2015 AFSA Tax Clinic Training

2015 AFSA Tax Clinic Training

Tax Background I’m going to present to you guys all the information we believe you should have a basic understanding of in order to appear competent at the clinic. Note that this does not provide you with detailed tax concepts – these will be taught to you in your tax courses.

Table of Contents Who receives/collects income taxes?
Differences between provinces Filing a tax return Why file a tax return? Preparing tax returns EFILE Paper File

Who Receives Income Taxes?
Federal government Provincial government The federal and provincial governments receive income taxes from you are I. The federal government collects personal income taxes on behalf of most provinces and territories. These taxes received constitute the majority of annual revenues of the Government of Canada, and the governments of the Provinces of Canada. This money is then used to fund government activities toward things such as social security, medical care, and education.

Who Collects Income Taxes?
Canada Revenue Agency (CRA) Administers federal and provincial tax law One tax return for both federal/provincial taxes The Canada Revenue Agency (CRA) collects and administers the individual income taxes on behalf of the government. Basically, the CRA reviews each of our tax returns and verifies all the information that we report is correct.

Differences between Provinces
Tax Rates Credits We will be looking only at Ontario credits Filing methods Each province has its own tax rates, credits, and methods of filing tax returns. For purposes of this session, we will only be focusing on the tax rates and credits present in Ontario. Our federal and provincial tax rates a graduated rate, which means that the less income you have; less tax you pay and the more income you have; more tax you pay.

Filing a Tax Return Annual Due April 30 Multiple ways to file:
NETFILE – Taxpayer does own return; files online EFILE – Third-party prepares return and files online Paper file – Mail return to the CRA Individuals prepare tax returns annually and the deadline for personal tax returns is April 30th of each year. Furthermore, there are three ways to file a tax return: NETFILE – taxpayer prepares their own tax return and files online EFILE – third-party prepares tax return and files online Paper File – preparing tax return using tax software and mail the return to the CRA I will be discussing these three methods in more detail later on in the presentation.

Why File a Tax Return? Refundable Credits Refund of overpaid tax
Encourages people to file a tax return There are two main reasons why we want to file tax returns: The first reason is to receive credits you are entitled to and the second reason is to receive a refund of overpaid tax. Even if you someone doesn’t have any income, it is still beneficial to file a tax return to get refundable tax credits, which can only be obtained by filing a tax return. Refundable tax credits are credits that will be paid to you if you are eligible. Two examples of refundable credits that some of you might be familiar with are the HST/GST tax credit, the Ontario Trillium Benefit, and the tuition tax credit. We will go into more detail about credits later in the presentation. As current or previous employers, most of already know that companies purposefully make tax withholdings on employment income higher than estimated tax to encourage people to file a tax return, which is the second reason why you should file a tax return.

Preparing Tax Returns We will use a program called Ufile
Ufile vs. EFILE Ufile (noun) – Program to prepare tax returns EFILE (verb) – Method that allows third-party to electronically file a client’s tax return We will use Ufile to both EFILE and prepare paper returns Ufile is the name of the program we will be using to prepare tax returns for our clients. EFILE is what permits us to electronically file tax returns on behalf of our clients. We will be using the program, Ufile, to electronically file tax returns and to prepare paper returns on behalf of clients. It is important to get this straight, because a lot of people may easily get mixed up between Ufile and EFILE.

EFILE STEPS: Prepare return using Ufile EFILE return
Sends all necessary information to CRA Taxpayer does not have to mail anything, but must keep all records for 6 years Return (refund) processed faster Give PDF copy of return to client via USB/ We will be “E-filing” return whenever we can. There are three steps to EFILE. Prepare the return using Ufile EFILE the return – this method sends all necessary information to the CRA via the internet. Therefore, the taxpayer does not have to mail anything to the client. In addition, the tax payer’s return is processed faster than if they were to mail their return in. Give a PDF copy of the return to the client via a USB or via

Who can’t EFILE? The taxpayer is a deemed resident (not subject to provincial or territorial tax) The taxpayer died prior to the current tax year The taxpayer's social insurance number begins with 0 The taxpayer is filing for bankruptcy There are certain individuals who we can’t EFILE for. We can’t EFILE returns for taxpayers who: Are a deemed resident Died prior to the current tax year Have a social insurance number that begins with 0 Is filing an in-bankruptcy or post-bankruptcy return I will not go into detail about these different scenarios, but basically these situations give rise to complex tax returns which are beyond the scope of the clinic.

