TheTaxSmith

"For clients under age 65, RRIF income, DPSP income, annuities, PRPP income, income-averaging annuity contracts, or RRSP income will only qualify for the pension income amount if they’re received because of the death of a spouse or common-law partner." https://www.advisor.ca/columnists_/frank-di-pietro/understanding-the-pension-income-tax-credit/

You need to file the T776 and convert all revenues and expenses to CDN currency. If you paid US tax you will also need to report that as foreign tax paid to claim a foreign tax credit. For the CCA schedule you need to convert the acquisition cost to CDN currency. Now something that is not well known is the actual cost of the property if you have a loan in US currency. The principal payments on the US loan should be allocated to the cost at converted dollars over time for the CDN T776 CCA schedule. For instance if the loan is a US loan then each month you make a payment the principal portion converted to CDN dollars can add to or reduce the original converted acquisition cost based on currency fluctuations. Since you did not actually pay in cash for the property the CDN cost will change over time and can only be allocated as you make the loan payments. Any cash you paid up front of course will be added to the cost when you paid it. If the loan is in CDN currency then the above does not apply.

You need to indicate that the property is owned 50% each and then at the end of the data entry indicate that you want to have the schedule also reported on your spouse's return and then show the ownership at 50%. Do not fill out a rental schedule on your spouse's return.

Posted by Nawal in 2020. 1. On the "Left side menu on the Interview tab", select "Interview setup". 2. On the right-hand of the screen, go to the "Employment and other benefits" group, check the box for "Employment expenses" and click "Next" at the bottom of the page. 3. Return to the "Left side menu on the Interview tab", select the "Employment expenses" and click on the plus "+" icon to the right of the appropriate line 4. On the "Employment expenses" page, enter the relevant information such as expenses related to your job and any benefits that you received. 5. If you used your vehicle for certain job-related travels, complete the subdivision entitled "Motor vehicle expenses". 6. Complete the subsection entitled "Employment conditions" and, if you were a resident of Quebec, the second sub-section "Employment conditions - Quebec". The program will generate the statement of employment expenses, the federal T777 and the T2200 on conditions of employment. In addition, the program will carry the amount on line 22900 of the federal return.

You should only indicate that the rental is a co-ownership, enter 50% as your share, then enter all the income and expenses. At the end indicate that it is a co-ownership with spouse and request (via drop down box) to transfer the schedule to your spouse's return and enter 50% for their share. Don't use the partner level (pro-rated). One point to explain is that CCA can not reduce rental income below zero unless there is more than one property and the extra CCA can be used against the other property because it has a positive income.

Hi there, yes you should file a 2022 Estate return and send a cover letter to CRA explaining the situation. Keep a copy of the cheque as proof of the 2022 date as well as including a copy of the cheque for CRA. If you need a referral for a CPA in BC you can send me a private message. Take care, and remember Tax season is the most wonderful time of the year. Well for some, LOL.

I think the payment you received is actually a Quebec teachers retirement plan payment and not a payment from the Quebec pension plan (QPP). The QPP if not applied for before death will have no balance after death to pay out from. Take a look at this https://www.retraitequebec.gouv.qc.ca/en/deces/rentes-prestations/Pages/rentes-prestations.aspx The teachers pension plan however will have a balance and will be payable to the Estate after death. What is the reason why the payment was received in 2022? Is the cheque dated 2021? The fact that you are told the plan was deregistered in 2020 and the slip is dated 2020 seems odd given you only received the cheque in 2022. Did the government make attempts to pay the amount earlier in 2020 but the funds were returned? If that is the case then 2020 is the taxable year. The Estate return is then due in early 2021 and any flow through to the beneficiaries will require they adjust their 2020 tax returns. You should take that into consideration to determine if it may be batter to have the Estate claim the income, pay the higher tax, and apply the withheld tax against what is owing and any penalty and interest charges.

