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Reasonable Doubt: The most basic review of family and separating family taxes from a non-accountant

  • Warning – this article discusses taxes; it may be a good idea to get a cup of coffee before going any further and get all funny cat videos out of your system first. But if you are getting separated, divorced, or have children and want to have a quick & easy overview of what you need to know, read further.

First the basics for those of us that are bit shaky on this stuff (if you’re not skip down to the part about declaring your marital status to the Canada Revenue Agency).

money tax buttons

Credit vs. Deduction vs. Benefit

A tax credit is a deduction against the tax liability you owe the government. This means that if you owe the government $20,000.00 in taxes at the end of the year, but you hold a $5,000.00 tax credit for some magical reason, you will only pay the government $15,000.00 in taxes, not $20,000.00. Value of a tax credit? $1 of tax credit equals $1 in your pocket. Very valuable.

A tax deduction is a decrease in the amount of money you pay taxes on. This means that if you earned $60,000.00, but collected $5,000.00 in deductions, then you will only pay tax on $55,000.00. Value of a tax deduction? $1 of tax deduction equals a portion of that dollar in your pocket depending on your tax bracket (i.e. 42 cents if your top marginal tax rate is 42%).

A benefit (at least in the case of the child benefits I’m talking about in this article) is when the government pays you money. Until the end of this month (June 2016), Canadian families receive the Canadian Child Tax Benefit and the taxable Universal Child Care Benefit.

In July 2016, these benefits are finished and families will receive the Canada Child Benefit as one monthly payment. The Canada Child Benefit will be based on an “adjusted family net income.” Your adjusted family net income is your net income (line 236) on your tax return added to the net income of your spouse on your tax return. In order to get your benefits, even if you didn’t earn any money, you need to file your tax return every year by July.

Importance of informing the CRA of your marital status

Since 2014 (or so Turbo Tax says (https://turbotax.intuit.ca/tax-resources/married-tax-payers/how-savvy-canadian-couples-file-taxes.jsp)), you cannot file a joint return with your spouse. This is not America! Spouse or not, you are an economic individual. Canada Revenue Agency

For tax purposes, the CRA considers you separated the day you separated if you remain separated for 90 days or more. You are considered common law after having lived together for 12 months. This is different than under our Family Law Act in BC.

To declare your status, you have to fill out this form http://www.cra-arc.gc.ca/E/pbg/tf/rc65/rc65-15e.pdf and send it in.

Why does it matter what your marital status is on your taxes? Well you’ll have to speak to your accountant for the full story, but essentially you can group deductions and maximize benefits in some situations.

What do you need to take away from this?

It is critical that you inform the CRA of your change in marital status – be it common-law, married, or separated. If you get married or are common law, you may not be entitled to some of the benefits or programs offered to you if your adjusted net family income makes you ineligible. If the CRA catches you not making the declaration and collecting benefits you are not entitled to, then you will have to pay a penalty and likely have to pay back the overpayment of benefits to you.

Why is it critical that you file for your separated status when you can?

Because you may be entitled to benefits that you were not entitled to when you were with your spouse, especially if you are the lower income earner. It’s more expensive than most people realize to maintain two houses instead of one.

Child care arrangements and how this affects your benefits and credits

When you separate, you will want to notify the CRA of the child care arrangements you have with your spouse. This can get really sticky and can involve a serious review by the CRA and letters from neighbours, teachers, doctors and lawyers to prove where your child is living.

Child care arrangements affect two things:

  1. Who gets the Canada Child Benefit? and
  2. Who can claim the eligible dependent credit?

As of 2011, the CRA does recognize a shared custody or parenting arrangement and will split benefits equally between parents. Other than that the CRA will pay the benefits to the person who has primary responsibility for the children.

The eligible dependent credit is a credit of up to $11,237 (in 2015) if you did not have a spouse or common law partner (or if you did you were not living with, supporting or being supported by your partner), maintained a home and lived in it with your qualifying dependent.