Who else can’t EFILE? The taxpayer is an emigrant or a non-resident (international students) The taxpayer's address is outside Canada The taxpayer is subject to provincial/territorial income tax in more than one jurisdiction The taxpayer is claiming a disability amount for themselves, or for their spouse, common-law partner, or dependent This slide also contains a list of taxpayers who we cannot EFILE for. I just want to point out that the first point here captures virtually all of the people we have to file paper returns for (i.e. international students). The third point captures any students who worked in more than one province in For example, a co-op student may have worked part-time during the school year here in Waterloo and then worked a co-op job in Alberta in a subsequent term.

Paper File STEPS: Prepare return using Ufile
Give PDF copy of return to client via USB/ Taxpayer prints at home Taxpayer attaches required slips and receipts and mails the return There is a page in the PDF that says what pages to mail, and what order to put them in I just want to bring to everyone’s attention that “paper file” is not the name of the method, it’s just what we will call it to contrast it against EFILE. This method used to be called “filing”, since it used to be the only way of filing a tax return. To paper file requires the following steps: Prepare the return for the client using Ufile Give a PDF copy of return to the client via UBS or These are the only two steps you are required to do as a filer. The last two steps are what the client does after you have prepared their tax return, they appear of this slide just for your information.

Eligible Taxpayers We can only prepare tax returns for eligible taxpayers Use the maximum income levels shown in the following table to determine eligibility Taxpayer Status Family Income Single person Up to $30,000 Couple Up to $40,000 One adult with one child Up to $35,000 For each additional dependant add $2,500 to the family income. We can only prepare tax returns for eligible taxpayers defined by the CRA. The income levels shown in the following table do not apply to any taxpayers who are students because they likely do not have income over $30,000. These restrictions mostly apply to older individuals and families.

Who We Can Prepare Returns For
Aboriginal peoples Social assistance recipients Newcomers to Canada Seniors Students This list of individuals we can prepare returns for comes directly from the CRA’s website. There will be an initial screening to determine taxpayer eligibility, so when you are directed to prepare a tax return you can assume that the individual is eligible.

Who We Can’t Prepare Returns For
DO NOT prepare returns for individuals who: Have self-employment income Have business or rental income and expenses Have capital gains or losses (disposition of marketable securities) Have employment expenses File for bankruptcy Deceased in the year Interest income over $1,000 This list also comes directly from the CRA’s website. I’m not going to read you this list because you guys can read this yourselves, but your job is to ensure that you understand those we can and cannot Efile for and those we can and cannot Ufile for. The reason we cannot prepare tax returns for these individuals is because they result in more complex tax returns that are beyond the scope of this clinic.

Payment Rare for our clients Both methods (EFILE/Paper)
Pay online via their bank Pay at a teller at their bank Cheque It is very rare for our clients to have a taxes payable balance owning to the government. As was previously mentioned, companies purposefully withhold more money from paycheques than is necessary to encourage people to file a tax return. With this being said, the more likely scenario is that the individual will have a balance that they will received from the government. There are three ways that the client can pay their balance owing: Online Bank teller By cheque I won’t go into any more detail about these three methods as this is an unlikely scenario.

