T AX PLANNING GUIDE CANADA

Transcription

1 T AX PLANNING GUIDE CANADA - Individuals

2 Table Of Contents RETIREMENT PLANS (Page 3) Registered Retirement Savings Plan (RRSP) Tax- free Savings Account (TFSA) Registered Retirement Income Fund (RRIF) Registered Pension Plan (RPP) Registered Education Savings Plan (RESP) Deferred disability savings plan (RDSP) Eligible funeral arrangements FAMILY CONSIDERATIONS (Page 6) Canada Child Tax Benefit (CCTB) Child Disability Benefit (CDB)- Child Assistance Payment (CAP) (Quebec only) Post-secondary Education Grant Children s Fitness Tax Credit Child tax credit (Federal only) Child art tax credit (Federal only) Student loan interest tax credit Teachers and Early Childhood Educator School Supplies Tax Credit (Federal only) Transferrable tax credits Income Attribution Income-Splitting Tax Child support/ Alimony payments Child care expenses Adoption expenses tax credit Infertility treatment tax credit (Quebec only) Top-level athletes tax credit (Quebec only) Home renovation tax credit (Quebec only) RenoVert tax credit (Quebec only)- STUDENTS (Page 8) Tuition fees/ Education credit Textbook credit Scholarships, bursaries and fellowships Graduates deduction (Quebec only) SENIORS BENEFITS/ CONSIDERATIONS (Page 8) Old Age Security (OAS) Experienced workers tax credit (Quebec only) MEDICAL AND SUPPORT (Page 9) Disability Tax credit Quebec drug insurance plan Caregiver tax credit (Federal only) Home support of older persons losing their autonomy tax credit (Quebec only) Caregiver of related adults tax credit- (Quebec only) Respite of caregivers tax credit (Quebec only) CAPITAL GAINS/ LOSSES (Page 10) GST/ SOLIDARITY TAX CREDITS (Page 10) Page 1

3 Table Of Contents CORPORATE CONSIDERATIONS (Page 11) Automobiles corporate- owned employee- owned Loans to shareholders and employees NON INCORPORATED ENTITY COSIDERATIONS (Page 12) Proprietorships/ Partnerships Apprentice vehicle mechanic s tools deduction (Federal only) Tradeperson s tool deduction Musician s instruments deduction (Federal only) Artists expenses (Federal only) OTHER INDIVIDUAL CONSIDERATIONS (Page 12) Income accrual rules Moving expenses Interest expenses Home office expenses Meals and entertainment expenses Charitable donations tax credit Employment credit Working income tax benefit (WITB) (Federal only) Public transit passes credit (Federal only)- Volunteer firefighters/ emergency services volunteers tax credit Workers deduction (Quebec only) Taxi or driver tax credit (Quebec only) Legal expenses Non-capital (business) losses Goods and services tax registration DEPARTURE FROM CANADA/ FOREIGN REPORTING (Page 14) Departure tax Foreign reporting requirements Snowbirds residency US Estate Taxes PERSONAL TAX NOTES AND APPENDICES (Page 15) Income tax instalments Alternative minimum tax (AMT) General anti avoidance rule (GAAR) Voluntary disclosure Limitation period for collection of debts (Federal) Income tax marginal rates: APPENDIX COMPARATIVE COMBINED TAX RATES ON TYPES OF INCOME (Page 16) APPENDIX COMPARATIVE COMBINED PERSONAL TAXES PAYABLE (Page 16) APPENDIX PERSONAL TAX CREDITS FEDERAL (Page 17) APPENDIX PERSONAL TAX CREDITS QUEBEC (Page 18) Page 2

4 RETIREMENT PLANS REGISTERED RETIREMENT SAVINGS PLANS (RRSP) For 2016 taxation year March 1, Maximum- lower of $25,370 (2017- $26,010), or 18% of 2016 earned income. Maximum $140,945 (2017- $144,500) earned income. Limit confirmed by referring to individual s 2015 Federal assessment. Required age of conversion of an RRSP to a RRIF- 71. Contribute until end of 71st year. Not qualified-periodic pension amounts, retiring allowances, death benefits of benefits from an RRSP, RRIF or DPSP do not qualify. Withdrawals Upon withdrawal, Canadian resident withholding shall be made, as follows: Non-resident withdrawals 25%, subject to any treaty conditions. Over-contributions over $2,000- penalty tax of 1%/ month per month of excess. Amount withdrawn Combined Withholding- Federal Combined Withholding- Quebec $0 - $5,000 10% 21% $5,001-15,000 20% 26% $15, % 31% Unused contributions can carry forward. Spousal Plans- may use any portion of contribution and allocate into spousal RRSP. Cannot collapse from year of contribution plus two subsequent years. Transfers from other plans are allowable on tax-free basis. Retiring Allowance- transferable in lump sum tax-free into an RRSP/RPP $2,000/$1,500 per year depending on years of service and date of employment. Retroactive Lump-Sum Payments Payments over $3,000 and after special method to compute the tax thereon. Interest on RRSP Loans is non-deductible. Foreign Holdings- No limits on foreign content. Funds may be invested by individuals in hares of private corporations, especially of employers. Option is not available to shareholders with 10%+ holdings. Self-directed RRSP funds ca invested in mortgage on beneficiary's Canadian home. Page 3

