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ESTATE PLANNING

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RDSP

A new Registered Disability Savings Plan (RDSP) with a Canada Disability Savings Grant (CDSG) Program and Canada Disability Savings Bond (CDSB) Program is applicable in 2008. There will be a lifetime limit of $70,000 on CDSGs and $20,000 on CDSBs.

Eligibility

Generally, any person eligible for the Disability Tax Credit (DTC) and resident in Canada, or their parent or other legal representative, will be eligible to establish an RDSP.

CLEARANCE CERTIFICATE

In a July 10, 2007 External Technical Interpretation, CRA notes that the distribution of property to a non-resident beneficiary in satisfaction of their rights under the Trust or the Estate is subject to a withholding tax unless a Clearance Certificate is obtained.

Taxpayers should also be aware that every non-resident person who in a taxation year disposes of any Taxable Canadian Property shall send to CRA a Notice.

Failure to comply may result in a penalty of $25 per day to a maximum of 100 days for a total of $2,500.

If this has been missed, a “Voluntary Disclosure” to CRA should be considered.

WARNING

In a November 29, 2007 Release, CRA warned investors about questionable RRSP and RRIF tax-free withdrawal schemes. To date, CRA has reassessed over 3,100 taxpayers, commenced audits on another 1,800 taxpayers and, audits on other arrangements are about to begin.

CRA advises that taxpayers should avoid schemes that promise withdrawal of funds from an RRSP or RRIF without paying tax, immediate access to assets in “locked in” RRSPs or RRIFs, or income tax deductions of three or more times the amount invested.

The Problem

CRA notes that the full amount of any withdrawal or ineligible investment is included in income.

Also, in many cases taxpayers have lost all, or part, of their retirement savings. These schemes are usually promoted either over the Internet, newspaper ads, or promotional meetings.

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WEB TIPS

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GOOGLE CHEAT SHEET

Organized by user skill level, this 2-page cheat sheet is a great tool to print off and post near your computer.

Contained on the sheet are:

- a list of services and tools that Google offers

- a list of search tips

- basic management and Google company information.

To view the Cheat Sheet, go to:

http://www2.adelaider.com/google-cheat-sheet/

INTEREST AND MORTGAGE CALCULATIONS

www.moneychimp.com is a website that breaks down some of the more complicated aspects of accounting and finance into a layman’s understanding. Of particular use are some quick calculators that can be found by clicking the calculator tab on the top of the home page. Some of the calculators included are: Compound Interest, Present Value, Annuity, Bond Yield and Mortgage. As a caution, the calculators include only the most basic inputs. Therefore, you must be aware of the limitations and applicability that each tool has.

FINDING A POSTAL CODE

One of the quickest and simplest ways to find a postal code is to use the Canada Post website:

www.canadapost.ca

On the left side of the homepage there is a menu that includes “find a postal code”. Upon selecting this option, you will be able to enter the other pertinent address details and then be presented with the related postal code.

Additional note! Whenever looking for directions or distances on websites such as Mapquest, use the postal codes of the starting and ending locations instead of the full address. It will save you a ton of time! Generally, one postal code is used per block, therefore, directions should be fairly accurate.

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DID YOU KNOW...

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eBAY

It was reported in the Globe and Mail that CRA have won a Federal Court Order requiring eBay Canada Ltd. to turn over the names, addresses, phone numbers and e-mail addresses of all high volume sellers on its website.

CRA is checking to see if the sales were reported on the 2004 and 2005 tax returns. CRA noted that it is targeting people who qualified for eBay’s Power Seller Program in 2004 and 2005.

REBATE/GREEN LEVY - VEHICLES

The 2007 Federal Budget introduces a vehicle efficiency incentive rebate of up to $2,000 for highly fuel-efficient vehicles (6.5 litres or less/100 kms - see www.tc.gc.ca) and a new Green Levy on fuel-inefficient vehicles (13 litres or more/100 kms) of up to $4,000.

The rebate applies to eligible new vehicle purchases or leases after March 19, 2007. See www.ecoaction.gc.ca for information and forms.

The Green Levy will apply to new vehicles delivered or imported after March 19, 2007.

CRA PENALTIES

CRA notes that starting January 1, 2006 penalties are being applied to all late-filed foreign reporting forms such as Forms T106, T1134, T1135, T1141 and T1142. To avoid being assessed a penalty, consider going through the Voluntary Disclosure Program at the local Taxation Service Office.

Editor’s Comment

We have heard of a number of $2,500 penalty assessments for late/unfiled T1135 Forms (foreign property costing $100,000 or more) - even if the income is reported.

Some of the assessments have been related to foreign investments held in brokerage accounts.

NIGERIA SCAMS

In a November 2, 2007 Tax Court of Canada case, the taxpayer lost approximately $300,000 from a fraud emanating from Nigeria (Nigerian Advance Fee Fraud).

CRA successfully disallowed a deduction for tax purposes on the basis that the losses had no connection with an actual business.

See www.phonebusters.com for information on scams.

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