T4 STATEMENT OF REMUNERATION
A T4 Statement of Remuneration is used for reporting employment income including salaries and wages, commission income, and taxable allowances and benefits. Employers are required to file their T4 returns and issue the T4 slips to their employees by February 28 of every year. You should expect to receive your T4 statement in late February, or early March at most. If your employer did not send you a T4 statement by then, you should contact them for one immediately.
For additional information, please visit the CRA website here.
This is what a T4 Statement of Remuneration usually looks like: T4 Statement Sample.
PRO TIP: While your accountant may gain access to your T-slips through the CRA database once you give them permission, you should still send T4 to your accountant each year. That’s because the CRA database may not always have updated which could mean your accountant may miss something important while preparing your tax return.
PRINCIPAL RESIDENCE SALE PAPERWORK
You should send documentation of the transaction if you sold your principal residence during this tax year. The evidence required includes a Statement of Adjustment and any other documents that show the details of the sale transaction. These documents could include bills, payment receipts, and such. A Statement of Adjustment is prepared by a lawyer or notary and clearly lays out the purchase/sale price, deposit, taxes, and other financial obligations of the transaction for both buyer and seller. This gives both parties a detailed transaction record. All costs and credits are laid out, calculated, adjusted, and formalized before closing the transaction and transferring the title on this document. You should get this document when the sale is completed. If you did not, you should contact the lawyer who helped you with the sale immediately.
NORTHERN RESIDENT TAX DEDUCTIONS
You and your spouse may be eligible for Northern Residents Deductions if you are a resident of certain northern territories within Canada. To claim these deductions and benefits, you are required to submit Form T2222 with your annual tax return.
For more information about these deductions, please visit the CRA website here.
For more information regarding associated tax benefits, please click here.
You may be eligible to claim qualified payments made to trade unions and other associations. You can also claim professional board dues incurred under provincial laws and professional insurance or membership dues paid. For more information, please visit the CRA website here.
STUDENT LOAN INTEREST
You may claim the interest you paid on your student loan for the preceding 5 years for post-secondary education if you received it under one of the acts and laws listed on the CRA website here.
TRANSFER UNUSED TUITION TAX CREDITS
In scenarios where you cannot use all your tuition credits in a tax year, you can either carry forward the credits to the following years or transfer them to your:
- Spouse or common-law partner
- Parent or grandparents
- Your spouse’s parent and grandparents
For more information about transferring educational credits, please visit the CRA website here.
To claim post-secondary tuition expenses, you are required to enclose form T2202A with your tax return. This form is an official income tax receipt issued by qualifying educational institutions for tuition credits. This form lists the amounts that can be claimed as educational expenses on your personal tax return. You should be able to get a copy of Form T2202A on the student portal on your post-secondary institute’s website. If you are not sure, you should contact the institution’s help desk. For additional information about this form, please visit the CRA website here.
Some jobs require employees to pay for certain expenses, for which they are usually reimbursed with the paycheque. Expenses for which no reimbursement is provided by the employer, a taxpayer can claim deduction for these. However, there are certain forms that need to be signed by the employer for you to do that. Your employer must submit Form T200 – Declaration of Conditions of Employment to claim such work-related expenses. For additional information on employment expenses, please visit the CRA website here.
SPOUSAL SUPPORT EXPENSES
Spouse support expenses are tax-deductible. This means you can claim a tax deduction for the financial support you paid to a spouse. To learn the conditions you must meet to be eligible for spousal support expenses claim, please visit the CRA website here.
If eligible, you can claim the expenses you incur while moving to a new residence from your taxes. Provide information regarding the move in your tax return for the year to claim.
To be eligible for this claim, you have to provide evidence that the move to the new home has reduced at least 40 kilometres from the distance to your new place of work or business in comparison with your previous home.
Bills, receipts, and payment confirmations suffice the documentary requirements for claiming moving expenses.
For more information about eligibility, please visit the CRA website here.
For a complete list of deductible expenses, please visit the CRA website here.