Your qualifying dependent is someone related to you who depends on you for their support and includes your child under the age of 18. You cannot split this credit with the other parent.

tax booklet

If you paid child support for your child, you cannot claim this credit. You cannot claim this credit if you and the child’s other parent cannot agree who is going to claim it because both of you maintain a home for your child. If there is only one child between two people, then it is common for parents to take turns claiming the credit each year.

There is a lot more to family and separating family taxes than I have included in this article. These are merely the basics and the biggest issues that you need to be aware of. If you are going through a divorce, you should be consulting with your accountant and your lawyer about the best way to plan your taxes while staying on the right side of the CRA.

There is also a lot of information from reputable sources on the internet. If you are doing your own research, make sure your information is up to date and be sure to check everything against the CRA’s own website if possible.

Laurel Dietz

Lawyer

and Columnist for Reasonable Doubt with Georgia Straight

Executors, Estates Administration & Digital Assets

FASTHelp old-couple-on-computer-740x394

The pace of change in the world is ever increasing. Oddly enough, many of our seniors
are embracing that change, particularly the use of technology – computers, the INTERNET, tablets and PDA’s. They use internet banking and investing; Paypal,Bitcoin, Ebay, Amazon, interac email money transfers; Instagram money transfers and the like. If you are a named executor of someone’s estate and you don’t know what a PDA is, or any of the things listed above, you have a potential problem.

bitcoinsThe reality is that assets having real value, including “cash money”, now have a virtual
existence that you simply cannot see without a device to get you on the internet AND
without the necessary passwords to access the person’s computer(s) (there is likely
more than one device involved) to ascertain what those digital assets are and their value.There are a host of legal issues surrounding sharing or divulging login passwords, however, there are even bigger legal issues if you, as an executor, miss substantial estate assets because you did not possess a reasonable amount of technological proficiency. password
So, if you are making new will; or revising or replacing an existing one as a will maker;or have agreed to act as an executor for someone, you should make a thorough examination of what digital assets exist and how the can be accessed an controlled.
MOST IMPORTANTLY, as many domestic partners are wont to do, only one partner “takes care of business” via online banking etc., and the other remains blissfully, and willfully ignorant of the whole scheme of things. This is a disaster waiting to happen.
You simply cannot ignore technology any longer.

You do so at the peril of your partner and other loved ones!

Start a dialogue, make the time now to sit down and have a plan.

Open communication eases the struggle for your surviving spouse.

Open communication now, will ease the struggle for your surviving spouse.

 

Dogwood lawyers can help.

Call us for a free initial consultation.

778 410 5090

 

 

 

 

 

copyright@2016

FASTHelp – Property Transfer Tax

FASTHelp

Property Transfer Tax – Is it too high?

This tax was brought in by the British Columbia government in 1987. It was introduced in an attempt to slow down the speculation (house price inflation) in real estate that was happening at the time. Subject to a few exemptions, the tax is payable by anyone who purchases property.

Until February 2016, the amount of tax was 1% of the first $200,000.00 of the purchase price, and 2% of the purchase price over $200,000.000. However, when the tax was first brought in, the average home price in Vancouver was $147,000.00. The idea was that by increasing the tax to 2% for values over $200,000.00, speculation would be reduced and home prices would be kept down.

There is also a first time home buyers exemption, but it is only for homes under $250,000.00. for properties in the range of $250,000.00 to $450,000.00, there is a partial exemption. For properties with a value greater than $450,000.00, the first time homebuyers exemption is forever lost.

Homeowner Tax Concept

Property Tax

 

There have been some changes effective February, 2016. As of February, the amount of tax is 1% on the first $200,000.0, 2% on the amount between $200,000.00 and $2,000,000.00 and 3% on the amount over $2,000,000.00. There is also a new exemption for newly built homes. It has no application to used residential housing or to newly built homes with a value over $800,000.00.

What most people do not realize, is that the percentage rates for properties under $2,000,000.00 have not been adjusted since 1987 (except for a few minor increases in the first time home buyers exemption). 