Mailing Address Waterloo residents:
Summerside Tax Centre 275 Pope Road Summerside, PE, C1N 6A2 Toronto residents: Canada Revenue Agency Tax Centre 1050 Notre Dame Avenue Sudbury, ON, P3A 5C2 This slide only applies to clients who you paper file for and does not apply to clients you EFILE for. For those clients that you paper file for, you will need to provide them with the relevant mailing address so that they mail their tax return and slips to the CRA. Drop off: 166 Frederick Street Kitchener ON N2H 0A9 (near Frederick / Weber)

Components of Tax Return
St. Jacob’s, ON Components of Tax Return

Steps in Calculating Taxes Payable/Refund
Total Income (Employment income, scholarships) Less: Deductions = Taxable Income Tax Payable federal and provincial rates) Less: Tax Credits = Taxes Payable/Refund This is a summary slides that gives an overview of the slides that follow. Basically, you take your total income from various sources for 2014 and subtract deductions to arrive at taxable income. Next, you determine the taxes payable amount by applying the federal and provincial tax rates to the taxable income figure. Finally, you deduct any eligible tax credits to arrive at the taxes payable/refund balance.

Deductions Government allows specific deductions to your total income
Reduces taxable income (pay less tax) Result from taxpayer incurring expenses Used to encourage certain behaviours such as saving money for retirement (e.g. RRSP) Tax deductions decrease your taxable income, thus decreasing the amount of tax you owe. Deductions result from a taxpayer incurring expenses and are used to encourage certain behaviours such as investing money for retirement purposes. I will discuss common examples of deductions on the next slide.

Examples of Deductions
RRSP Contributions Union Dues Professional Dues (e.g. CPAO) Child Care Expenses Moving Expenses Common examples of deductions include: RRSP Contributions – money that is contributed into a retirement savings plan Union Dues – regular payment of money made by members of unions to fund various activities of the union Professional Dues – Fees toward a professional organization. For example, most of us or our employers will be paying annual professional dues to CPA Ontario. Note: you only receive a deduction for out-of-pocket costs. If your employer reimburses you for a professional due that you pay then it is not deductible for tax purposes. Child Care – When the child lives with both parents, the parent with the lower net income can claim child care expenses. Eligible child care expenses include: daycares, nursery schools, and day camps to name a few. Moving Expenses – You can claim eligible moving expenses if you move and establish a new home to work or run a business at a new location, or if you move to study at a post-secondary institution. Please keep in mind that each of these types of deductions has a limitation on the amount that a taxpayer can claim. For purposes of this training session, we will not worry about these restrictions.

Taxes Payable Based on graduated tax rates
Tax rate affects how much tax you pay The higher the tax rate, the higher the taxes paid As previously mentioned, the provincial and federal tax rates are graduated. This means that the less income you make, the less tax you have to pay and the more income you make, the more tax you have to pay.

Credits Reduces taxes payable dollar for dollar
More valuable than deductions Also used to encourage certain behaviour Refundable vs. non-refundable credits Generally, tax credits are more valuable because they directly offset the actual taxes you pay, dollar for dollar. In contrast, deductions reduce the amount of tax you pay by reducing your taxable income. Similar to deductions, credits are also granted to encourage certain behaviours Credits can be refundable or non-refundable: Non-refundable – a tax credit that only reduces an individual’s tax liability to zero. In other words, it cannot reduce the amount of tax owed to less than zero. Refundable – a tax credit that reduces an individual’s tax liability beyond zero resulting in a refund to the individual.

Examples of Credits Ontario Energy and Property Tax Credit (OEPTC)
HST/GST Tax Credit Ontario Energy and Property Tax Credit (OEPTC) Tuition Tax Credit Basic Personal Credit Here are three examples of credits that you may be familiar with: GST/HST Credit – quarterly payment that helps individuals and families with low incomes offset all or part of the GST/HST that they pay Ontario Energy and Property Tax Credit (OEPTC) – designed to help low- to moderate-income Ontario residents with the sales tax on energy and with property taxes. Most of us are eligible for this credit if we lived in residence last year or lived off-campus and paid rent. Tuition Tax Credit – The tuition, education, and textbook amounts you pay allows you to reduce any income tax you may owe by the amount of the credit Basic Personal Credit - Everyone is entitled to claim a basic personal amount Note: Credits are based on eligibility and there are restrictions on the amount you can claim. For purposes of this training session, we will not worry about these restrictions.