Is your wife 65? Take a look at this https://www.advisor.ca/columnists_/frank-di-pietro/understanding-the-pension-income-tax-credit/

The 53%applies to graduated rate trusts which begin to exist 36 months after death. But income distributed by allocation to beneficiaries reduces the Estate income. That distribution by way of allocation and T3 slips gets taxed in the beneficiaries personal tax return. The taxes withheld are Estate taxes and can not be transferred to the beneficiaries. So you claim them as Estate taxes paid and because the Estate has no taxable income the taxes will be repaid to the Estate. Since the full gross amount of the QPP income was allocated to the beneficiaries which includes the tax withheld, the taxes are not owed by the Estate and will be reimbursed. The issue will also be that you may need to set up an Estate account to cash the cheque. Some banks will allow a different treatment when you produce all the documents such as the will and tax return assessments. The lump sum pension does not trigger a locked in 53% tax payment when the income is distributed. Alternately you can let the Estate pay the 53% and distribute the net amount after tax to the beneficiaries without them paying any income tax.

Follow this link for Schedule 9. https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t3sch9.html When you complete Schedule 9 you should allocate all the income (gross QPP paid) to the three beneficiaries as per their share. Then you will need to issue three T3 slips for the beneficiaries. The taxes deducted (as you initially mentioned) will be claimed as taxes paid on the last section of the T3 return. Since you are not filing a Quebec resident estate return you should add the Quebec and Federal tax together and allocate it as tax paid on the Federal return for the province of residency. The Estate will make the claim for those taxes to be refunded. Now there could be a wrinkle here due to the Quebec tax but let it happen and then adjust based on the response. After all is settled you can issue the funds to the beneficiaries. The gross QPP will be taxed on each individual's personal tax return. The tax deducted will be refunded and it can be distributed without any income tax consequences. Unfortunately the problem with Quebec tax being deducted was made by someone providing the Quebec QPP department with an address in Quebec. Sometimes the only way to get the Quebec tax refunded is to later sent a copy of the Federal Estate T3 assessment to Quebec indicating that they would not refund the Quebec tax portion (if that happened), add a letter explaining the address problem, and as well by filing a Quebec Estate return showing NIL income and tax paid (to get a refund). Complicated but that could be the final solution.

The higher tax rate is due to a change in Estate (T3 Trust) filing back in 2016 and Graduated Rate Trusts. See the following https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/budget-2014-road-balance-creating-jobs-opportunities/graduated-rate-taxation-trusts-estates-related-rules.html That change has now impacted your file. You should compare the total tax impact on the 3 beneficiaries versus the tax impact in having the Trust pay the tax. You can flow the QPP through the trust and provide slips for the beneficiaries, allocating both income and tax to each to avoid paying the higher trust tax if it is beneficial. The link above also explains the year end the trust would have. Your dilemma may be the year on the QPP slip versus when you received the funds. That 2020 year would require adjusting the beneficiary returns with possible interest charges on any tax owing. The death benefit amount received back in 2016 should have been filed on a T3 return and either having tax paid by the trust, or a flow through to the beneficiaries. The fact that the death benefit was applied for you should look at when the QPP pension was effectively applied for. If it was by any chance applied for before death you would have an opportunity to file a Rights and Things return and be able to exclude all or a substantial amount of tax. Then any amount left would be distributed to the beneficiaries after tax and would not impact their personal tax situation. That may seem to be a bit complicated but I hope it explains things a bit.

It is as I originally thought but was looking for avenues to reduce the tax for the file. The executor has the choice of residency for the estate. If the executor is resident in a jurisdiction different from the the deceased's residency then the executor can decide which province the estate will file in. I suspect Alberta is the better choice however. So the QPP can be taxed on an estate T3 or flowed through to the beneficiaries with the subsequent tax withheld. As Quebec tax was deducted it basically is added to the Federal tax. This will complicate the process with CRA but that is how it works. Consider the year end you chose for the initial trust return to determine what tax year you are filing on the T3 and the subsequent flow through to the beneficiaries and what year they will claim that amount. Now you need to also look for the $2,500 QPP death benefit. Did you get that?

