My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Friday, November 15, 2013

Year-end Tax Tip Tweets - For the Week Ending November 15th

My Twitter year-end tax tips for this week are listed below. I really like this week's tips as many are not the standard tips you read, if I do say so myself. You can also see them as they come out daily on Twitter each morning and afternoon. My twitter name is @bluntbeancountr. I hope there will be one or two tips that are beneficial.


Tips for Week of November 11 - November 15, 2013


If you make installments, review your income tax situation to see if the Dec 15th tax installment is necessary #yearendtips

If you plan to withdraw $ from your #TFSA, do it before Dec 31 so the withdrawal will be + back to your limit on Jan 1/14 #yearendtips

If you own a corporation, review your shareholder loan account to determine what you may need to dividend in 2013 #yearendtips

If you cashed in a #RRSP in 2013, the tax is often under withheld. Prepare a draft return to see if you have a tax liability #yearendtips

If you have not made a #RESP contribution in 2013, consider making one before Dec 31st#yearendtips

Don’t wait until February 28th to contribute to your RRSP. Contribute now if you have the money #yearendtips

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

4 comments:

  1. Mark, if you pay installments and determine that you don't need a December installment, do you have to contact the CRA to make sure they agree?

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    Replies
    1. Hi Sandi:

      You do not have to contact the CRA, see below. However, you must make sure your installments to date will cover any 2013 tax liability owing in April, 2014. As long as you have made installments equal to your actual tax liability you are good, however, if close, probably better to pay at least a partial payment, because if u r short, you will have interest and maybe penalties.

      This is what the CRA says:

      If you have to pay by instalments, you have three instalment payment options:
      ■ no-calculation option;
      ■prior-year option; or
      ■current-year option.

      If you choose the best instalment payment option for your situation, you will not overpay your tax during the year or have a large amount of tax to pay when you file your income tax and benefit return.You do not have to tell us which
      option you choose, even if that option requires no payments.

      If you use the current-year option and make the payments in full by their 2013 due dates (Sandi, you will already have made full payment for 2013 according to your comment), we will not charge instalment interest or a penalty unless the amounts you estimated when calculating your total instalment amount due
      were too low.

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    2. Based on my personal experience with my clients who were short on their installment payments have never paid a penalty. They would be charged interest though.

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    3. Hey Kat:

      I guess you need to get some higher net worth clients :) I have had clients over the years who do not make timely instalments, often professionals who have not got their income allocation and cannot make their installment payment, who have been subject to penalties. See below how penalty is calculated below per CRA:

      Instalment penalty

      You may have to pay a penalty if your instalment payments are late or less than the required amount. We apply this penalty only if your instalment interest charges for 2013 are more than $1,000.

      To calculate the penalty, we determine which of the following amounts is higher:
      •$1,000; or
      •one-quarter of the instalment interest that you would have had to pay if you had not made instalment payments for 2013.

      Then, we subtract the higher amount from your actual instalment interest charges for 2012. Finally, we divide the difference by two and the result is your penalty.


      Example

      For 2013, John made instalment payments that were less than he should have paid. As a result, he has $2,500 of actual instalment interest charges for 2013. If John had not made any instalment payments in 2013, his instalment interest charges would have been $3,200. Since one-quarter of $3,200 is $800, we subtract $1,000 (the higher amount) from $2,500. The difference is $1,500. Then, we divide $1,500 by two. John's penalty is $750.

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