Child-care expenses can be tax-deductible if qualified. You can claim child-care expenses only if the child is:
- your – or your spouse's or – common-law partner's child
- a child who was dependent on you or your spouse or common-law partner, and whose net income in 2019 was $12,069 or less
The child must have been under 16 years of age at some time in the year. However, the age limit does not apply if the child had an impairment in physical or mental function and was dependent on you or your spouse or common-law partner.
Tips are a recognized taxable form of income, according to the CRA. If you receive tips at work, you should list them in your tax return. Note that tips received in the following roles are considered taxable in Canada:
- Casino dealer
- Taxi driver
- Pizza delivery driver
- Cruise steward
- Room service waiter
- Golf caddy
- Tour guide
- Hotel room cleaner
- Ski instructor
For more information in this regard, please visit the CRA website here.
FOREIGN EMPLOYMENT INCOME
You are expected to disclose the nature of your foreign employment – if any – and the income you earn with it in your tax return. You should specifically describe the nature of your employment, including details of your role and what responsibilities and tasks it entails. You must also mention the length of your foreign employment and other related details that provides the CRA with a complete picture of your foreign employment.
FOREIGN TAXES PAPERWORK
Since tax authorities around the world offer payment receipts for taxes paid, it is expected that you will have this evidence to claim deductible foreign tax expenses. However, for certain countries, the CRA expects you to enclose certain documents issued by the foreign state’s tax authority with your tax return. For instance, taxes paid in the USA can be claimed with Form W-2, U.S. 1040 return, a bank account transcript in the USA, and payment receipts or other related documentary evidence. If the foreign country in question uses a different language than english, the CRA requires you to submit a translation of the documents certified by authorized officials with the stamp and seal of the foreign country’s embassy.
FOREIGN TAXES PAID
Often the business taxes you pay on foreign land are deductible from your taxes in Canada. As long as you are dealing with foreign taxes that qualify, you can request tax credit in Canada for the amounts paid or accrued during the tax year. The CRA may also use other methods, such as itemized deductions on your tax return to deliver the incentive you are owed.
For more information, visit the CRA website here.
FOREIGN BUSINESS OWNERSHIP
Canadian citizens may own business abroad, and disclosing necessary details of the business and its revenue is mandatory for annual tax returns. If you own a business abroad, you should specifically disclose details about the kinds of products and/or services you offer.
More than one individual can own a property. By definition, a co-owner is an individual that shares ownership in a property with another individual or group. Each co-owner owns a percentage of the property, although the amount may vary according to the property agreement. The rights of each owner are typically defined in accordance with a contract or written agreement. For more information about co-owners, please visit the CRA website here.
DEDUCTIBLE RENTAL EXPENSES
The current list of eligible rental expenses to deduct includes the following:
- Interest and bank charges
- Office expenses
- Professional fees (includes legal and accounting fees)
- Management and administration fees
- Repairs and maintenance
- Salaries, wages, and benefits (including employer's contributions)
- Property taxes
- Motor vehicle expenses
- Other rental expenses
- Prepaid expenses
For more information about tax-deductible rent expenses, please visit the CRA website here.
STATEMENT OF ADJUSTMENTS
A statement of adjustment is prepared by a lawyer or notary and clearly lays out the purchase/sale price, deposit, taxes, and other financial obligations of the transaction for both buyer and seller. This gives both parties a detailed transaction record. All costs and credits are laid out, calculated, adjusted, and formalized before closing the transaction and transferring the title on this document.You should get this document when the sale is completed. If you did not, you should contact the lawyer who helped you with the sale immediately.
You can also manage your wealth and investments yourself. If this is the case, you are required to prepare a detailed statement/summary of investments related transactions that you incurred during the year. It should include all transactions including dividend receipts, interest receipts, purchase and sale of securities, return on capital, etc.