Refund/Balance Owing Represents how much tax the client has to pay to the CPA or what the client will get back from the CRA The only line that your client cares about! As mentioned before, it should be very rare for any of our clients to have taxes payable, because the government purposely makes sure that employers withhold more money from your paycheque than is necessary. It is more likely that the client will have a refund that they will get from the government and this is the only amount they care about!

Common Misconceptions
Deductions vs. Credit Deductions reduce taxable income Used to calculate taxes payable Credits reduce taxes payable (tax liability) Ufile vs. EFILE Ufile  program used to prepare returns EFILE  method used to electronically file Tax Preparation vs. Tax Planning Backward-looking vs. forward-looking This slide on common misconceptions also acts as a summary of some of the key topics we have covered so far: You should have an understanding of the difference between deductions and credits Deductions reduce taxable income, which in turn reduces taxes payable and credits directly reduce taxes payable Just to reiterate, Ufile is the program we will be using to both electronically file returns and to prepare paper returns. Efile is the method used to electronically file returns. Tax preparation is the process of preparing tax returns. Tax planning requires a thorough understanding of the tax system and strategies that that help to minimize future taxes payable.

Lake Erie, ON Start here!! Using

Step 1 – Open Ufile Follow along as we navigate through the next steps

Step 2: Interview - Identification
Fill in all personal information SIN can be found on ‘Notice of Assessment’, any income slips (e.g. T4), last year’s tax return, etc. If program says SIN is invalid, check again Program is always right, because there is an algorithm to determine if a SIN is valid or not Where is Step 1?

Province of Residence Think of this as ‘where did you have a place to stay on Dec 31, 2014’ Generally Ontario Updated year.

Marital Status Single Common-Law Married Widowed Divorced Separated Common-law – if it looks like a marriage, then CRA will deem you to be common-law, which receives much of the same benefits/drawbacks as being married AT LEAST ONE: 1.) has been living with you in a conjugal relationship, and this current relationship has lasted at least 12 continuous months; Note: In this definition, 12 continuous months includes any period you were separated for less than 90 days because of a breakdown in the relationship. 2.) is the parent of your child by birth or adoption; or 3.) has custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support.

Step 2: Interview – CRA Questions
Are you filing an income tax return for the first time? This is an EFILE exclusion! Do you wish to apply for the GST/HST Credit Single: Yes Married/Common-Law: Only one person should claim, doesn’t matter which

Do you own foreign property over $100,000? Should be no But, ensure you ask this – liability issues! Major penalties if unreported Measurement: Cost > $100,000 Investment property such as shares, rental property, etc. Not personal-use cottage

Authorize the CRA to […] You can ask the client Simply allows Election Canada to update their voters list Students can still vote in whatever jurisdiction they reside in, just need to show up at polling station with proof of residence Therefore, not a big issue yes or no.

Tick this box if […] Very important! Don’t miss it! What does this mean?

Step 2: Interview – Interview Setup
Sets up all the future screens you will look through later to enter information Skip for now! Skip interview setup You will be required to fill in this information at a later point

Step 2: Interview – Current Address
Mailing Address Suggest using parents’ address CRA can mail out of country for international students CRA will mail private information to the chosen address Cannot be changed using EFILE Home address is always the best, assuming your parents care about your well-being. All correspondence from CRA will go to this address, the correspondence will contain very sensitive information like your SIN, your income, the assessment result of your tax return, etc. Can not be changed by EFILE Can be changed by putting a different address if paper file, or by signing up for an account on CRA’s website, or by calling them ( ) CRA can mail out of country for international students.

Step 2: Interview – Current Address
Is your home address the same as your mailing address? Home address is the place where you are currently living Mailing address is where you want important documents to go This may be where you are currently living or where your parents are living, or both Home address can change every term (like me) Mailing address should be a place you trust that can help you receive your tax documents for you!