So, as a result, when the tax was first introduced, the vast majority of home buyers paid only 1% of the purchase price as tax. Also, the vast majority of first time homebuyers were exempt from the tax (since so many homes were under $250,000.00). In 2015, the vast majority of home buyers are paying 2% tax on most of the purchase price, and very few first time home buyers qualify for the full (if any) exemption. The “new” 3% tax on properties over $2,000,000.00 is (as it was in 1987) a further attempt to reduce speculation. However in raising the tax on these values, there was no adjustment made to the 2% payable on houses valued from $200,000.00.

Is that reasonable??

Laima Pakstas

Lawyer

copyright@2016

 

FASThelp Business Recordkeeping and Electronic Evidence

FASTHelp

What is included in your business records may surprise you!  Do you retain your e-mails? What about your meta-data? Electronic evidence is increasingly important in business litigation.

Business Records & Evidence in the Electronic Age

(and how it affects you)

 

computer image

For some years now computers and other electronic devices have become an integral part of carrying on business for many enterprises. In addition to using software programs for document creation and storage, text messaging and email have become a large part of our communication systems as has social networking. Necessarily, the law follows societal change and must adapt with it. In the result nowadays much evidence needed to resolve disputes is to be found stored in                                                                                      electronic format.

Generically, the law refers to this as “ESI” – Electronic Storage of Information. What now poses a greater problem for those involved in litigation is dealing with the volume, types and locations of electronic “documents” as the law, and the rules of court, require litigants to list, disclose and produce documents within their possession or control pertinent to the issues in the dispute. puzzle pieceReasonableness remains a guiding principle, however the substantive law and rules of court have developed such that a litigant who has not taken reasonable steps to keep such electronically stored information in a place, and in a manner that is readily ascertainable and producible runs the risk of being sanctioned by the court eg., having your claim or defence struck out (and thereby losing by default) or, alternatively, losing your case because you just didn’t keep or cannot find that email or text message that makes or breaks the case.

We recommend therefore that you design and implement a policy and procedure for the organized electronic filingstorage – retention, indexing and searching– of important electronic information to avoid a serious pitfall. A general policy for the routine destruction/deletion of such information when it becomes old, if also reasonable, will not likely result in censure from the court. The time interval for this may vary from enterprise to enterprise but the Income Tax Act Canada effectively requires document retention for 7 years so you may wish to use that as a guide. If unsure, seek advice.

Don’t forget your PDA’s, Blackberry’s etc., as well as social networking pages/sites – Facebook etc., Remember, if you want information to remain private, DON’T put it on Facebook or anywhere else on the internet.

FASThelp: Timing your family law matters.

Timing your family law matters: A calendar for co-parents

 

Co parenting can be difficult, even at the best of times! Prior to your custody arrangements being heard in court, you will have to co parent in the midst of your separation. There are many ways to ease the tension; including timing your family law matters. Read on for advice on co parenting before written agreements are solidified.man head in hands

A lot of frustration in legal matters occurs because parents do not think ahead when making their arrangements for their children. For co-parents that have a rocky relationship, planning ahead is critical for peace of mind. The court process moves slowly on its own. There are periods of time necessary for providing notice to the other side, then there is time to wait for a court date itself in order to have your matter heard.

In addition, before you can even get to court, you must also navigate your lawyer’s schedule.co parenting heartbreak

Most lawyer’s schedules are booked up months in advance and it takes time to prepare a court application and set a court date to have the matter heard. Be prepared and think ahead; start discussions early with your former spouse about how you would like to share holidays and special events with the children. If the discussions are unsuccessful, contact your lawyer as soon as possible.

 

You should allow yourself 3-6 months to settle the matter if it needs to proceed to court; this time estimate will be greater or lesser, depending on the state of your legal matters. This seems like a lot of time, however, there is no shame in having your agreement or order months in advance of your trip, holiday, or special event. It will save on the nail biting and extreme anxiety that last minute planning results in.

co_parenting_philosophy

In August and September, it is time to start thinking about Christmas. Do you have plans yet for how that will look? Once most couples have been through the process once, they have a plan for how each Christmas will look every year thereafter. In January and February, it is time to start making plans for the summer holidays. These are likely to change every year and may depend on extended family or work schedules. Some couples are successful in negotiating the same schedule every summer in order to reduce friction and promote consistency for the children.