INVESTMENT TAX PACKAGE
To help simplify your tax preparation efforts, investment management companies and banks provide a package of the various tax slips and supporting documents related to your investments. You will need these slips to prepare information for your tax return. It is a package of tax slips and other documents that taxpayers receive if they hold investments in securities. There are various types of T-slips that can be issued depending upon the income earned by the investments during the year. Here are some of the slips and documents that make up an investment tax package:
- T3 Statement of Trust & Income Allocations and Designations Packages
- T5 Statement of Dividend and Interest Income
- T5008 Statement of Securities Transactions
- T5013 Statement of Partnership Income
- Transaction Summary
You should expect to receive all the documents in the tax package by late February or early March every year either via mail or in your online investment account. In case you have not received your package by late March, you should contact your investment manager and request it. This is crucial information. Not providing it in your tax return will lead to amending the return later with possible penalties.
RECOGNIZED INVESTMENT MANAGEMENT INSTITUTIONS
The Canadian government has licensed many financial institutions to offer professional wealth and investment management services to the citizens. Some of the most widely known among these are as follows:
- TD Asset Management Inc.
- RBC Global Asset Management
- RBC Dominion Securities
- Scotiabank Asset Management
- Blackrock Asset Management Canada Ltd
- Philips, Hager & North Investment Management
- Manulife Asset Management Ltd
- Fiera Capital Corp.
- Connor, Clark and Lunn Financial Group
- Brookfield Asset Management
- Beutel, Goodman & Co. Ltd
- CIBC Asset Management Inc
- State Street Global Advisors Ltd
- Goldman Sachs Asset Management LP
- Fidelity Canada Institutional
- LC Asset Management Group Ltd
- Greystone Managed Investments Inc
- J.P. Morgan Asset Management (Canada) Inc
- Wellington Management Group LLP
- BNY Mellon Asset Management Ltd.
- Letko, Brosseau & Associates Inc.
- MFS Investment Management Canada Ltd
- Pimco Canada Corp
- Mercer Global Investments Canada Ltd
- Jarislowsky Fraser Ltd
- Franklin Templeton Institutional
- Sunlife Global Investments
- Leith Wheeler Investment Counsel Ltd.
- Mawer Investment Management Ltd
- Burgundy Asset Management Ltd.
- Addenda Capital Inc.
- Industrial Alliance Investment Management Inc.
- Baillie Gifford Overseas Ltd.
- Pathfinder Investments
- Alliance Bernstein Canada Institutional Investments
- Schroder Investment Management Ltd.
- Canso Investment Counsel Ltd.
- Acadian Asset Management
- Hexavest Inc.
- Arrowstreet Capital LP
- Morguard Investments Ltd.
- Northern Trust Asset Management
- Guardian Capital LP
- Hillside Investment Management Inc.
- Setanta Asset Management Ltd.
- Unigeston • Janus Henderson Investors
- Global Alpha Capital Management Ltd.
- CC&L Infrastructure
- Capital Group
INVESTMENTS HELD WITH INVESTMENT MANAGERS
Investment portfolios are usually held with a wealth manager or an investment management company that manages your investments based on your needs and investment goals. These investments may generate interest and dividend income for you. You are required to disclose these in your tax returns. Your investment managers will send you statements showing your income summary at the year-end.
PENSION SPLIT FOR COUPLES
As a Canadian resident, you may split certain pension income with your resident spouse or common-law partner. This action allows you to get tax benefits, as you can transfer income from higher-income spouse to lower-income spouse to reduce your overall taxable income. If you and your spouse choose to split pensions, you will both be required to sign a pension splitting authorization form. For more information about pension splitting, please visit the CRA website here.
RECOGNIZED RRSP INSTITUTIONS IN CANADA
The Canadian government recognizes financial institutions for offering Registered Retirement Savings Plan (RRSP) to the citizens. Some of the widely known among these are as follows:
TYPES OF PENSION PLANS
There are many types of pension plans that Canadian taxpayers can avail. Understanding the plan you use and reporting it appropriately in your annual tax returns is important. The list of pension plans includes the following:
- Registered Retirement Savings Plan (RRSP)
- Registered Retirement Income Fund (RRIF)
- Registered Pension Plan (RPP)
- Canada Pension Plan (CPP)
- Old Age Security (OAS)
- Pensions from a foreign country
- Other pensions and superannuation
- Registered Disability Savings Plan (RDSP)
- Lump-sum payments from profits-sharing plans
- Retiring allowance o Severance Pay
- Net federal supplements
For more information about pensions, please visit the CRA website here.
