In this two-part series, we will review the tax measures and developments that will enable you to have more money in your pockets.

By April 30^th, make sure you don’t forget any credits that could reduce your tax bill!

Moving

If you moved in 2018 to be at least 40 kilometres closer to your new work location in Canada, you can claim your moving expenses. Note however that these costs can only be deducted from your income from the new job (or new company) for the year. Any non-deducted balance of eligible expenses can be carried forward to future years.

Here are some examples of eligible expenses that are often overlooked:

• Costs relating to the sale of your former residence, including the broker’s commission;
• Legal fees and transfer duties applicable to registering the deed of ownership of your new residence when you sell your old one;
• Maintenance fees of up to $5,000 relating to your former residence while it was up for sale and you and your family were not living there.

Financial expenses

When you make an investment to generate (not tax-exempt) investment or business income, you can claim the expenses incurred during the year for this investment as a tax deduction. In Quebec however, in the case of income from property (and not from a business), the deduction of financial expenses is limited to investment income. As applicable, any non-deducted balance will be carried forward indefinitely and can be deducted when taxable investment income is generated.

Seniors or retirees

The tax systems offer numerous benefits for seniors and retirees. For example, there is the non-refundable tax credit for experienced workers offered in Quebec. Now available as of 61 years of age instead of 63, this credit could entitle you to a maximum credit of $450 if you are 61 years old, $750 if you are 62, $1,050 if you are 63, $1,350 if you are 64 and $1,650 if you are 65 years old. You must be employed and earning more than $5,000 per year.

Since 2016, the Quebec government has also been offering a grant to seniors aged 65 years and older who have owned their residence for at least 15 years and who experience a significant increase in their municipal taxes. If your annual family income does not exceed $51,700, you may qualify.

In Quebec, the independent living tax credit for seniors has been increased. This credit corresponds to 20% of the portion exceeding $250 of the annual expenses incurred to acquire, rent or install equipment to be used by a senior 70 years and older in his/her principal residence. The extended list of eligible equipment now includes walkers, canes, crutches, non-motorized wheel chairs and equipment for the hearing impaired.

Tips

Did you forget a tax deduction in the past? You can ask for an adjustment to your income tax returns for the past 10 years in order to claim the deductions to which you are entitled.

Consult an expert to benefit from the best tax reductions.

This article was published on April 25, 2019 in the Journal de Montréal and Journal de Québec (in French). Christian Menier is the new columnist for the Argent – Dans vos poches column.

In this two-part series, we will explore new, lesser known tax developments and measures that can help reduce your tax bill and maximize your tax refund.

Buying your first home

For several years now, the federal government has been offering a $750 tax credit (before Quebec abatement) for a new home owner. Good news for 2018: there’s also a maximum credit of up to $750 available in Quebec. As such, a total credit of $1,376 can be available for the purchase of a first home.

Be aware however that this does not necessarily imply the purchase of a “first” home. To qualify for the credit, you must not have lived, in the acquisition year or the four previous years, in another dwelling owned by you, your spouse or your common-law partner. Additionally, the residence must be acquired with the intention of making it your principal residence no more than one year after it is purchased.

Renovations

The refundable RénoVert tax credit, extended until March 31, 2019, allows you to obtain up to $10,000 for eco-friendly renovations carried out on a principal residence or cottage. Eligible work includes renovations involving insulation, waterproofing, doors and windows, heating, air conditioning, etc. Individuals have until March 31, 2019 to enter into an agreement with a recognized contractor and will have to pay for their renovation expenses before January 1, 2020.

Family caregivers

The Quebec tax system provides for several credits available to family caregivers:

• Taking care of your spouse of at least 70 years of age in your own residence could allow you to claim a maximum tax credit of $1,015 in 2018.
• Housing or living with a relative who needs care can entitle you to claim a maximum tax credit of $1,185 for 2018.
• New this year, caregivers who do not live with the relative they’re caring for can request a maximum refundable tax credit of $533. To qualify, they must help this person regularly on voluntary daily basis.
• In order to provide more support for family caregivers who need respite, the eligibility criteria for the tax credit for respite of caregivers were increased in 2018. Caregivers can allocate a $250 credit to a volunteer who has provided 200 hours of assistance during the year, $500 for 300 hours, and $750 for 400 hours of work.

