Table of Contents

I. Real Estate Issues

1. LAND TRANSFER TAX & LTT REFUND
2. CMHC MORTGAGE INSURANCE PREMIUMS
3. HOME BUYERS PLAN REPAYMENTS
4. CITY OF TORONTO MILL RATES

II. Bookkeeping & Compliance Issues

5. AUTOMOBILE CAPS
6. DEPRECIATION - CAPITAL COST CLASSES
7. GST REMITTANCE CALCULATIONS
8. PERSONAL INCOME TAX & GST QUARTERLY INSTALLMENTS
9. C.R.A. INTEREST & PENALTIES

III. Personal Tax Issues

10. 2004 PERSONAL INCOME TAX RATES
11. 2004 NON-REFUNDABLE TAX CREDITS
12. CLAWBACKS AND REDUCTIONS
 
 

1. LAND TRANSFER TAX & LTT REFUND  The long form for calculating LTT is: 0.5% on the first $55,000; plus 1.0% from $55,001 to $250,000; plus 1.5% from $250,001 to $400,000; plus 2.0% over $400,000.    The short form calculation is:  $55,001 to  $250,000 Price x .01 less $275; $250,001 to $400,000 Price x .015 less $1,525 $400,001 plus Price x .02 less $3,525 The LTT refund is available for first-time buyers of new homes for personal usage. The first $2,000 of LTT , for homes costing up to $227,500, is refundable for offers signed after April 1, 1999.		2. CMHC MORTGAGE INSURANCE PREMIUMS Based on ratio of mortgage to total value:   Up to 65% - 0.50% Up to 75% - 0.75% Up to 80% - 1.25% Up to 85% - 2.00% Up to 90% - 2.50% Up to 95% - 3.75% The total of the premiums may be added to the principal amount of the mortgage.
		4. CITY OF TORONTO MILL RATES Property taxes are a product of:  Value of assessment X mill rate.  Current Value Assessment (CVA) was introduced in 1998. The mill rate dropped from 47% of the very low historical property valuations to about 1.26% of 1998 current value assessments. Year Mill Rate  1997 47% (Historical system)  1998 1.2597% (CVA) 1999 1.2137% (CVA) 2000 1.2137% (CVA) 2001 1.073544% (CVA)
3. HOME BUYERS PLAN REPAYMENTS Repayments start 2 years after withdrawal over 15 years. Annual amounts:  Loan amount Repayment $20,000 $1,333 $17,500 $1,167 $15,000 $1,000 $12,500 $ 834 $10,000 $ 667 $ 7,500 $ 500 $ 5,000 $ 333 Non-payment leads to an income inclusion.
5. AUTOMOBILE CAPS   Purchase. Maximum of $30,000 plus GST and PST may be depreciated for a year 2001 purchase. Reduce this by any GST claimed as an ITC. (For cars used 90% or greater for business claim full GST on all auto expenses as an ITC.) Auto Loan. Interest cap of $10 per day. Lease. Cap of $800 per month plus taxes. [ Deductibility is reduced if 85% of list price exceeds luxury cap of $30,000. ]		6.DEPRECIATION - CAPITAL COST CLASSES Only ½ of rate allowed in year purchased. Class 10.1* Car 30% rate Class 10 Car 30% rate Class 10 Computer 30% rate Class 12 Software 100% rate Class 8 Equip./Furniture 20% rate   * For cars costing more than $30,000. Only $30,000 may be depreciated and no terminal loss may be claimed.
7. GST REMITTANCE CALCULATIONS Quick Method. For agents with commissions and GST added together totalling no more than $200,000 in a year. Pay 4% on first $30,000, then 5% on excess. In addition, claim the Input Tax Credits (ITCs) on capital purchases. Simplified Method. For those with commissions only up to $500,000. To segregate out the GST multiply the expense by 7/107 or take 6.542% of the expense. The total of GST paid is deducted from GST collected. You recover all of your GST paid.  Detailed Method. For those with commissions exceeding $500,000. GST must be segregated from every expense and commission.  [ Typical non-GST expenses: Insurance and banking costs and charges, wages and expenses outside Canada. ]		8. PERSONAL INCOME TAX &  GST QUARTERLY INSTALLMENTS  GST. Installments are required if prior year remittance exceeds $1,500. Due one month after each of Mar. 31, Jun. 30, Sep. 30, Dec. 31. Installments are calculated as ¼ of the prior year total remittance.  Personal Tax. Includes Federal and Ontario taxes and CPP premiums. Installments are required if the total figure of these amounts exceeds $2,000 in the prior year. Due on Mar. 15; Jun. 15, Sep. 15, Dec. 15.   [ Interest is charged on any deficiency on installments running from the due date. Taxpayers may adjust installments down to reflect decreased revenues but risk interest charges if they under-remit. ]
9. C.R.A. INTEREST & PENALTIES   Interest. A 'prescribed rate' of prime plus 4% is set for personal taxes and GST for late or deficient payments.   Note. A penalty of 50% may be levied if the interest assessed on late or deficient installments is $1,000 or greater. Penalties. For late filing of personal taxes, the base penalty is 5% plus 1% per month for 12 months or a 17% maximum. For a second late filing within 3 years, the base is 10% plus 2% per month for 20 months or a maximum of 50%. File on time.		10. 2004 PERSONAL INCOME TAX RATES  (Provincial thresholds are very slightly different than Federal thresholds but we are treating them as identical.) Federal Ontario  Up to $35,000 16% 6.05% $35,000 - $70,000 22% 9.15% $70,000 -$113,804 26% 11.16% $113,804 plus 29% 11.16%  [ The combined rate from $70,000 to $113,804 is 43.4% due to the effect of Federal and Provincial surtaxes and leads to a peak of 46.4% at over $100,000. ]  [[ T
11. 2004 NON-REFUNDABLE TAX CREDITS  Type Dollar Value Basic personal $8,012 Married $6,803 Married equivalency (Single Parent) $6,803 Age 65 or over $3,912 Disability $6,486 Disabled dependant $3,784 Caregiver amount $3,784 [ All are fully indexed and save taxes at only the lowest combined rate of 22.05%. ]		12. CLAWBACKS AND REDUCTIONS Net Income of taxpayer/dependant affects:  OAS. 15% clawback at income of $57,879. GST Credit. Reduces at $26,284. Age Credit at 65. Reduces at rate of 15% for net income over $26,284. Medical Expense Credit. Deductibility  reduced by 3% of net income or first $1,755 of such expenses for high earners. Tuition/Education Transfer. $5,000 amount reduced by excess of student net income over $7,412.