ASSETS PURCHASED OR SOLD DURING THE YEAR
You are required to declare any assets you bought or sold during the tax year to correctly report your total assets. You are required to describe the nature of the assets, the purpose of use, and the amount for which you bought or sold each of them. This information is also used for calculating capital cost allowance for assets purchased and capital gains/losses for assets sold.
CLAIM AMORTIZATION ON CAPITAL ASSETS
Capital cost allowance expense – more commonly called amortization expense is claimed when you own an asset, such as a vehicle, to reduce your taxable business income.
For more information, please visit the CRA website here.
HOME OFFICE EXPENSES TO CLAIM FROM SELF-EMPLOYMENT INCOME
A home office is a workspace in your home that you use to earn income for your employment or business. It can be a room, a cabin, or any other place where you conduct business. You can deduct part of the following expenses from your self-employment income that you incur for your home:
- Home insurance
- Cleaning materials
- Property taxes
- Mortgage interest
- Capital cost allowance
You are required to calculate the percentage of home office expenses that you can deduct from your taxes. This is usually calculated as the area of the workspace divided by the total area of your home. The percentage obtained is multiplied with total expenses to determine eligible expenses. For more information about home office expenses, please visit the CRA website here.
EARNINGS FROM THE WEB
There are many ways you could earn income and one of such ways is by leveraging your online presence. CRA requires taxpayers to report the income they generate from the Internet. Specifically, they require you to report the webpages and websites where you earn income from along with the approximate income earned from these sources. If you cannot determine the exact percentage of income you generate from these websites, insert a reasonable estimate.
For more information, please visit the CRA website here.
STRUCTURE OF BUSINESS IS IMPORTANT
You are required to declare the type of business you own in your tax return to calculate your taxes appropriately. You must declare whether you own a sole proprietorship business or a partnership. A sole proprietorship is the type of business where you alone own the entity and are self-employed (Learn more from the CRA website here). Partnership is when two or more parties register a business together as joint owners (Learn more about business partnerships on the CRA website here).
SELF-EMPLOYMENT BUSINESS INFORMATION
You are required to disclose the nature of your employment in your tax return every year. This includes your status as a self-employed individual. If you are self-employed, you are required to provide necessary details about the nature of your business and appropriately identify the industry your business belongs to. When your accountant fills in your tax return, they will need ample information regarding your industry and products and/or services.
WORKERS COMPENSATION BENEFITS
Workers Compensation pays income to workers who are disabled while at work. To be eligible for workers’ compensation payments, you must work for a covered employer and suffer a work-related injury or illness. If you qualify for workers’ compensation benefits, you can receive disability income payments until you turn 65, and sometimes longer. You may also qualify for other benefits, including payment of health care and equipment expenses as well as payment for pain and suffering. If you received any Workers Compensation allowance or benefits during this tax year, you are required to disclose this information in your tax return.
For more information, please visit the CRA website here.
EMPLOYMENT INSURANCE BENEFITS RECEIVED
Employment Insurance (EI) provides regular benefits to individuals who lose their jobs through no fault of their own (for example, due to shortage of work, seasonal or mass lay-offs) and are available for – and able to – work but have not found a job. If you were in a similar situation during the past tax year and applied for EI benefits in this period, you must disclose this information in your tax return.
For more information, please visit the CRA website here.
PARTNERSHIP INCOME REPORTING
Partnership Income is the income you earn from partial ownership of a business. The source of this income depends on the nature of your partnership business. You are required to disclose your share of partnership income or loss on the T5013: Statement of Partnership Income on your tax return.
For more information, please visit the CRA website here.
T4 - STATEMENT OF EMPLOYMENT
T4 (Statement of Employment) is a statement that your employer must prepare each year and send it over to you by end of February. If you do not receive it, remind your employer to prepare the statement and send it to you.