5 RRSP Home Buyer s Plan (HBP)- Withdraw max. $25,000 from RRSP tax-free, Quebec also. Both spouses may participate, thereby doubling total to $50,000. This amount must be repaid in equal instalments over a 15- year period. Upon becoming a non-resident, balance outstanding in the HBP must be repaid within 60 days or included in income for the year of departure. First-time home Buyer Tax Credit- Non-refundable, available after January 27, Credit is 15% of expenses up to $5,000, maximum $750. May be claimed by taxpayer or spouse/common- law partner. Taxpayer and spouse/partner may not have owned/lived in another home 5 years previously. Qualification is same as for Home Buyer s Plan. Educational Withdrawal (Lifelong Learning Plan)- Individual/spouse may withdraw up to $10,000 ($20,000 maximum over 4 years) in any year for cost of higher education of either. Must be repaid to an RRSP in equal instalments over 10 years. If die or emigrate, outstanding amounts included in income in year of death or emigration. For emigration, may avoid income inclusion by repayment within 60 days. TAX- FREE SAVINGS ACCOUNT (TFSA)- Contribution maximum $5,500 per year, earning income taxfree and are tax-free upon withdrawal. Unused contribution room may be carried forward indefinitely. Overcontributions penalized 1% per month for each month on excess. May contribute to spouse s TFSA if has available room. No attribution is made for income generated by spousal contributions. Upon death, tax- free status of plan ceases. Assets in account may be transferred tax-free to surviving spouse within 2 years. If the taxpayer ceases to be a resident, account maintained and withdrawals, but no further contributions allowed. REGISTERED RETIREMENT INCOME FUNDS (RRIF)- RRIF's may be self-administered, which is not possible for annuities. Plan ended when taxpayer becomes 90, required measures at that time (e.g.: annuity). Consideration may be to have payment period under RRIF be based on younger spouse. Derivatives of the RRIF are Life Income Funds (LIF), Life Retirement Income Funds (LRIF) and Locked-In Retirement Accounts (LIRA). These have more particular restrictions than a regular RRIF and should be examined on a case by case basis. Maturity Options- Pension plans must mature at age 71, with payments from RRIF or other annuity starting the following year. Non-Residents- 25% withholding tax on pension income; lower for treaty countries. Non-resident may elect to file Canadian tax return and pay taxes at the usual rates as applicable, but on greater of the non-resident's Canadian taxable income or world income. This would apply to OAS, CPP/QPP, RRSP, RRIF and alimony. Page 4

6 Required withdrawals at age 71 as follows: AGE MINIMUM AGE MINIMUM AGE MINIMUM % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % REGISTERED EDUCATIONAL SAVINGS PLANS (RESP)- Contributions not deductible, accumulate tax-free for maximum 35 years (40 if beneficiary disabled) until child withdraws funds. No annual limits; to $50,000 maximum/ beneficiary. Excess contributions: penalties 1%/ month. No catch up for contributions not made previously. Child Pursues Higher Education Once beneficiary enrols as full-time student in qualifying postsecondary institution, payments may commence from RESP. Expenses qualifying for plan: living expenses, tuition fees, and books. Child does not Pursue Higher Education by Age 21- Canadian residents, contributing minimum of 10 years may transfer spouse s income to RRSP to $50,000 total. Penalties on excess. Canada Education Savings Grant (CESG)- $500, depending on family income. Unused contribution room shall be carried forward, but not excess. Quebec provisions maximum $500 per year per beneficiary to a maximum of $7,200. Quebec Education Savings Incentive (QESI) (Quebec only)- Vocational training/ post-secondary studies provide grants for low and middle income families tied into RESP, as well as refundable tax credit ($3,600 per child). Deferred Disability Savings Plan (RDSP)- Taxpayers qualifying for the disability tax credit (DTC) of their parents/legal representatives may contribute to plan. Payments are tax-free.. $ 200,000 lifetime limit, with no annual limit. Lifetime limit $70,000 qualify for Child Disability savings Grant (CDSG) until end of year when achieve age 49. Matching rates vary from 100%, 200% or 300% depending of family income of beneficiary and spouse/partner for years after 18. Required payments from RDSP by end of year beneficiary reaches 60. When beneficiary dies, must repay all CDSG and CDSB amounts plus all income earned in 10 year period prior to payment from plan. The remainder, net of contributions, taxable to estate/beneficiary. ELIGIBLE FUNERAL ARRANGEMENTS (EFA)-Maximum- $35,000, covering both funeral and cemetery services, $15,000 only for funeral services; $20,000 for only cemetery services. Page 5