Step 2: Interview – Controls
Additional CPP Contributions (unlikely) If they received tips, you can ask them if they want to pay CPP on the tips CPP: You contribute to it, and receive benefit when you retire or are disabled The more you contribute, the more you receive later Please ask us for help if you don’t feel comfortable explaining CPP

Step 2: Interview – Controls
CPT30 Election 65 – 70 years of age, can elect to stop contributing to CPP Must have already made election (for our purposes), if they didn’t and are still contributing, too bad! We are not in a position to advise making or not making the election – too many factors to consider Should we delete this slide if situation is unlikely? Note that self-employed (which are outside of the scope of the tax clinic) can elect to stop contributing to CPP on their tax return assuming they meet the age requirement!

Step 2: EFILE Leave as default
Accidentally changing one of these may result in the CRA sending a notice to you or AFSA asking to see the taxpayer’s rent receipts or similar. Not what we want!

Step 2: Employment Income
T4 – Enter all boxes listed (leave blank if 0) Tips – Waiters/waitresses must declare tips received as income Other Employment Income DO NOT USE Except for international students foreign employment income (convert to $CAD) Other Employment Income is narrowly defined as a list of certain sources, none of which are relevant here.

If there is a box on the T4 not listed on UFILE’s form, there is a dropdown on the bottom for additional boxes. Some boxes on the T4 are not required on UFILE’s form. If in doubt, please ask.

Super Easy Example tinyurl.com/allthosedocs
Ms. Jennifer Jones (curling gold medallist) Also lawyer at National Bank Date of birth: July 7, 1974 SIN: Home and Mailing Address: 1 Regal Ave, Waterloo, ON, N2L3G1 Single Lives in parents’ basement (no property tax or rent!) See link for T4: tinyurl.com/allthosedocs

Post-preparation Tell client how much they owe only after you are sure all the information is correct Ask for help if you are unsure of any amounts! Have client fill in TIS60 form, and sign Section 1 If and only if the return was EFILE’d, then you and the client must sign Section 2 If paper file, tell them to sign the bottom of the Jacket (the page with the balance owing/owed)

Post-preparation Put return onto USB or email return to client
We may provide you with a short summary that you can use that you should edit as appropriate Tell them how much they will receive under HST Credit and Ontario Trillium Benefit Bottom of ‘GST Credit Calculation’ page Bottom of ‘Ont trillium calculation p2’ Should mention that this is not part of the balance owing/refund

I’m just hungry. Using Pt2

INCOME! HORRIBLY MISTITLED!
This checkbox actually includes ‘RESP Income’, ‘Scholarship Income’, and ‘Other Income’. If you’re holding a slip that says ‘T4A’, check the box.

Interview Setup - Income
I had no income from any source Won’t let you proceed if you don’t check a box in the list, so choose the first box if no income

Pension Income (and other income) T4AOAS

Pension Income (and other income) T4AP Why does slip say T4A(OAS) but slide says T4AP?

Pension Income (and other income) T4A (Other Income) This slip shows Box 28, Other Income Note that for some reason, UFILE has lumped in all T4A’s as ‘Pension Income’

Pension Income (and other income) T4A (Scholarship Income) This slip shows Box 105, Scholarship Income Note that for some reason, UFILE has lumped in all T4A’s as ‘Pension Income’

Universal Child Care Benefits RC-62 Slip (from government)

T3 – Trust Income Usually received from investing in mutual funds – INVESTMENTS Can also receive, if they are the beneficiary of a family trust Will say what it’s from. If it’s the former, make sure they didn’t buy or sell anything (or else we can’t help them).

T5 – Investment Income Interest, dividends, foreign investment. Make sure they didn’t buy or sell anything (or else we can’t help them). If >$1,000 interest income (Box 13), we can’t help them.

Other things on the Investment Page: T4PS – Employee Profit-Sharing Plan Carrying Charges Safety Deposit Box fees Do we need this slide?

T5013 – Partnership Income Full-page slip You will 99% sure not see this Do we need this slide if rare situation?

T5007 – Statement of Benefits Usually for EI (employment insurance) benefits.

