Understanding basis personal tax can help you minimize your tax bill and put more money in your pocked!

1. Understanding Personal Tax
Presented by
Patty Auger, CPA, CA, CFP
Patty Auger Consulting

3. Books and records
Personal tax records must be kept for 6 years from the date of filing!
EXCEPT…..
information relating to long-term transactions such as investments and capital
properties until sold or disposed of and/or until a notice of objection or
appeal is completed and time for further appeal has expired

4. Filing deadline…….
April 30th
…..or is it….
June 15th?

5. Interest and penalties
- late filing penalty (5% of balance plus 1% of balance per
month to max 12 months; if charged late penalty in prior
3 years, could be 10% plus 2% per month up to 20
months);
- balance owing- interest begins May 1st on any unpaid
amounts at the prescribed rate (currently 5%)
- failure to report income in consecutive years could be
10% of amount failed to report
- interest on refunds starts May 31st (or 31 days after file
your return or day after you overpaid your taxes) is paid
to you at 3%

6. Understanding taxes payable
INCOME
less
DEDUCTIONS
equals
TAXABLE INCOME
apply graduated tax
rates
CALCULATED TAXES
CALCULATED TAXES
less
CREDITS
equals
TAXES PAYABLE

7. Deductions
Reduce income by 100% of amount incurred
- RRSP contributions (contribution limit; do not have to deduct in
year of contribution)
- union or professional dues
- child care expenses (limit; T778)
- moving expenses (>= 40km)
- spousal support payments made
- carrying charges and interest expenses
- employment expenses

8. Credits
In most cases, USE THEM OR LOSE THEM
- reduce taxes payable by 15% of amount calculated except
donations
- Amount for Eligible Dependent (if no spouse)
- Family caregiver amount (for children<18)
- Volunteer Firefighter / Search & Rescue Volunteer
- Public transit (monthly or annual passes)
- Children’s fitness amount – refundable, $1,000 per child
- Children’s arts amount – $500 per child
- New home buyer’s amount - $5,000
- Adoption expenses - $15,255
- Caregiver amount (dependent > 18 years, net income < $20,343,
physical/mental impairment)

9. Credits
In most cases, USE THEM OR LOSE THEM
- reduce taxes payable by 15% of amount calculated
except donations
- Student loan interest
- Tuition, education and textbook amounts (Schedule 11);
maximum $5,000 transfer per child to parent
- Medical expenses - > 3% of income before deductions or
$2,208
- Charitable Donations – 15% of first $200, 29% of all others
(do not have to claim in year donated; can carryforward)
- 1st time donor – extra 25% upto $1,000 (2013-2017)

10. Other Credits
- political donations
- Family Tax Cut (Schedule 1A)
– maximum $2,000 reduction from taxes payable

11. Once you’ve filed your return…..
CRA may issue a Request for Information
- 30 days to respond
CRA will issue a Notice of Assessment (NOA)
- review for completeness
- includes RRSP contribution room
- can file an objection up 90 days after day of NOA

14. Tools Available
Canada Revenue Agency
o Website - http://www.cra-arc.gc.ca
o General Income tax and benefit guide – excellent resource!!
o Free preparation software

15. Federal Tax Rates
2015 2016
Rate Income Rate Income
First bracket 15% $0 - $44,701 15% $0 - $45,282
Second bracket 22% $44,702 - $89,401 20.50% $45,283 - $90,563
Third bracket 26% $89,402 - $138,586 26% $90,564 - $140,388
Fourth bracket 29% $138,587 and up 29% $140,389 - $200,000
Fifth bracket NA 33% $200,000 and up

16. Alberta Tax Rates
2015 2016
Rate Income Rate Income
First bracket 10.00% $0 - $125,000 10.00% $0 - $125,000
Second bracket 10.50% $125,001 - $150,000 12.00% $125,001 - $150,000
Third bracket 10.75% $150,001 - $200,000 13.00% $150,001 - $200,000
Fourth bracket 11.00% $200,001 - $300,000 14.00% $200,001 - $300,000
Fifth bracket 11.25% $300,001 and up 15.00% $300,001 and up

17. Combined Tax Rates
2015 2016
Rate Income Rate Income
25.00% $0 - $44,701 25.00% $0 - $45,282
32.00% $44,702 - $89,401 30.50% $45,283 - $90,563
36.00% $89,402 - $125,000 36.00% $90,564 - $125,000
36.50% $125,001 - $138,586 38.00% $125,001 - $140,388
39.50% $138,586 - $150,000 41.00% $138,586 - $150,000
39.75% $150,001 - $200,000 42.00% $150,001 - $200,000
40.00% $200,001 - $300,000 43.00% $200,001 - $300,000
40.25% $300,001 and up 44.00% $300,001 and up

18. Impact of New Rates
Income Estimated Taxes (before credits)
2015 2016 Impact
$75,000 $ 16,326 $ 15,769 (557)
$150,000 $ 43,217 $ 42,701 (516)
$300,000 $ 103,092 $ 110,702 7,610
$450,000 $ 163,467 $ 182,702 19,235

19. Questions?