Wednesday, January 29, 2020

Tax Time 2020 - What's New?

It's almost that time of year again and I have the inside scoop updates for the 2019 tax year, including information on small business taxes, retirement contributions and other hot topics. In this blog post, I will also help you avoid scammers pretending to be the Canada Revenue Agency with some safety tips. So, let's get started.

Check out some significant changes that may affect your tax returns for 2019 and 2020.

1. Planning to Retire? 
  • Maximum pensionable earnings increased for the Canada Pension Plan (CPP) in 2020: $58,700 up from $57,400 in 2019
2. New CPP Contribution Rates
  • Employer and Employee: 5.25%          Self-Employed: 10.5%
3. Maximum Yearly CPP Contributions in 2020 (NOTE: This money is still taxed as income!)
  • Employer and Employee: $2,898          Self-Employed $5,796 
4. Retirement Account Contributions Can Roll Over
  • If you didn't max out your Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) contributions in 2019, the Canada Revenue Agency (CRA) lets you add the difference onto next years contribution.
5. Do You Own a Small Business?
  • The tax rate dropped to 9% on the first $500K of income compared to 10% in 2018.
6. Does Your Business Generate Passive Income?
  • If you make more than $50K, the 9% tax rate may not apply.
7. Common Small Business Deductions:
  • Home Office Expenses (can include interest on your mortgage)
  • Vehicle Expenses
  • Accounting and Legal Fees
  • Reserves or "Sinking Fund" (for reasonable amounts)
  • Office Rent
If you need a professional to help you get started on your taxes, call me for a great referral!

Now that we covered the tax time information, let's move on to the CRA scams and how to identify them.
In 2018, more than 4,000 victims lost out on over $15.2 million as a result of tax scammers pretending to be with the Canada Revenue Agency (CRA).

  • Phone Call
  • Email
  • Text Message
  • Door-to-Door
  • Mail
  • Demanding personal information - social insurance, credit card or bank account numbers.
  • Referencing don't have
  • Threatening or coercive language
  • Demanding immediate payment, especially in the form of bitcoin or gift cards
  • You are prompted to visit a website outside of the official domain
  • Saying they're sending the police
  • Is this link legit? Hover over it to see where it leads before you click.
  • Am I sure this caller or sender is a CRA employee? The CRA will never pressure or threaten you to take immediate action.
  • Do I owe money to the CRA? If you know you don't, it's probably a scam.
  • Have I received an official statement of account recently? Government programs like Canada student loans or employment insurance will send you official statements - not a threatening phone call out of the blue.
There you have it. I hope this information is helpful to you and for anyone with older family members and friends, take the time to educate those about these scams. Those are the ones being taken advantage of. 

Until next time - Keep It "REAL"

SOURCES: Canada Revenue Agency (CRA), Royal Canadian Mounted Police (RCMP), Buffini & Company

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