7 FAMILY CONSIDERATIONS CHILD BENEFITS-Low/ middle-income families have Canada Child Tax Benefit, Child Disability Benefit. Canada Child Tax Benefit (CCTB)- Non taxable benefit, starting July 2016, replacing Universal Child Care Benefit and Child Tax Benefit, maximum of $6,400 per child under 6; $5,400 for children Must be Canadian resident, live with child, be parent of child and have/ share custody of child. Family net income (FNI) below $30,000 maximum benefit; $30,000- $65,000 reduction 7% for 1 child family; 13.5% for 2-children family; 19% for 3-child family; 23% for larger families. Family income over $65,000, benefits further decreased 3.2% for 1 child family; 5.7% for 2- children family; 8% for 3-child family; 9.5% for larger families, by excess over $65,000 FNI. Child Disability Benefit (CDB)- Non taxable benefit $2,730 per year caring for children under 18 with severe and prolonged mental/ physical impairment. Benefit reduced by 3.2% of Adjusted Family net income (AFNI) over $65,000 in 1-child eligible family and 5.7% of the amount of AFNI. Child Assistance Payment (CAP) (Quebec only- 2017)-Paid quarterly, reduced by family income over $47,665 ($34,656 single parents) and comprises: $2,410 maximum/ year- first child, plus $1,204 maximum/ year- second, third children, plus $1,806-3 maximum/ year- additional children. Post-secondary Education Grant- Eligible first-year, post-secondary students from low income families (parents entitled to National Child Benefit Supplement in previous tax year) qualify for grant of 50% of cost of tuition, to maximum of lesser of $3,000 ($1,800 per year for part-time students). and Student s assessed Federal need. Eligibility is automatically considered when apply for a full-time student loan. Children s Fitness (Quebec Youth activities) Tax Credit-Non refundable maximum $400 for children under 16, in programmes of physical/ recreational activities. Either parent may claim credit. Receipts must be filed. Family income must not exceed $134,095. Eligible disabled children-up to 18 for additional $100 non-refundable credit. Child art tax credit (Federal only)- Non-refundable maximum $250 (2017- $0)/ child under 16. Qualified activities: artistic, cultural, recreational or developmental and be in programme lasting at least 8 weeks with at least 1 session per week. Student loan interest tax credit- Non-refundable- 15% claimed by the student.. Unused credits may be carried forward 5 years (Quebec- no carry forward). Transferrable tax credits If not used to reduce spousal taxable income to nil, the following deductions are transferrable to other spouse: old age, disability, tuition fees, pension income, dividend income (with election- Quebec no election required). Teachers and Early Childhood Educator School Supply Tax Credit (Federal only)- Refundable to 15% of eligible expenses to maximum of $1,000. Employers must certify use was for teaching/ enhancing learning. Page 6

8 Income Attribution Income earned on money given to family member is considered income of individual having given the funds, eventhough funds legally belongs to another family member. Second generation income - income given to, say, a grandchild, not attributable. Applies for spousal RRSP s if not held for at least two years after year of contribution. Attribution applies to gifts/loans to children, nieces, and nephews over 18. For those under 18, except for capital gains (including mutual funds), income earned is attributed back to the transferor/lender. Income-Splitting Tax Various Income received by minor children taxed at top marginal rate of tax: Child support/ Alimony payments Per written agreement/ court order, dated after April 30, 1997, are neither deductible by payer nor taxable by recipient. Otherwise deductible by payer and taxable by recipient if by joint election by both payer and recipient. Legal fees incurred in obtaining child support are not deductible. Child care expenses Must be in Canada and lower income parent may claim lesser of: 2/3 of earned income, or $8,000 per child under 7 plus $5,000 per child, 7 to 16, or $11,000 for a disabled child, regardless of their age. Quebec- refundable tax credit is the lesser of: $9,000 per child under 7, plus $5,000 per child, 7 to 16, $11,000 for a disabled child, regardless of their age. Can apply to receive credit in advance if tax credit amount is expected over $1,000. Adoption expenses tax credit- Non-refundable-15%/ child under 18. Maximum $15,453/ adoption Qualifying expenses include agency fees, legal fees, court fees, translation and travel. Quebec- refundable -50%, maximum $10,000/ child- costs of international or local. Infertility treatment tax credit (Quebec only)- Refundable- 50% (maximum $10,000/ couple) for treatment of infertility, costs for artificial insemination and in vitro fertilization. Top-level athletes tax credit (Quebec only)- Refundable-training, purchase and maintenance of equipment required. Tuition fees/ Education credit (2017-$0) - 15% of $400 per month of amounts paid by student (15% of $120 per month for part-time students, Level Individual sports Team Sports Excellence $4,000 $2,000 Elite $4,000 $2,000 Relève $2,000 $1,000 May transfer to parent/grandparent/spouse if student's taxable income $0, maximum $5,000. Unused credits may be carried forward indefinitely. Benefit lost if no tax return is filed. Quebec-Non-refundable tax credit of $2,130/ semester, reduced by child s net income. RénoVert (formerly LOGIrenov) tax credit (Quebec only)- Refundable- home renovations completed by September 30, For qualified work to renovate/expand/adapt to special needs principal residence. 20% of costs(first $2,500 not qualified). Maximum credit $10,000. Page 7