Alimony or Support Payments No slip, this will probably be in a separation agreement or other legal document We don’t need to see any documentation Take their word

Knight Family Case Case 2!

What Winter’s Supposed to Look Like
Using Pt3

Deductions and Credits

RRSP Contributions (Deduction)
What is an RRSP? Designed by the government to encourage retirement savings! Deduction now, taxed on withdrawal (presumably when you’re retired) RRSP Contribution Limit Generated by employment income Carries forward if not contributed Get last year’s carryforward from Notice of Assessment (best) or last year’s tax return RRSP is only effective if you have a lower income tax rate when you’re retired compared to when you take the deduction. Also, notice that the investment income you earn inside the RRSP is not taxed, it’s held within the RRSP and can earn more income until you withdraw the money. See the links (tinyurl.com/allthosedocs) for the sample notice of assessment.

RRSP Contributions Financial Institution will give you an ‘RRSP Contribution Receipt’ Contributions will be divided between: ‘First 60 days of 2015’ Remainder of the 2014 year Can also contribute to spouse’s RRSP Use your contribution room When spouse withdraws a long time from now, taxed in their hands Do we need all this information on RRSP contributions? The government allows you to make a contribution in the first 60 days of the 2014 year (It’s not Mar 1 yet!) and let you deduct it for 2013 taxation year

RRSP Contributions Overcontribution
First $2,000 over limit is ok – no penalty Will probably be some warning bells if over, talk to us! We may have to figure out if there’s a way to take the money out to minimize penalties.

RRSP Contributions All receipts look different, here is TD
We may have to figure out if there’s a way to take the money out to minimize penalties.

Should I Input that Medical?
Born before 1996 Yes If Unsure how to do this step, just enter it UNLESS it’s a big stack of receipts No Pays no Net Federal Tax (ie. Jacket Pg4) No Yes Calculate: Total Medical – 3% * Net Income Zero or negative Unsure Big Number (>$50) There is no downside to the client if you enter their medical receipts into the program. Unlike donations, they will not miss future tax saving opportunities. The only problem is if a client brings a shoebox of medical receipts, we will need them to help us total the receipts. Has Cdn Parents => Do they have parents earning income in Canada who would be able to use it? Net Income can be found on the Jacket page 3 Has Cdn Parents Ask a Tax Mentor Yes No Parents Do not Claim Claim

Medical Expenses (Credit)
Generally not worth the effort Need to have tax payable to have effect Credit received reduced by 3% of net income Quickly estimate 3% of net income If medical expenses are below or only slightly over that amount, don’t bother Ask us if you want some judgement help Note that there is actually a lesser of calculation here. For the purposes of the tax clinic, no one will have >$70k income so it is not relevant. For your interest, The total amount of medical expenses is subtracted by: Lesser: i) $2125, ii) 3% of Net Income This is the amount you get as your credit

Medical Expenses Only certain medical expenses are eligible
In general, most things sensible count Prescriptions, Dental, Optometry But, no over-the-counter drugs (i.e. does not require a prescription) Check list here:

Medical Expenses Timeframe
Can claim any date range of 365 days that ends in 2014 Client might have more medical expenses from Mar 20, 2013 to Mar 19, 2014 Can’t claim medical expense twice

Medical Expenses Things people will bring
University Health/Dental Insurance

Medical Expenses

Medical Expenses Definitely transfer to parents if student is born in 1996 or later Otherwise, transfer only if: Medical expenses >3% child’s net income E.g. 0 income, definitely transfer! How do you transfer? Get the child to give the receipt to parents. No further action required.

Political Contributions
Not the same as charitable contributions Need to mail in receipt with return if paper file Represents donation to Federal, Provincial or Municipal candidate (or party)

Should I Claim that Donation?
Have they donated previously in ? Yes No Eligible for FDSC Is the total amount of donations significant? Yes No Do they owe taxes? (i.e. Net Federal Tax on Jacket Pg4 > $0) Yes & No Unsure Ask a Tax Mentor Claim ADVISE not to claim & Explain Why!