While your accountant may gain access to your T4 statement through the CRA database once you give them permission to access your account, you should still send it to your accountant each year. That’s because the CRA database may not always have all your latest slips available and relying solely on the CRA database could mean your accountant missing something important on your tax return.
T2201 CERTIFICATE FOR PEOPLE WITH DISABILITIES
Form T2201 (Disability Tax Credit Certificate) is a certificate that allows eligible Canadian citizens and their families to apply for the CRA’s support programs for people with disabilities. The support from these programs is usually transferred as tax credits. You or a family member can apply for disability credits once you get a certified medical practitioner to sign your Form T2201. For more details, please visit the CRA website here.
DISABILITY CREDITS REQUIREMENT
Eligible Canadian citizens and their families can apply for the CRA’s support programs designed for people with disabilities. The support from these programs is usually transferred as tax credits. You or a family member can apply for disability credits once you get a certified medical practitioner to sign Form T2201 – Disability Tax Credit Certificate. For more details, please visit the CRA website here.
REPORTING FOREIGN PROPERTY
As a Canadian taxpayer, you are required by the CRA to disclose any properties you owned in a foreign territory during a tax year in your tax return for the year. In addition to tangible property situated outside Canada, the concept includes a long list of items that may be considered foreign property under Canadian law, starting with patents, capital stock, shares of certain types of corporations, and much more. For details, contact your tax advisor.
REPORT PRINCIPAL RESIDENCE SALE
Your principal residence – the place you call home and live in for most of the year. If you sold your principal residence during the tax year, you might be eligible for tax credits on any gains you made from the sale owing to an exemption. Reporting this information is necessary, so your accountant and the CRA can calculate your taxable income for the year appropriately for the current and subsequent years. If you have any further questions in this regard, please contact your accountant.
SHARING PERSONAL INFORMATION WITH ELECTIONS CANADA
CRA asks on each tax return if they have your permission to share your personal information with Elections Canada, the administrative authority that overlooks the organization of the general elections. Let's say you choose to allow the CRA to share this information. In that case, they will forward your name, date of birth, and residential address to Elections Canada, where this information will be updated into the National Register of Electors. If you choose not to allow the CRA to share this information, it could delay you from receiving your voter information. For more details, please talk to your accountant.
DEPENDENTS FOR TAX PURPOSES
Your children, parents, grand and great grandparents, grandchildren, siblings, aunts and great aunts, uncles and great uncles, nephews, and nieces can be your dependents. In some cases, other individuals may also be considered your legal dependents, and, if you are unsure, you can send your questions to your accountant. Please, note a dependent is any of these relations who depends on your financial support for their needs.
FILING TAX RETURNS JOINTLY WITH SPOUSES
The CRA allows spouses and common-law partners to file taxes together or separately, and there are various reasons for which you could choose either of these options. Filing tax returns jointly has plenty of benefits, and you can talk to your accountant about them, but you can choose to file tax separately if that is what you want. Regardless of which option you select, the CRA wants you to state it in your tax return to calculate your taxable income accordingly. Even if you file your tax returns separately, you are required to provide the name and approximate annual income of your partner in your tax return.
Joint tax filing for spouses
The CRA allows spouses and common-law partners to file taxes together or separately, and there are various reasons for which you could choose either of these options. Filing tax returns jointly has plenty of benefits, and you can talk to your accountant about them, but you can choose to file tax separately if that is what you want. Regardless of which option you select, the CRA wants you to state it in your tax return to calculate your taxable income accordingly. Even if you file your tax returns separately, you are required to provide the name and approximate annual income of your partner in your tax return.The CRA allows spouses and common-law partners to file taxes together or separately, and there are various reasons for which you could choose either of these options. Filing tax returns jointly has plenty of benefits, and you can talk to your accountant about them, but you can choose to file tax separately if that is what you want. Regardless of which option you select, the CRA wants you to state it in your tax return to calculate your taxable income accordingly. Even if you file your tax returns separately, you are required to provide the name and approximate annual income of your partner in your tax return.