9 STUDENTS Textbook credit (2017- $0) - Non-refundable- $65/ month- full time; $20/ month- part-time attendance post-secondary institution. Unused credits- carry CARRY FORWARD OPTIONS Description Carryover Period Transfer to parent/grandparent Transfer to spouse Federal Québec Federal Québec Federal Québec Tuition fees Indefinitely Yes Yes Yes Yes Education Indefinitely n/a Maximum n/a Maximum n/a $5,000 total $5,000 total Textbooks Indefinitely n/a n/a Interest- student loan 5 years Indefinitely No No No No forward indefinitely by student/supporting person. Scholarships, bursaries and fellowships Federal- tax free for primary/secondary school/registered in pro- gramme enti- SENIORS BENEFITS/ CONSIDERATIONS Old Age Security (OAS)- Full pension: Canadian citizen/ legal resident at least 40 years after 18. Lower pension if 10 to 40 years. Years resident after 65 not eligible. Under 20 years- must reside in Canada when approved. Leave Canada 6 months and not Canadian resident 20 years, OAS suspended until return. Live in Canada for at least 20 years may receive OAS anywhere in the world. Low income/ widowed, spouses aged entitled to Spouse s Allowance, may qualify for Guaranteed Income Supplement. Clawback- 15% excess net income over $73,356; spouse s income is not included. Split eligible pension incomes with spouse (both must file to qualify), including income eligible for the pension income credit: Pension from (RPP)- no age restriction, Periodic income from a RRSP, RRIF or DPSP, if taxpayer is 65 or older, Not eligible for splitting are amounts from: Old Age Security (OAS), CPP/QPP, RRIF/DPSP annuities (for taxpayers under 65), Income from retirement compensation arrangements (RCA), Lump sum RRSP withdrawals. Periodic income from RRSP or RRIF if less than 65 and if received a result of death of spouse/ partner. Tax Credit for experienced workers (Quebec only)- Enriched graduated scale: Minimum of $5,000 eligible work income. Age and + $6,000 $8,000 $10, ,000 6,000 8, ,000 6, ,000 Page 8

10 MEDICAL AND SUPPORT Medical expenses credit- Non-refundable 15% (Quebec 20%) qualifying medical expenses incurred for taxpayer, spouse all dependents, whether incurred inside or outside Canada, including expenses for any 12-month period ending in the taxation year. 15% (Quebec 20%) of expenses. The deduction would be amount minus lesser of 3% of net income and $2,237(net income $74,567); excess 15% federal credit. Quebec amounts paid less 3% of combined family income. limits amounts claimed for eye-glasses at $200 per taxpayer and excludes deductions for services that are cosmetic in nature (teeth whitening, facelifts, liposuction, etc.). Additional 25% refundable credit for specified expenses to maximum of $1,166, less excess of family income over $22,560. Disability Tax credit- $1,200 (Quebec- $548). Disabled dependent children over 18 claim extra $700 supplementary credit, depending on their income. Reduced by 15% of dependant s income over $6,807 ($0 at income of $13,595). Unused credits may be transferred to a supporting aunt, uncle, niece, nephew, or sibling in addition to supporting spouse, parent, grandparent, child or grandchild. Quebec drug insurance plan- Quebec residents and Quebec Medicare cardholders must be covered under prescription drug insurance program. Persons not covered by group insurance plan are required to be covered by public plan and thus pay required premium upon filing their income tax return. The Régie de l'assurance maladie du Québec (RAMQ) is advising all eligible residents to subscribe, through the RAMQ, to insure for $660 per year. Persons under 18, those who are full-time students or receiving social assistance, or seniors receiving the Guaranteed Income Supplement are exempt from this levy. Caregiver tax credit (Federal only)- $700 for providers of in-home care for elderly/infirm relatives, who live with them in same home, reduced by infirm relative s income over $15,980. No claim if equivalent-to-spouse or dependent credit is claimed. Home support of older persons losing their autonomy tax credit (Quebec only)- 34% eligible expenses: Non-dependant designated 70 years and older seniors- $19,500 (maximum $6,630); dependant seniors- $25,500. (maximum- $8,670). Either of couple may apply and for advance payment of credits. Caregiver of related adults tax credit- (Quebec only)- $642/ eligible dependant housed, plus supplement $525, reduced by 16% of dependant s income over $23,330. Respite of caregivers tax credit (Quebec only)- Refundable 30% of expenses ($5,200 maximum) maximum credit of $1,560, for providing specialized respite services for care of eligible person. Reduced by 3% of excess of caregiver s family income over $56,515. Page 9