“Shared parenting = ALLIES. Not enemies.”  unknown

 

In June, start thinking about Halloween. Halloween is one of those events which seems frivolous at first, but for parents of young children, its an important event and one that is often overlooked until the last minute when making plans. Thinking about Halloween in June may seem ridiculously early, however, it can allow for communication between counsel or other dispute resolution mechanisms to resolve the matter if necessary.

If Easter or Thanksgiving or any other holiday is important to your family, allow yourself 3 to 6 months to make arrangements with your co-parent and consult with your lawyer. The more important the event is to you and the more difficult your relationship with your co-parent is, the earlier you will want to bring the matter to the attention of your lawyer.

Dogwood Law 778-410-5090

 

Supreme Court of Canada Strikes Down BC Court Hearing Fees

The Supreme Court of Canada has struck down the Rules of the BC Supreme Court requiring litigants to pay hearing day fees.  For more information, click here

FASThelp: Wills Variation Actions

On March 31, 2014 the Wills Variation Act was repealed by WESA – the Wills, Estates
and Succession Act, SBC 2009, c. 13. The statutory right available to those classes of
persons to have the Supreme Court review and vary a Will was preserved unchanged in
Division 6 of WESA.

gavel

What is a Wills Variation Action?

Section 60 of WESA provides as follows:
“Maintenance from estate 60 Despite any law or enactment to the contrary, if a will-maker dies leaving a will that does not, in the court’s opinion, make adequate provision for the proper maintenance and support of the will-maker’s spouse or children, the court may, in an action by or on behalf of the spouse or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the will-maker’s estate for the spouse or children.”
Section 62 of WESA also provides:
“Evidence 62 (1) In an action under section 60, the court may accept the evidence it considers proper respecting the will-maker’s reasons, so far as may be determined,
(a) for making the gifts made in the will, or
(b) for not making adequate provision for the will-maker’s spouse or children,
including any written statement signed by the will-maker.
(2) In estimating the weight to be given to a statement referred to in subsection (1), the court must
have regard to all the circumstances from which an inference may reasonably be drawn about the
accuracy or otherwise of the statement.”

hourglass
While a Wills Variation lawsuit is open to the spouse and children of a will-maker there
are legal time limits within which it must be brought, and, as is the case with all litigation in the
Supreme Court of British Columbia, the unsuccessful litigant usually pays the costs of the
successful party as well as their own. So, this is not a course of action that is embarked upon
lightly, but should be thoroughly investigated                                                                                               beforehand.

If you think you have been treated by a parent in his or her Will contrary to what the law provides, contact us. We can help you decide what is the best course of action to take.

Dogwood Law Corporation 778-410-5090

 

FASTHelp: Divorce

Here in Canada, we have a “no-fault” divorce system. This means that any married couple can get divorced as long as they live separate and apart for at least one year prior to applying for the divorce.

Divorce

In a “no fault” divorce, the reason you and your spouse are divorcing simply does not matter when settling your other matters surrounding your divorce. These matters may include property division, debt division, pension division, spousal support, child support, parenting time of children and allocation of parenting responsibilities of the children. Essentially, you are free (and expected) to manage your personal emotional turmoil on your own time and not have a judge weigh and assess the reasons for your divorce and determine who was the most morally justified party.

sad_couple-1280x1024

In order to apply for a divorce in British Columbia, you must be a resident in BC for at least 1 year prior to starting the process. You must have a valid marriage certificate. If your marriage certificate is not in English, you will also need a translation of the marriage certificate as well. Keep in mind, prior to getting your divorce the Courts require that you sort out the most important things in your life – your plan for your children if you have any. Child support and parenting arrangements MUST be considered before you apply for your divorce.

Most lawyers would recommend that you sort out your property matters as well before applying for your divorce. Other than sorting through the difficult realities of separation, the actual divorce procedure is relatively simple. If you do not have any contested matters in your divorce, you can apply for what is called a “desk order divorce.” This means that you do not even need to attend court in order to get your divorce order. A divorce usually takes effect 31 days after the order for divorce is made. This allows time for the court registry staff to complete the required paperwork on their end to ensure that your divorce is registered.