Charitable Donation Receipts
Charity receipts will have certain identifying marks Registered Charity xxxxx xxxx RR 0001 Need to mail in receipt to CRA if paper file PREVIOUSLY, I’d say to always claim Can carryforward for 5 years Changes in 2013! What change was made in 2013?

Eligible for the First-Time Donor Super-Credit (FDSC)? Did not claim a donation on all tax returns between What is FDSC? Non-refundable Tax Credit (BONUS 25%! In addition to normal 15%) Does not carryforward Yes, they actually called it a ‘super-credit’.

FDSC – Decision Time Do not claim donations for anyone who will not be able to use credit, that is Did not claim donations in the previous 5 tax years (i.e. eligible for FDSC) Either Has no taxes payable Has taxes payable, but has tuition credits to carryforward Goal is to preserve student’s ability to claim donation credit in the future, since it is valuable (up to $250 in cash!)

Other Donation Cases US donations Prescribed universities outside of Canada

Tuition Receipt T2202A Always enter!
Tuition, Education and Textbook CREDITS are all generated from this slip Education and textbook amounts are calculated on a per-month of study basis Don’t need to know how much you actually spent on textbooks Don’t need to mail in slip if paper file

Tuition Receipt T2202A

Tuition Receipt T2202A Unused amounts are carried forward
Best way is to get from notice of assessment (it will be in a bunch of paragraphs) Excerpt: Otherwise, last year tax return, see ‘Schedule 11’

Tuition Receipt T2202A Even better than carryforward is transfer to parents Action IS required in order to transfer to parents From the drop-down list, choose ‘Transfer to parent not processed’ Leave fields below that blank

Interest paid on Student Loans
If you have to take a student loan out to fund your post-secondary studies, the interest payments are deductible Would normally receive a statement that explicitly mentions the deductible portion for tax purposes Only deductible if the student loan is from the government.

Union/Professional Dues (Deduction)
Union dues normally already recorded on T4 Professional dues (e.g. CPA Ontario) are usually not recorded on T4 Don’t need to mail in receipt if paper file

Moving Expenses (Deduction)
Rare Moving closer to school Can only deduct against taxable scholarships, bursaries, etc. Most likely NO! Moving closer to work Moving from Waterloo -> Toronto to your parent’s house counts

Moving Expenses Choose Simplified Method unless either:
They flew there, or All of: They have receipts The total of receipts is more than simplified method Simplified method quick calculation $0.55 / km travelled, + $17 / meal while travelling (max 3 meals/day) *MAKE NOTE ON ELIGIBILITY*

Childcare Expenses (Deduction)
Create a family member for the child and enter on child’s ‘interview’ Eligible examples: Caregivers providing child care services; Day nursery schools and daycare centres; Educational institutions, for the part of the fees that relate to child care services; (private schools) Day camps and day sports schools where the primary goal of the camp is to care for children (aka summer camp); or Boarding schools, overnight sports schools, or camps where lodging is involved

Waterloo, ON Using Pt4

Other Specific Things!

Transit Pass Flowchart
Are they under 19 on Dec 31, 2014? Has Cdn Parents? Yes Yes No No Has Income? No Yes There is no downside to the client if you enter their transit pass receipts into the program. Unlike donations, they will not miss future tax saving opportunities. The only problem is if a client brings a shoebox of medical receipts, we will need them to help us total the receipts. Has Cdn Parents => Do they have parents earning income in Canada who would be able to use the credit? (e.g. Intl students may not) Parents: Tell Client to give receipt to parents to claim on their tax return Do not Claim Claim

Transit Pass Amounts (Credit)
Only useful if there is tax payable! Don’t need to submit with paper file Sometimes, already listed on T4 (e.g. if provided by employer), don’t enter again Lots of sources PRESTO card FEDs UPASS (all undergrad students) GSA UPASS (all graduate students) Other Local transit (e.g. York Region Transit (YRT), Toronto Transit Commission (TTC)) There is no downside to the client if you enter their transit passes into the program. Unlike donations, they will not miss future tax saving opportunities by claiming it. It just wastes your valuable time. Generally, don’t even think about it unless they have income.