11 Tax Planning Guide - Canada For Individuals CAPITAL GAINS / LOSSES Taxable capital gains / Allowable Capital Losses are taxable / deductible to the extent of 50% of gain / loss. Allowable capital losses deductible only against taxable capital gains. Small Business Corporations- Disposition of shares of a Small Business Corporation and farm and fishing property qualify for a Capital Gains exemption of $824,176; $724,176 if already claimed the $100,000 basic exemption. Reduced by post-1987 cumulative net investment losses CNIL): Deferral of Capital Gains on disposition of Eligible Small Business Investments without limit, subject to re-investment in another small business investment with assets (including related corporations) not to exceed $ 50 million. This must be done at any time during the year of disposition or within 120 days after the end of that particular year. Uncollected Proceeds on Disposition- Deferral of capital gains achieved by claiming reserve, determined by proportion of uncollected proceeds from a disposition. Limit- 3 years, and at least one fifth of gain is recognized per year, three-fifths in last year. Allowable Business Investment Loss (ABIL)- Is capital loss incurred upon sale of shares or debt of Canadian-controlled private corporation to an outsider, or bankruptcy of same. May be applied against income from other sources without limitation. Claim reduced by total capital gains exemption claimed previously. Unapplied balance may be carried back 3 years and forward 20 years. Superficial Loss- Once incurred, property cannot be repurchased for 30 days, or loss denied. Offset of Capital Losses against Capital Gains- Losers may be kept in order to offset taxation of a taxpayer s winners thereby minimizing overall net taxable gains. Stock Options- The deduction rate for these is 50% (Quebec 25%). GST/ SOLIDARITY CREDITS GST- $272 Reduced over income $35,465. Solidarity tax credit (Quebec only)- Reduced if family income over $55,828 with spouse; or $51,279 for single parents or no spouse. Page 10

12 AUTOMOBILES Tax Planning Guide - Canada For Individuals Company-Owned- Personal use of company automobile by shareholder/ or employee MAY trigger "standby charge" and/or charge for operating costs. CORPORATE CONSIDERATIONS Standby charge- 2% of capital cost of automobile per month (1.5% for car salesman) or 2/3 of monthly rental cost (excluding insurance) for rented cars. Benefit deemed even if not used. Operating expenses- Based on either percentage of personal mileage to total mileage or 50% of standby charge. Capital cost ceiling of $ 30,000 (before GST/HST/QST). Interest paid is restricted to maximum of $300 per month. Lease payments are deductible to $800/month maximum. Taxable benefit for operating costs is 26 ) /km for the personal use. Neither employer nor employee would suffer adverse effects if "reasonable" allowance were given to employee. This would be calculated as follows: 54 per kilometre for first 5,000 kilometres of business use and 48 thereafter. Employee-Owned Deemed maximum capital cost is $30,000. Maximum deductible for interest charges is $300 per month. Expenses must be prorated by the business use of the car. A daily log for personal mileage should be kept, as a taxable benefit may be added to the standby charge for the personal portion of operating costs. Quebec requires the use of a log. A penalty of $200 imposed on non-compliance. LOANS TO SHAREHOLDERS AND EMPLOYEES Deemed income if not repaid within one year of the end of fiscal year in which loan was originally made. Exclusions from rule are loans for purchases of treasury shares, automobile, and one's home, provided repayment terms are reasonable. Another benefit may result from low / non-interest loans made to individual. The measure of this rate is the prescribed rate as established quarterly by the Departments, currently 1% (4th quarter 2016). Page 11

13 NON-INCORPORATED ENTITY CONSIDERATIONS Proprietorships/ Partnerships- Individuals who report unincorporated business / professional income can file return June 15 of following year but tax still due April 30. Apprentice vehicle mechanic s tools deduction (Federal only)- Registered individuals may deduct the greater of: limit as per Canada Employment Credit (max $1,161; Quebec $1,140) plus $500 or 5% of income for year. Losses cannot be created, but may be carried forward. Apprentice grant (Federal only)- $2,000/ year offered-first 2 years qualifying programme. Tradeperson s tool deduction Cost of new tools- maximum $500 of amounts over $1,161 (Quebec $1,140). This is over and above the Apprentice Vehicle Tools Deduction. Musician s instruments deduction (Federal only)- Capital costs allowance of 10% (20% for second year and thereafter) for costs of maintenance, rental and insurance. Deduction only to extent of income from employment, not other income. Artists expenses (Federal only)- Deduction -(lesser of $1,000 or 20% artistic employment income) or qualified expenses for painter, sculptor, playwright, literary author, composer, actor, dancer, singer or musician. Deduction reduced by claim for automobile expenses and musical instruments costs. OTHER INDIVIDUAL CONSIDERATIONS Income accrual rules- Income reported (and taxed) only as received. Except for Income averaging annuity or prescribed annuity contracts, income must be reported at least every year. Therefore, income earned on items such as Canada Savings Bonds and life insurance policies must be reported even though not received. Moving expenses Maximum $5,000 and must move more than 40 kilometres (25 miles) closer to new work location in Canada. Individual must have been available even if unemployed before move. Deduction limited to employment and/or business income earned in new work location or in case of a student, the total financial assistance received. Any excess carried forward to year after move. Receipts need not be filed, but should be retained for possible future requests by the Department. Form T1 M must be filed. Interest expenses Deductible to extent used to earn income/ potential income generation. Form T2219 is required to be filed with taxpayer's return Quebec Deductible to extent of investment income (including taxable capital gains) earned. Excess- carry back against investment income for previous 3 taxation years, or in future years. Page 12