Simply getting a divorce does not mean that your former bank paperworkspouse is now automatically removed from title to your property or from your financial affairs. You must communicate with each institution to ensure that the proper steps have been taken to have yourself or your spouse removed from title to property, from bank accounts, credit cards, and mortgages, among other things. If you are freshly separated and wish to discuss the divorce process and consequences of divorce, it is worthwhile to consult a lawyer to make sure that you’ve considered everything. If you have been separated for a long time, but still have not managed to get your divorce finalized, speak to a lawyer about doing up the paperwork for you.

Dogwood Law offers a free 30 minute consultation process, call today and book your appointment.

778-410-5090

 

FASTHelp: Must you have a will?

Don’t know if you should have a will or not?

There is no law of general application in force in British Columbia which requires you to
make a Will.

Last Will and TestamentIn the absence of your having a Will to express your wishes after your death, your
possessions (collectively termed your “estate”), will be distributed in accordance with a
legislated scheme set forth in the Wills Estates and Succession Act (WESA) which will vary
depending on the next of kin you have left behind. This scheme may not be agreeable to youeither now or in the future.

A person who dies without having a Will is said to die “intestate”.
Just because there is no legal requirement for anyone to make a Will does not mean
that a given person should not make a Will. On the contrary, making a Will and keeping your
Will up to date, is not only the assurance that your estate will be given to those people to
whom you want it to be given, but it’s also a labour of love on your part to ease the burden
and suffering of the loved ones you have left behind as to what they should do with your
estate.

Attractive Happy Senior Couple in Front Yard of House.

Make a will and feel secure.

For the most part having a valid and up to date Will goes a VERY long way toward
making a difficult time for your partner and family much, much easier to contend with.
All Wills are not equal however, and our law is a living thing which constantly changes.
Accordingly we do not recommend the use of “stationers Wills”, the prepackaged
one-size-fits-all Will “Form” available for a few dollars from a stationer or from the internet.
(UNLESS, of course, you want to send your estate into years of protracted and expensive
litigation.) The difficulty with a do-it-yourself Will is that you cannot fix any problems created
by it…..you are no longer here.

legacy and will
Generally, if you: own a home; have a spouse; children; or are in a second/blended family, then you should make a Will.

Contact us for more information and a free initial consultation. 778-410-5090

 

FASThelp: Statutory Holidays in British Columbia

 

British Columbia officially observes 10 statutory holidays every year.  Federally regulated employers observe additional days.  Very few have fixed dates.  Where those fall on a Sunday, they are generally observed the following day.  Others fall on specified Mondays by legislation, while Easter is determined by the lunar calendar.

The following table lists the statutory holidays for 2015-2018

 

2015

2016

2017 2018
New Year’s Day Thursday
January 1
Friday
January 1
Sunday
January 1
Monday
January 1
Family Day Monday
February 9
Monday
February 8
Monday
February 13
Monday
February 12
Good Friday Friday
April 3
Friday
March 25
Friday
April 14
Friday
March 30
Victoria Day Monday
May 18
Monday
May 23
Monday
May 22
Monday
May 21
Canada Day Wednesday
July 1
Friday
July 1
Saturday
July 1
Monday
July 2
B.C. Day Monday
August 3
Monday
August 1
Monday
August 7
Monday
August 6
Labour Day Monday
September 7
Monday
September 5
Monday
September 4
Monday
September 3
Thanksgiving Day Monday
October 12
Monday
October 10
Monday
October 9
Monday
October 8
Remembrance Day Wednesday November 11 Friday
November 11
Saturday
November 11
Sunday
November 11
Christmas Day Friday
December 25
Sunday
December 25
Monday
December 25
Tuesday
December 25

Note: Canada Day is usually July 1st. If July 1st falls on Sunday, Monday July 2nd replaces July 1st as the statutory holiday.
Easter Monday (Monday following Good Friday) and Boxing Day (day following Christmas Day) are not recognized as statutory holidays in British Columbia. Federally regulated employers, public sector employers and many private companies do give their employees Boxing Day and Easter Monday as days off. BC observes Family Day a week earlier than other provinces.

 

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