Odessey Business Services

Here is your yearly tax update.

Personal tax rates:

Federal:

For 2008, the year just closing, the lowest tax level is $ 37,885. The income equal to and less than this amount will be taxed at 15%. The next level to get yourself under is $ 75,769 which means that the first $ 37,885 is taxed at 15% and the amount between $37,885 and $75,769 is taxed at 22%. Next bracket after that is $ 123,184 which is at 26% and anything over that is taxed at 29%.

The personal exemption amount for 2007 was $9600. This is what is earned before taxing kicks in. The spousal and equivalent to spouse amount is also $9600. So single parents, you make $19,200 before you start getting taxed.

The age amount is $5,276. Anyone over 65 gets to earn this amount also with no tax, so seniors, with a spouse not working who is also over 65, you can make $ $ 29752, before the taxing kicks in. Nice! Also a note for seniors, if you receive CPP and OAS as well as other income, check to see if there are taxes coming off these govt payments. You can get tax to come off, they just don’t voluntarily do it, and I hate to see seniors making installments because the govt is lazy. Let me know, I can get you the paperwork.

CPP rates are 4.95%, and most people don’t need that number for anything, but self employed, remember, we pay double that, so 9.9% CPP on taxable earnings. So even tho you may not owe taxes, you may very well have a balance due that is CPP only.

Public transit passes. This now includes weekly passes, so hopefully everyone kept receipts of transit fares.

Note to transport employees: Truckers, rail etc. Meal expenses have increased from 60% to 65%. This will be further increased to 80% over the next 5 years. This is for Long Haul transport employees, which means overnight trips. Nice to see.

For all the employees who can write off vehicle expenses and the self employed group who are incorporated, the km rate for 2008 was .52/km for the first 5000 kms and .46/km after that.

AND SPEAKING OF KMS!! ON NEW YEARS DAY, GO CHECK YOUR KMS AND EMAIL THEM TO ME, SO I HAVE IT ON FILE!!! REMINDER REMINDER!!!!

I’m sure most of you have heard of the restrictions the government is trying to put on naturopathic medical services, and even though that nasty bill has not been passed yet, it has already affected the medical claims you can use on your taxes. On medical expenses and purchases made after Feb 26,08 only those that are prescribed by a recognized medical practitioner, or recorded by a pharmacist are eligible. (Small rant here). Also to note, Alberta does NOT consider massages as a viable medical expense for deduction…lalalala…I can’t hear them. :)

** The biggest news that came out this year, but really won’t affect anyone’s taxes until 09, is the Tax Free Savings Account(TFSA). Everyone over 18 has a beginning contribution level of $5000/yr. This is set to be increased $500/yr for inflation. It is a government tracked savings account that grows any way you want it too, without tax consequences.

Starting January 1/09, you can put money into a high interest savings account, mutual funds, stocks, etc. grow it, get interest, makes gains. All of the different agencies will have different growth vehicles for this money. IT IS NOT A TAX DEDUCTIBLE CONTRIBUTION LIKE AN RRSP. But, when you take this money out it will not be taxed.

One very nice feature, any balance WILL qualify as an asset and may be used as collateral for a loan. Also, this money, grown and withdrawn, will not affect government benefits such as Child Tax Credit, GST tax credit, guaranteed income supplement for seniors, or EI benefits.

For instance, if you have money in an ING bank account, it grows and accumulates interest, you get a slip to claim the interest as income on your taxes. Also, if you trade stocks outside your RRSP, when you sell them, if you made any gains, you pay tax on half of them at your current tax bracket.

This account is set up so that anything you make is yours.

This is a REGISTERED account, which means it will be tracked…you will see your limits and activities in this account on your tax assessment, like you see your RRSP contribution room after you file.

Any withdrawals you make, will give you back that room to contribute. Any room you do not use, will carry forward every year, the way RRSP room does. So if you only put in $2000 in 09, in 2010, you will have $3000 in carry forward room, plus the $5000 from 2010.

Why would you use this?

For example, when you buy a house, instead of pulling out RRSP’s for a down payment and having to repay or claim 1/15 of that amount every year on your taxes, this is your money, and you don’t pay tax on the withdrawal.

Another idea, if it is used as a vehicle for retirement savings, you can have your RRSP savings last longer, take less, which means take less taxable income, and subsidize yourself with the savings and growth you made in them. No tax consequences.

Put it this way, if you and your spouse put away the $5000/yr, which works out to a direct payment from your bank account of $417/mo for 2009, for 10 years, you would have minimum $100,000 saved. 10 years isn’t that long really, and yes, you could pay down your mtg, or make those lump payments every year, go on a sweet trip every year without worrying about the saving, or use it to live on when times are tough, start a business so you can work part time in retirement, buy a treehouse in Costa Rica..lol.

Anyways, talk to a financial guru, I have two I use, why put all my treehouses in one basket!

Laurie Tregaskis of Quiet Wealth, is a financial planner who can work out a personal plan for you and your family to invest and grow that $5k/yr based on where you are financially now and where you want to be..never too early to make a plan!

ltreg@telus.net or call her at 403-290-0940.

Darren Harrold works with Blackmont Capital and can set up a portfolio for you, to trade in any stock in any world market, as well funds, REIT’s and too many other options to mention, to grow that $5K/yr.

dharrold@blackmont.com or call him at 403-260-6839.

Childrens fitness tax credit. I hope everyone kept receipts for the childrens sporting ventures for 08. You can claim up to $500/child that you paid out for childrens athletic activities. There are some stipulations. They program must be 8 weeks in duration, with at least one hour/week of activity that raises the heart rate. Camps, such as hockey schools etc, must be 5 consecutive days, not 3.

Anyways, that’s the scoop. I already have a working copy of the 08 tax program, so I can have a look come RRSP time to see where you are at if you want. Not going anywhere tropical this Jan so youa re all stuck with me and I am available if you have any questions. So arrange your receipts in category order, or if you are so brilliant to tally them in excel, I have templates I can send out. Please arrange medical expenses by date, keep everything, including Dec 31 paystub showing what you contributed to your company medical plan for extended health and dental, and premiums for private plans, just not provincial health care.

Make sure you have all your slips, EI comes late, T3 and T5 slips don’t have to be issued till March 31..these are usually latest.

Have a great holiday season, have a big xmas party and write it off 100% you self employed folks! But you MUST invite your tax lady!

Talk to you all next year! Deb

Provided by Odessey Business Services, for your holiday reading pleasure.
403-816-5098