14 Home office expenses Must be self-employed individuals having office/ workspace at home used exclusively to earn business income. Cannot create loss claiming such. Disallowed expenses are carried forward indefinitely reducing business income from same business. Quebec- 50% (employees 100%) of amounts paid.. Meals and entertainment expenses- Deductible 50% (Truck drivers - 80%).. Transportation employees may claim flat rate of $17 per meal; maximum $ 51/ day without receipts, but still may claim more with appropriate documentation. Quebec- provisions withdrew the 12-hour minimum for commissioned employees when selling property or negotiating contracts on the employer s behalf. Exemptions to this 50% limitation are as follows: Quebec- 2% ($650 for sales $32,501- $52,000; 1.25% of sales for sales over $52,000) of taxpayer's gross sales earned in year. Charitable donations tax credit- Non-refundable-15% (Quebec- 20%) on first $ 200; 29%/33% (Quebec- 24%) of the excess, to maximum of 75% of net income. First-time donors (Federal only) super tax credit of 25% of offering maximum credit $1,000. Must not have donated after 2007 tax year to qualify. Spouse with higher net income should claim deductions, irrespective of donor. Qualifying securities include those to private foundations. Unused portions may be carried forward five taxation years. Year of Death- The limitation is 100% of net income. Any excess can be carried back to prior year, still with the 100% limit. Gifts of Capital Property- The limit is 75% of net income for tax purposes, Gifts of publicly traded securities (shares, bonds, bills, warrants) - None taxable. Employment credit Non-refundable- lesser of: $1,161 (Quebec $1,130), or Employment income (Quebec 6% of employment income). Working income tax benefit (WITB) (Federal only)- Refundable For low-income earners- 20% earned income over $3,000 (Quebec- $3,600) to $1,028 (Quebec- $1,641) maximum for single taxpayers without dependents and $1,868 (Quebec- $2,581) for couples/ single parents. For disabled taxpayers (not dependents), supplement of 20% to $514 maximum. Must be eligible for disability tax credit and have minimum of $1,150 (Quebec- $1,200) of earned income. Reduced by 15% of net family income of $18,531 (Quebec - $20,333 for singles and $28,575 (Quebec- $31,434) for families. Public transit passes credit (Federal only)- Non-refundable- For taxpayer, spouse/ partner or dependent children under 19. Cost of monthly passes or of longer duration such as an annual pass for travel on public transit. Receipts must be filed. Volunteer firefighters/ emergency services volunteers tax credit May chose between Nonrefundable on $3,000 maximum, or $1,000 tax exemption. Must have at least 200 hours of service in year to qualify. Quebec- exclude the first $1,100 of income earned in providing qualifying services. Page 13

15 Taxi owner or driver tax credit (Quebec only)- Refundable-lower of $565 times number of permits owned or 2% of income as taxi driver; gross income from taxi business and taxi rental covered by taxi owner permit, as a holder. Must either hold taxi driver permit or hold at least 1 taxi owner permit, while bearing at least 90% of taxi s fuel costs, and must file form TP Legal expenses usually deductible if incurred in process of earning income, including: establish/ collect retiring allowance/ pension benefit, enforce court-ordered payment of alimony/ maintenance, representations concerning taxpayer s income, enforce pre-existing rights to and to defend against reduction of child support payments and defend against fines and penalties, presuming reasonable and in the course of earning income. Non-capital (business) losses- Business and property losses may be carried back 3 years, forward 20 years (10 years for years ending March 22, 2004-May 2, 2006; 7years for losses incurred prior to March 23, 2004). Goods and services tax registration- Individuals/ businesses with taxable sales of $ 30,000 or more must register. DEPARTURE FROM CANADA/ FOREIGN REPORTING Departure tax Individuals ceasing in being residents of Canada are deemed to have disposed of, and subsequently reacquire, their Canadian property at fair market value. Exceptions: Canadian real estate, Canadian Business property, Certain other properties (stock options, retirement funds, etc.). Proceeds from life insurance policies may be taxable. This will result in realisation, and taxation of previously accrued and untaxed gains. The taxpayer can pay this tax or leave security to the Canadian Customs and Revenue Agency (for taxes due over $25,000) so as to pay tax when indeed the property is sold. No interest will be charged if the latter option is selected. New emigrants must file information return (T1161) if holdings $25,000+. Foreign reporting requirements- Persons/ partnerships, owning specified foreign property, with cost over $100,000, Corporation/ trust is foreign affiliate of person resident in Canada or partnership, person/ partnership shall file return in respect of affiliate, T1135 requirements for foreign holdings over $250,000. Penalties if non compliant. Snowbirds residency- Individuals may be deemed US resident and taxpayer, under substantial presence test.if 183 days or more, person will be deemed to be resident alien of US. Burden of proof falls to individual to prove otherwise. Year Residency (days in year) Current number of days in US x preceding number of days in US x 1/3 + + second preceding number of days in US x 1/6 + Page 14 Total Days