Where was the deceased a resident of? What date was an application for the QPP made? Typically an executor would file a Final return, a possible Rights and Things return, and an Estate return. If you can respond to the questions above it would make an answer to your question more specific. Where someone died is not necessarily the same as where they resided for tax purposes. Also I suggest you look at the CRA guide for filing tax returns for a deceased taxpayer. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4011/preparing-returns-deceased-persons.html

Hello Spidersan. Basically she will be taxed in the Province of residency as at 31 December even if she only worked there for one month. Look to see if there is Federal tax deducted that is being transferred to the Quebec return. That is the usual situation. Also since she worked separately from her teaching job she may have not been placed in the correct tax withholding bracket. So perhaps not enough tax was deducted by Starbucks based on all the income she was actually earning. On top of that Quebec taxes can be higher than Ontario taxes, so it is what it is.

Look closely at each schedule you fill out as there is usually the option to select to not transfer. But that said if it is transferring it is usually the best outcome. However it is nice to be able to see the difference for reassurance. The Ufile software is the little sibling of a major commercial tax prep software used by many accountants and is very robust.

I posted this back in February 2021. Do a search for OAS Go to the Interview tab then click on "Interview setup" in the index list. Look to the right and look for "Pension". Tick the box. From there look back at the Index listing on the left and look for "T4A and pension income". Click on that and to the right you will see in the "Pension income" group a Confirmation schedule, add it and you should be ok once its completed. Select Adjustment of old age security pension. Just for information purposes. When you do decide to apply for OAS consider asking for a retro payment for the preceding 11 months. It might be beneficial.

This will/should explain what is happening. https://www.taxtips.ca/filing/spousal-dividend-transfer.htm

How did you complete the CCA schedule? Seems like something is not entered correctly. Take a closer look at your data entry.

Not enough information to respond. Are you collecting pensions and pension splitting is in play? Why are you filing jointly if you are separated?

Hi HMJC. Good to hear. So all ok now. In the CRA publication they could have explained that but c'est la vie!

Hello HMJC. You are correct in your understanding that the January HBP withdrawal from your RRSP should be considered as withdrawn on the same date as your first withdrawal. You should provide a copy of the CRA publication to your bank and once again ask about the slip. That said you could also enter it as a 2021 HBP withdrawal and provide proof later to CRA should they follow up. CRA does get records from the bank directly and should be able to verify independently the withdrawal date.

Hello Moomin. Yes you enter the $203k amount as the ACB. The ACB will get updated each time you include amounts in the additions area. That amount will eventually be used to determine any capital gain and CCA recapture when you dispose of the property. Make sure you allocate the purchase ACB between the building and the land. The land portion can not be used for CCA claims. If the building is owned 50% each owner can claim their respective share of the CCA each year.

You can also search the community site for posts concerning CCA, ACB, etc. That said if this is the first year you are claiming rental income you will leave the Opening Balance area blank. Next you will enter the purchase cost of the building as an Acquisition. The acquisition amount is the ACB, and you must be careful in how you determine that. You purchased land and a building but only the building portion can be used for a CCA claim. Also any costs for a survey, legal fees, appraisals, inspections, municipal transfer taxes must be allocated proportionally to the land and building cost to determine the correct ACB. Those costs are not rental expenses. From there you let the software determine the CCA to be claimed. If it's the first year the CCA will be half. Now if you have claimed rental income in prior years you will enter that ACB amount you determined, as mentioned above, in the Opening Balance area and let the program determine the rest. The Land ACB will not be subject to a CCA claim and you need to enter it in a Land category and make sure you keep a record of how it's ACB was determined.

Hi Aryan. That has always been an issue, due to interest payment dates, different tax year ends between countries. I suggest you use the date and year the interest was received in this case. So if the bank in India paid you in 2021 and withheld tax, even if it was part way through the year, then use that for your 2021 CDN returns. For the 2022 interest payment from India use that on your 2022 CDN return. CRA should not have any issues with that and it is easier for all to understand. Trust that helps.

Hi there. Try looking at this to understand about capital properties and rental income as well as Capital Cost Allowance. If you can provide more specific numbers it would be relatively easy to help you allocate amounts to the proper areas. How does that sound? Read this first https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/capital-cost-allowance-rental-property.html