FRAUDULENT CALLS INCREASE

We noted in our newsletter last summer that fraudulent phone calls from imposters posing as individuals from the Canada Revenue Agency (CRA) were on the rise. Since then, the level of harassment has increased dramatically. In June of this year, the RCMP in Penticton reported that 51 people contacted their office in one day to inform them that they had received a phone call from people posing as employees of the Canada Revenue Agency.  nl1
Unfortunately, this means that these individuals must be having some level of success, as this has become one of the most common phone scams in Canada today.  Many of our clients have  reported receiving these calls. Often times the taxpayer will receive a recorded message. The message will warn the individual that they have a debt with the CRA that must be paid immediately.
The message will go on to say that if the taxpayer does not return the call, the police will be coming to arrest them for not making this payment.
It is important to note that the CRA will NEVER leave personal information on an answering machine message. In other cases, it can be an actual caller. These people can be aggressive and belligerent. They will usually want to receive payment in the form of Western Union transfers, gift cards, or prepaid credit cards. In most instances, there is very little that can be done about these phone calls. The CRA will advise taxpayers to call the Canadian Anti-Fraud centre. People can also call the RCMP, although there is little the  RCMP can do to stop the calls or recover lost money.

New Tax Credit for Coaches

A new credit was introduced for teachers this year to encourage involvement in volunteer activities at qualifying schools.

The B.C. Education Coaching Tax Credit is a non-refundable tax credit for teachers and teaching assistants who volunteer for at least 10 hours of extracurricular coaching activity in the tax year. The provincial credit amount is $500, providing a tax benefit up to $25.30.

The credit is available for the 2015, 2016 and 2017 tax years. The taxpayer must be a resident of B.C on December 31 to quality for the credit. The extracurricular activities must be performed after school or on weekends, and can include sports, arts and many more activities.

In order for the school qualify, it must provide instruction for the children from kindergarten though grade 12. This would include public schools, francophone schools, independent schools and First Nation schools.

Activities undertaken at preschools would not be eligible to quality for this credit.

Fall Newsletter

You can get our 2015 Fall Newsletter either online if you have signed up for our mailing list, from your local office or here.

Please feel free to let us know if you have any questions or talk with your local office.

MINIMUM RRIF WITHDRAWALS DECREASED

Registered Retirement Income fund (RRIF) rules were recently changed to take into account the changing financial outlook for retirees. The government does not allow taxpayers to keep investments in their Registered Retirement Savings Plan (RRSP) for their entire lifetime. By the end of the year in which a taxpayer turns 71, they must have rolled their RRSP into a RRIF, or report all of the money in their RRSP as taxable income on their personal income tax return for that
year.
Once the investments have been rolled into a RRIF, the government dictates the amounts that must be withdrawn from the RRIF on an annual basis.
Minimum annual withdrawal amounts, coupled with decreasing interest rates, were resulting in many retirees depleting their RRIF’s earlier than anticipated.
The original calculations used to determine the required withdrawal amounts from RRIF’s were based on assumptions that returns on investment would be 7%, and inflation would be 1%. This type of investment return is now unrealistic for most seniors with a conservative portfolio.
The new guidelines assume a 5% return on investments, as well as a 2% rate of inflation. Although a 5%  return may still be higher than most retirees receive on their investments, it has helped to reduce the minimum withdrawal rate. The new minimum withdrawal rate for people who turn 71 in the year will be 5.28% of the balance in the RRIF. The previous minimum withdrawal rate was 7.38%. Furthermore, between the ages of 71 and 94, all minimum withdrawal rates have been lowered. By the time a taxpayer is 94, the minimum withdrawal rate is 20%, which is the same percentage that has been used in the past. For somebody  who has withdrawn over 5.28% already from their RRIF, they will be allowed to repay their overpayment back into their RRIF. The excess must be recontributed
to the investment by February 29, 2016. One drawback of taking a smaller annual withdrawal is that the taxpayer may have a larger balance in their RRIF when  they pass away, resulting in a higher total tax bill on cumulative withdrawals. This should be considered when determining how much is going to be withdrawn on an annual basis.