16 US Estate Taxes- applied on property situated within the United States. US taxes property held by non-residents upon death., and are levied upon total property value in US, including items with permanence, such as real property, furnishings, boats, club memberships, and shares/debt of US corporations. PERSONAL TAX NOTES AND APPENDICES Income tax instalments- If individual's combined federal and provincial income tax payable exceeds any amounts deducted/ withheld at source by more than $3,000 (Quebec- $1,800) in both current year and either of the two preceding years, then quarterly instalments required. Interest charged on non/ late payments, due March 15, June 15, September 15 and December 15. Penalties to 50% are being imposed on late/insufficient instalments. Extra interest charge on any balance to pay upon filing of the return. Alternative minimum tax (AMT)- Certain deductions / credits otherwise allowable are disallowed in the calculation. Calculation made after adjusting for the above, at flat rate of 15% plus provincial tax (Quebec 16%). Taxpayer given $40,000 exemption. General anti avoidance rule (GAAR)- Tax department given virtually unlimited power to refuse any transaction that may be structured for tax advantage purposes. Voluntary disclosure-the CRA has discretion to be lenient with taxpayers who, because of circumstances beyond their control, are unable to meet deadlines or otherwise comply with certain rules. This discretion is available for requests made for a taxation year ending in the 10 previous calendar years. For example, a request made in 2017 will only be accepted for 2007 and later taxation years. One must apply in writing and give reasons why the CRA should exercise this discretion (Revenu Québec has a similar fairness package). Limitation period for collection of debts (Federal)- Normal prescription period 3 years, however, Federal Department recently issued pronouncement - 10 years. MARGINAL INCOME TAX RATES / NON RESIDENTS FEDERAL QUEBEC TAXABLE INCOME 2016 TAXABLE INCOME 2016 $ 0 45,282 15/22.2% $ 0 42,390 16% $ 45,283 90, /30.34% $ 42,391 84,780 20% $ 90, ,388 26%/38.48% $ 84, ,150 24% $ 140, ,000 29%/42.92% $ 103, % $ 200, /48.84% Page 15

17 APPENDIX COMPARATIVE COMBINED TAX RATES ON TYPES OF INCOME- (TOP BRACKET) PROVINCE DIVIDENDS Eligible DIVIDENDS Non-eligible CAPITAL GAINS ORDINARY INCOME B.C Alberta 30.33/ / / /48.00 Saskatchewan Manitoba Ontario 37.19/ / / /53.53 Quebec Nova Scotia New Brunswick P.E.I Newfoundland / Non-residents 25% tax/ per treaty 25% tax/ per treaty APPENDIX COMPARATIVE COMBINED PERSONAL INCOME TAXES PAYABLE TAXABLE INCOME B.C. ALTA. SASK. MAN. ONT. $20,000 1,784 1,434 1,736 2,452 1,783 30,000 3,790 3,934 4,336 5,032 3,788 40,000 5,843 6,434 6,936 7,788 5,793 50,000 8,372 9,193 9,904 10,822 8,405 60,000 13,192 12,243 13,254 14,147 11,370 70,000 14,012 15,293 16,604 17,612 14,335 80,000 16,932 18,343 19,954 21,402 17,425 90,000 20,073 21,393 23,304 25,192 20, ,000 23,871 24,962 27,173 29,501 25,204 Top 47.70% 48.00% 48.00% 50.40% 53.53% TAXABLE INCOME QUE. N.B. N.S. P.E.I. NFLD. NON- RESIDENTSNTS $20,000 1,958 2,270 2,291 2,455 2,197 4,440 30,000 4,810 4,738 4,696 4,935 4,517 6,660 40,000 7,663 7,206 7,691 7,736 7,094 8,880 50,000 11,036 10,423 10,945 10,875 10,204 11,484 60,000 14,748 13,955 14,504 14,305 13,604 14,518 70,000 18,460 17,487 18,221 17,910 17,004 17,552 80,000 22,172 21,019 21,938 21,630 20,506 20,586 90,000 26,092 24,704 25,655 25,350 24,011 23, ,000 30,637 28,925 29,949 29,617 28,035 27,422 Top 53.31% 53.30% 54.00% 51.37% 49.80% 48.84% Page 16

