Introducing The Tax Issue Tax Organizer for 2011!!

Organizing tax information for your tax preparer can be a daunting task. Do you use a shoebox? a shopping bag? Despite your best intentions, you may not have the time or the knowledge necessary to provide a complete and organized dossier.

Those of use who prepare your taxes just don’t have the time or energy to instruct their clients on how to properly prepare their income tax papers.

And so, as a public service to those beleaguered tax preparers, and to those of you who want your accountant to love you at tax time, The Tax Issue introduces the Tax Issue Tax Organizer.

The Tax Issue Tax Organizer is a free PDF file that you can download and use as an accountant, to give to your client, or as a client to use yourself to help organize the information you give to your tax preparer and make his or her life a little easier.

How to use the Tax Issue Tax Organizer

Simply download and print the Organizer. Each page represents a section that will let you organize the information for that topic. It starts with a list of the relevant documents you should submit to your tax preparer. Attach each page to a separate envelope or file folder containing the documents for that section.

Each page has a list of Do’s and Don’ts to help ensure that you help your tax preparer by including all the necessary documents and receipts he needs to efficiently prepare your taxes.

Finally, each page contains a few tax tips to help guide you through the process.

Even if you prepare your own tax returns, The Tax Issue Tax Organizer is a great tool to help you prepare.

Have a great tax season and enjoy using the Tax Issue Tax Organizer!


I just want to wish all my readers a Merry Christmas, Happy Chanukah, and any other politically correct salutation that applies to any ethnic minority, majority or other unnamed group or individual alive or dead.

I truly enjoy bringing this Blog to you, and your kind feedback  is all the encouragement I need to keep it going for another year or two. (maybe, we’ll see)

See you in 2012!! (when sales tax goes up to 9.5% in Quebec 🙂 )

The Tax Issue Is One!!

This week marks the first anniversary of the The Tax Issue. I started this blog last year with almost no knowledge about blogs and blogging, and now I’m proud to say that today, I have very little knowledge about blogs and blogging :-).

I’d love to brag to you about the number of “hits” and “pings” I’ve had over this past year, but frankly, I’m not sure what those are, or if I they amount to anything I should be bragging about. All I know is that I enjoy writing and knowing that people from across the country have subscribed and are reading this tax stuff.

The What’s Your Tax Issue? feature, where readers write in and ask questions has been a pleasant success, with questions coming in on a regular basis. Keep them coming!

Finally, for its birthday, I’m giving The Tax Issue a makeover. I hope you like the new look.

So if you’ve been reading and subscribing, I thank you, and if not, I invite you to check out my latest post on how to incorporate your professional practice, or browse some of the more than 65 articles posted so far.

And if you’d like to subscribe, just hit the “sign me up” button at the bottom of the page!

David Wilkenfeld, C.A.

What’s Your Tax Issue: Deduction for Fido?

The Tax Issue:

I was told that if you have a home office, you can deduct the expenses of your dog under the heading “Security”; is this true? I have two large golden retrievers who loudly announce when anyone enters my driveway or knocks on the door.

The Answer:

Thanks for this question. I love dogs. And this is a chance to show off my own Jackpot. He’s warm, soft, affectionate and sweet. However, as a guard dog, and especially as a tax write-off, he’s pretty much useless.


I don’t mean to dismiss your question. In fact, costs that are normally viewed as “personal” are often the centre of disputes between taxpayers and the CRA. If you want to read a good 50-page dissertation on the topic, the Supreme Court of Canada analyzed this very issue in the Symes decision.

But I’ll save you the time; it essentially boils down to one question: Did you incur doggie expenses for the purpose of gaining or producing income from a business? Put another way, if your dogs were suddenly stifled, would you trade them in for a couple of yapping schnauzers? I certainly hope not!

Strange things have happened. One taxpayer was successful at deducting extra food that he claimed he needed because he was a bicycle courier and required extra energy. On the other hand, suits and other business attire were held to be personal items and not allowed as a write-off.

I suspect that the CRA would view your dog costs as personal items and disallow any attempt at deducting them. But please don’t stop loving them, OK?

New Rates for New Buildings

The federal budget of 2007 included some new rules that would be favourable to taxpayers who incur the cost of a new building used for non-residential purposes. In essence, the new rules allow for enhanced capital cost allowance (CCA) rates for buildings located in Canada and purchased on or after March 19, 2007. The new rates are 10% for buildings used in manufacturing and processing (M & P) and 6% for all other non-residential buildings. The operation of these rules are fairly technical, and so they deserve the Tax Issue treatment. Let us first look at the two major traps embedded in the law.

Trap #1 – Election Required

The most important trap in the regulations seems to be that if you have acquired a qualifying building, it is not enough to simply place it in a separate class. You must make an election by supplying a letter attached to a timely filed income tax return, requesting that Regulation 1101(5)(b.1) be applied to place the building in a separate class.

Trap #2 – No Use Prior to March 19, 2007

The election is only available for acquisitions of an “eligible non-residential building”. Among other things, this definition requires that the building has not been used, or acquired for use by any person before March 19, 2007. Therefore, these new CCA rates do not apply to just any commercial building purchased. If the building was used prior to purchase by another person in any non-residential fashion prior to March 19, 2007, the enhanced CCA rates do not apply.

Building Use

The enhanced rates include the 4% allowed by Class 1. The building is placed in a separate class 1.3, and an additional allowance of either 6% or 2% applies. The 6% rate (making the total 10%) is allowed for buildings where at least 90% of the floor space is used at the end of the taxation year for the manufacturing and processing in Canada of goods for sale or lease. Note that the 90% applies at the end of the year. Thus, a building that did not qualify for the first part of the year may still qualify if its use changes by year-end.