Don’t forget that there are also federal support measures for family caregivers. A credit is available if you are caring for a spouse, common-law partner or dependent with a physical or mental disability (parents, grandparents, children, grandchildren, brothers, sisters, uncles, aunts, nephews or nieces). Several factors influence the available credit, such as your relationship with the person, the person’s net income and whether or not other credits were claimed for this person.

Tips

If you qualify for the first-time homebuyer tax credit, make sure to update your address in your tax return and the information entered with regard to an HBP, if applicable.

If you carried out eligible renovations for the RénoVert credit, don’t forget to obtain a copy of prescribed form TP-1029.RV.A-V duly completed and signed by the contractor who did the work.

Consult your tax specialist or financial advisor to ensure that you receive all the benefits to which you are entitled.

This article was published on April 24, 2019 in the Journal de Montréal and Journal de Québec (in French). Christian Menier is the new columnist for the Argent – Dans vos poches column.

There are numerous specific tax measures that apply to franchises. It’s important to know these measures and we have, therefore, summarized some of them below.

A franchise right is an intangible asset that usually entitles the franchisee to operate a business for a specified or unspecified period of time in accordance with pre-defined rules.

When the franchisee pays to acquire a franchise right, the tax treatment for the franchisee must be determined. If a franchise right has a limited life, it is amortized over that period, which is usually the franchise contract term.

For example, if the franchise right is granted for a four-year period, one quarter of the cost of the franchise can be deducted as a capital cost allowance (CCA) during the four years.

The CCA makes it possible for the franchisee to reduce taxable income and taxes payable. The franchisor must declare the sale of the franchise right in income for the taxation year. Income from the sale of the franchise right is considered business income for the franchisor.

Renewal of franchise rights

If the initial franchise agreement provides for renewal periods, these periods must be analyzed to determine if they have to be included in the amortization period.

The Canada Revenue Agency considers that automatic franchise right renewal periods must be included in determining the franchise’s useful life because the franchisor and franchisee do not need to negotiate the renewal.

If the renewal must be negotiated or is conditional, the facts at hand must be analyzed to determine whether they should be included in calculating the initial amortization period. Lastly, if the renewal periods to be taken into consideration are such that the franchise can be renewed for an unlimited period, the franchise right is amortized on a declining basis at an annual rate of 5%.

To summarize, it’s important to analyze a franchise agreement because of the impact on the amortization period. The shorter the useful life of the franchise right, the higher the amortization cost. In this case, the accelerated franchise right amortization provides a tax benefit, however, an indefinite franchise right is amortized on a declining basis at an annual rate of 5%.

Refundable tax credit for tips paid to employees

The Quebec tax credit for reporting tips is a way to grant financial assistance to eligible employers who pay additional deductions at source and employer contributions on tips paid to employees.

Who can apply for the refundable tax credit?

The employer must carry on a business in the hotel or restaurant industry in Quebec (other than fast-food establishments where employees generally do not receive tips from most customers).

Additionally, the employees must receive tips directly or indirectly in carrying out their duties in the employer’s establishment. An employer can apply for the tax credit with respect to tips received by or attributed to employees who work in the establishment and for which the employer pays additional payroll deductions.

How to apply

The employer must use prescribed form TP 1029.8.33.13 to apply for the credit. The form is attached to the tax return filed with Revenue Quebec or submitted no later than 12 months after the income tax filing deadline.

The form is completed on a calendar year basis. If the corporation’s fiscal year-end is February 28, 2019, the corporation can claim the refundable tax credit for tips received or attributed during the 2018 calendar year.

Note that payroll deductions for which a corporation is claiming the tax credit must have been actually paid at the time of filing the form, other than vacation allowances and the related employer contributions.

To summarize, the refundable tax credit is equivalent to 75% of Quebec payroll deductions (Health Services Fund (HSF), Quebec Pension Plan (QPP), Quebec Parental Insurance Plan (QPIP), etc.) paid by the employer. The tax credit amount tax taxable at the time of receipt.

This article was written in collaboration with Marie-Danielle Roy.