18 APPENDIX 3 PERSONAL TAX CREDITS FEDERAL DEDUCTION/ CREDIT $ AMOUNT $CREDIT (15%) Basic personal 11,474 1,721 Spousal / equivalent to spouse a) 11,474 1,721 Age 65+ b) c) 7,125 1,069 Disability d) c) 8,001 1,200 Caregiver e) 4, Education/textbook per month - full time g) Education per month - part time g) Pension income c) 2, Charitable donations - first $200 h) - 15% Charitable donations - over $200 h) - 29%/33% Medical expenses i) - 15% CPP/QPP- employee/ self 2,544/5,088 15% Employment insurance Tuition fees g) - 15% Infirm dependents - over 17 f) 6,788 1,018 Interest paid on student loans j) - 15% Children s art Children s fitness Adoption 15,453 2,318 Employment 1, Dividends k) (eligible/ordinary) %/10.52% a) Reduced by spouse s/ dependent s income; same for equivalent to spouse credit. Eligible individuals include dependents under 18 related to taxpayer, parents/ grandparents, or other person related to taxpayer and infirm. b) Reduced 15% of excess of taxpayer s net income exceeding $35,927. c) Transferable to supporting spouse, subject to net income limitations. d) Transferable to supporting person, reduced by excess dependent s taxable income over $11,474. e) Reduced by dependent s net income over $15,940. f) Reduced by dependent s income over $6,807 Transferable to spouse, parent or grandparent; maximum $5,000, less student net income over $11,474. Amounts unclaimed carried forward by student. g) Includes textbook tax credit $65/month full time; $20/ month part-time. h) Maximum yearly limit- 75% of net income (100% in year of death and preceding year). First-time 25%; max $1,000. i) Maximum is lesser of 3% of net income or $2,337. j) Not transferable but may be carried forward five years if not claimed. k) Eligible taxable Canadian dividends applied at specified percentage to grossed-up amount (138%; 117.0% ineligible amount) of dividends. Page 17

19 APPENDIX 4 PERSONAL TAX CREDITS QUEBEC DEDUCTION $ AMOUNT $CREDIT (20%) Basic personal 11,550 2,310 Spousal a) 11,550 2,310 Single parent b) 1, Living alone/ with dependent b) 1, Age 65 b) c) 2, Disability c) e) 2, Home support for seniors over 70 f) 25,500-dependant/ 19,500-non (34%) 8,670/ 6,630 Caregivers f) 5,200 (30%) 1,560 Dependent children first d) 2, Dependent children subsequent d) 3, Other related dependents - over 18 d) 3, Dependent post-secondary- per term d) 2, Pension income b) h) 2, Employment 1, CPP/QPP - employee/ self-employed 2,737/5,474 20% Adoption i) 20,000 50% Charitable donations - first $2,000 j) - 20% Charitable donations remainder j) - 24% Medical expenses k) - 20% Tuition fees g) l) - 8% Dividends paid (eligible/ordinary) m) %/ 7.05% Interest paid on student loans o) - 20% Infertility n) 20,000 50% a. Reduced by the excess of the spouse s net income. b. Amounts for person living alone, age 65+ and pension income summed, reduced by 15% family income over $33,505. c. Transferable to supporting spouse, reduced by income tax payable by spouse. d. These are summed and reduced by 80% of amount of dependent s net income. e. Transferable to supporting spouse, reduced by income tax payable by dependent. f. Reduced by family income over $56,515 If qualify as medical expense, may not claim for both credits. Credit reduced by income of caregiver and spouse over $56,515. g. Maximum is two terms, and claim is available to supporting Quebec parent. h. Lesser of eligible pension income or $2,000. i. For local/ international adoptions - 50% refundable (maximum of $20,000 for qualifying expenses paid (maximum $10,000 per child) including court/ legal fees, travelling/ translation expenses (foreign countries) and agency fees. j. Maximum yearly limit - 75% of net income or 100% net income in year of death or the preceding year. k. Refundable credit, reduced by 80% of child s income in year. l. Not transferable but may carried forward by the student indefinitely. m. Eligible taxable Canadian dividends- applied at grossed-up amount (138%; 117% non-eligible). n. Artificial insemination, in vitro fertilization - 50% eligible expenses (maximum $10,000 credit per couple). o. Unclaimed amounts paid may be carried forward indefinitely. Page 18

20 Montreal Toronto (by appointment only) 750 av. Ste.- Croix Ave. 658 Danforth Ave. # 404 Saint-Laurent, Québec Toronto, Ontario H4L 3Y2 M4J 5B9 Tél. (514) Tel. (416) Fax. (514) Fax. (647) With 11 associated offices throughout Greece and Cyprus