taxation with confidence.
Remember, this blog post provides general information and should not be considered as professional advice tailored to your specific situation. Always consult with a tax professional for personalized guidance.
[1] https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/digital-currency/cryptocurrency-guide.html
A personal services business (PSB) exists where the individual performing the work would be considered to be an employee of the payer if it were not for the existence of the corporation. A corporation may be a PSB if the following criteria are met:
Tax Implications for Personal Service Businesses and its Owner:
Risk Mitigation Strategies:
Conclusion:
Operating a personal service business in Canada comes with unique tax implications and potential risks due to the distinct tax treatment. To mitigate these risks, it’s essential to diversify your client base, document your relationship, consider offering goods alongside services, manage your compensation wisely, and focus on business growth. Feel free to contact our office if you have any questions about personal service businesses or feel you may be at risk.
In Budget 2021, the Canadian government introduced the Underused Housing Tax (UHT), a 1% annual tax on the value of non-resident, non-Canadian-owned vacant or underused residential real estate. In response to feedback on the onerous filing, the government is proposing significant changes to streamline compliance. These changes have not yet been passed with federal legislation but are expected to be passed and enacted in the coming months.
One notable proposal is the elimination of filing requirements for certain owners. “Specified Canadian corporations,” partners of “specified Canadian partnerships,” and trustees of “specified Canadian trusts” are slated to become “excluded owners,” relieving them of UHT reporting obligations. The government aims to expand these definitions to include a broader range of Canadian ownership structures, reducing the compliance burden for eligible entities starting from the 2023 calendar year.
This means that most Canadians should not have to file a UHT return in 2023.
To further ease the transition, the government is also suggesting a reduction in minimum failure-to-file penalties. The minimum penalties for individuals and corporations for late filing UHT returns are proposed to decrease from $5,000 to $1,000 and from $10,000 to $2,000, respectively, beginning in 2022.
The requirement to file UHT returns for 2022 under the original legislation will continue and the deadline has been extended to April 30, 2024. If you have not filed your UHT returns yet or are unsure if you have a filing obligation, please contact Fulcrum Group.
*The information contained in this post reflects the standards and rules applicable at the date posted and may or may not be relevant at future dates
The Canada Revenue Agency (CRA) recently released technical interpretation UHTN-15, which discusses co-ownership of residential rental properties and its potential impact on the filing requirements for the Underused Housing Tax (UHT).
In accordance with UHTN-15, the term “partnership” for UHT purposes is not explicitly defined in the Underused Housing Tax Act (UHTA). Instead, the CRA relies on the definition provided by provincial partnership legislation, which is consistent with the legal understanding of a valid partnership.
The key criteria for a relationship to be considered a partnership for UHT purposes are:
These three criteria closely mirror the fundamental elements required for a valid partnership under provincial partnership legislation. If any of these criteria are not met, the relationship would not qualify as a valid partnership for UHT purposes.
Given the self-assessment nature of Canada’s tax system, it is crucial for co-owners to determine whether their residential rental property arrangement meets these criteria. Should the co-ownership structure align with the conditions outlined in UHTN-15, filing a UHT return as a partnership may be necessary. The deadline to file is Oct 31, 2023, for 2022 returns and will be April 30 for future years. The late filing penalty is $5,000 per form.
To ensure compliance and explore any potential implications for your specific situation, contact our office and/or schedule a meeting at your earliest convenience. This will allow us to discuss the particulars of your residential property holdings and formulate a tailored strategy to address any UHT filing requirements that may arise.
Phone: 780-532-4641
Fax: 780-532-4947
Toll Free: 1-800-422-6093
Email: office@fulcrumgroup.ca
#102, 9919 – 99 Avenue
Grande Prairie, AB
T8V 0R6