Transit Pass Amounts Should be transferred to parent if:
Under 19 years of age at Dec 31, 2014 If Transfer to Parent: Tell them to give receipt to parents to claim on their tax return Do not claim on student’s return Here is tax planning at its simplest. You can claim the credit on the student’s return or the parent’s return. Student probably pays no tax. Parents probably pay tax.

FEDS UPASS Download and fill in receipt from FEDS site

PRESTO Statement You can claim the cost of any 32 or more one-way trips: Taken on a single transit agency, and During an uninterrupted period of 31 days or less.

Monthly Transit Passes
They need to the transit pass in case CRA asks! We don’t need to see it, but you can ask

Home Buyer’s Amount Very very very unlikely to come up Ask us
Delete this slide entirely?

Richmond Hill, ON Using Pt5

Ontario Credits MUST click this!!! Property Tax Rent Residence

ON-BEN Application for […]
Fill in the yes on the second drop-down where it says “Applying for the 2014 Ont. energy and property tax credit” Will not receive credit if you don’t fill this out!!!! Not very intuitive, weird Ufile would set it up this way….

Ontario Energy and Property Tax Credit (OEPTC)
Residence Don’t need receipt Don’t need amounts paid Client will get $25 paid out separately from tax return

Rent / Sublet We don’t need receipt, not needed to file return CRA usually asks for this info, receipt from landlord or cheque copy from bank usually work Client can get LOTS of money back from the OEPTC This is the main reason why students should file a tax return even if they make nothing.

We don’t need receipt, not needed to file return, just the amount Need the actual amount required (for Toronto, these come out halfway through the year I *think*), NOT the estimates that they give at the start of the year If you do see a document, there will be a VERY clear line that says total property tax for 2013 Delete if rare? This one should be rare because students. Also, note that if they’re paying property tax, they own a house. If they own a house and are renting to friends, we can’t help them!!!

Fitness/Arts Credit Go to the child’s ‘interview’ and enter information there Claim up to $535 (for Ontarians) in Fitness $500 in Arts Don’t need to submit receipts Eligible activities for the children’s arts tax credit include artistic or cultural activities such as art classes, piano lessons, and tutoring, as well as other activities that are intended to improve a child’s dexterity or co-ordination. Eligible activities for the children’s fitness tax credit include strenuous games like hockey or soccer and activities such as golf lessons, horseback riding, sailing, and bowling, as well as others that require a similar level of physical activity.

Lots of Cases Let’s do a lot of cases. It’ll be fun. :)

Eugenia, ON Other Important Notes

Important Note Macs (and Linux) – Not supported Software
Very few companies develop tax software for Macs (no supply) Virtually no tax preparers use Macs (no demand) Software Ufile – Used by consumers Taxprep – Used by professional accounting firms Ufile is generally used by consumers, and provides an easy step-by-step wizard that makes it easy for people to prepare tax returns. Taxprep is software used by professional accounting firms (among others) and is much less user-friendly. MACS: If you’re using Bootcamp or Parallels, I suggest you keep it installed because you will be given an educational copy of CCH Personal Taxprep in AFM202. Obviously, this will be Windows-only. Your classes, exams and assignments will be all about using Taxprep.

Important Note Protect your hardware! Dress well
Spyware, keyloggers, etc. Dress well No torn jeans, offensive logos/words/etc. Representing AFSA and UW As aspiring professionals, ethics is important Ethical is fact and appearance You are in charge of protecting clients’ very sensitive financial information, including their SIN. If your system is compromised, you’re giving away the client’s name, address, SIN, income and other personal information. Liability issue. Let us know. We will tell CRA, who will handle it from then on. Tax planning is appropriate. Usually taking advantage of government incentives to reduce tax. Fraud and tax evasion is not.

2015 AFSA Tax Clinic Training

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2015 AFSA Tax Clinic Training

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