The 2% additional allowance (making a total of 6%) is available where the building does not qualify for M & P as above, but 90% of the floor space is used in any other non-residential capacity.

Since the determination of the building’s CCA rate is based on its use at the end of each year, it seems that the additional rate could, theoretically, be different from year to year. Thus, a building whose M & P usage drops below 90% at the end of any given year could have its CCA rate reduced from 10% to 6% for the year and vice versa.

Building Under Construction

The new rates apply to buildings that were under construction on budget date. Construction costs incurred prior to March 19, 2007 are deemed under a special rule to have been incurred on March 19, 2007, unless the taxpayer elects out of this deeming rule. This will allow for the full cost of a new building completed after budget date to be eligible for the enhanced rates.

However, care should be taken to ensure that no part of the building was put in use prior to March 19, 2007. If this is the case, it will not qualify. However, post March 18, 2007 costs will still be eligible to be placed in a separate class under the rules described below.

Additions and Alterations

A special rule provides that the cost of an addition to or alteration of an otherwise non-qualifying building is deemed to be a separate building for the purpose of the new allowances. The election must be made to place these capital costs in a separate class 1, and the new rates will apply.


The enhanced CCA rates for new non-residential buildings are attractive, but care must be taken to ensure that a building, addition or alteration qualifies for the new rates and that the proper compliance steps are not forgotten.

Put On Your Yamakah!

No tax issues today.

I’d like to take this opportunity to wish everyone a happy Chanukah  and  in that spirit let’s all share in one of the well-known rituals of this festive holiday. It’s a traditional Chanukah song, but with a bit of a twist. That’s right, it’s the excellent rockin’ cover of Adam Sandler’s Chanuka song by the fabulous (and Jewish) Neil Diamond.

Enjoy! And have a happy happy Chanukah!

What’s Your Tax Issue?: Supply of Burial Plots

The Tax Issue:

I am the treasurer of a charitable organization that sells burial plots to individuals. Do I charge the GST on these sales?

The Answer:

The Goods and Services tax and, depending on your province of residence, the Harmonized Sales tax or Quebec Sales Tax are levied on all supplies of property or services rendered in Canada, unless they fall in to one of a myriad of exemptions, exceptions  or exclusions.

A quick check of the law shows that there is a special section of exemption for supplies by registered charities. However, these exemptions come with a long list of exceptions. So, if you’re following along, everything is taxable, unless it’s exempt. Everything supplied by a charity is exempt, unless it is not exempt.

A supply of real property by way of sale is an exception to the registered charities exemption, so it’s taxable. The charity must charge the GST on the sale.

The question you must ask, therefore, is whether the sale of a burial plot is really a sale of real property for purposes of the GST. Is there a transfer of title to the property? Is the burial plot provided for a limited period of time, say 99 years, or in perpetuity?

If, according to the terms of the contract, the provision of the plot can be viewed as lease, licence or similar arrangement, then it would be exempt from GST.

Registered Disability Savings Plans

One of the more interesting proposals from the 2007 federal budget may have escaped detailed analysis by many commentators…until now. For younger taxpayers qualifying for the Disability Tax Credit (“DTC”), the new Registered Disability Savings Plan (“RDSP”) should be considered as an important part of a financial plan.

In 1986, an expert panel produced a report to the Minister of Finance outlining its recommendations for a savings plan designed in a similar manner to the Registered Education Savings Plan, that would assist families in providing long term financial security for severely disabled children. The result was the introduction of the RDSP, which came into existence in 2008.

The plan is available to taxpayers under the age of 60 years who are eligible for the DTC. A plan is set up by its “Director” – generally the parent or guardian of a minor child. A competent adult would be the Director of his own plan.

Contributions and Government Grants

Like an RESP, contributions to the plan are not tax deductible, but income accruing is not taxed. Contributions can only be made by the plan’s Director, and there is a lifetime contribution limit of $200,000.

When a contribution is made to a plan, the government will pay a Canada Disability Savings Grant (“CDSG”) equal to a specified percentage into the plan to augment the contributions. The amount of the CDSG depends on the family income of the Director and is limited to a lifetime total of $70,000.

For families with net income equal to or less than $74,357, the government will provide:

  • $3 for every $1 on the first $500 of contributions; and
  • $2 for every $1 on the next $1,000 of contributions.

For families with net income over $74,357:

  • $1 for every $1 on the first $1,000 of contributions.

A further amount of $1,000, called a Canada Disability Savings Bond (“CDSB”) is paid where family income is below $20,883, and is gradually decreased until such income reaches $37,178.

The income thresholds are to be indexed and apply to the family income of the parents where a minor child is the beneficiary, and to the beneficiary and his spouse in any other case.

The CDSG’s and CDSB’s are available only until the end of the year in which beneficiary turns 49 years of age.

The provisions are intended to promote long-term savings for young people who are disabled. As such, there is a fairly strict rule that provides for the repayment of all grants/bonds paid into the plan in the ten years prior to one of the following events:

  • A withdrawal from the plan;
  • The death of the beneficiary; or
  • The beneficiary is no longer DTC eligible


Payments from the plan must begin at age 60. Payments received will be made up of a repayment of capital (non-taxable) and a combination of income earned, CDSG’s and CDSB’s, which are taxed in the hands of the beneficiary.

Payments out of the plan are limited to a maximum annual amount based on the life expectancy of the beneficiary.