It has been a longstanding administrative position with the Canada Revenue Agency, that you did not have to report the sale of your principal residence on your personal tax return if it was covered by the principal residence exemption for all the years you owned it.
This has now changed! On October 3rd, 2016, Finance Minister, Bill Morneau introduced new rules to tighten up mortgage lending and deal with some issues with foreign home buyers. However along with these, a change was also put through, that starting in 2016, now requires you to report the sale of your principal residence on your personal tax return in the year of sale. It will still be tax free if covered by your principal residence exemption, but will give the CRA more information to combat perceived "home flipping" in the current hot real estate market and likely reduce unreported taxable sales of homes and cottages.
This is a significant change in that if this is not reported, it may effect your principal residence exemption when trying to use it in the future on another sale, and the CRA can now go back and assess non reporting penalties if you do not report the sale of you principal residence starting in 2016.
From the CRA's information released on this change - "You will complete Schedule 3 and file it with your T1 Income Tax and Benefit Return for the year you sell the property. If the property was your principal residence for every year that you owned it, you will make the principal residence designation in your Schedule 3. In this case, the year of acquisition, proceeds of disposition and the description of the property are the information that will have to be reported. Schedule 3 will be modified accordingly. Form T2091 (or Form T1255) will still be required for the designation in the case the property was not your principal residence for all of the years that you owned it.
So you will now want to ensure that the disposition of your home, including information on when it was purchased and proceeds of sale, is reported or it may haunt you down the road.
We are moving our location just across the street at 373 Midland Ave. We have been busy packing everything up and unpacking. You can find us here after August 24th! Please come for a visit to see our new digs!
We have received a few calls from clients who have recently received threatening calls purporting to come from the Canada Revenue Agency (CRA) stating that they owe quite a bit of money or are being audited.
As a general rule, do not give any personal information over the phone or via e-mail. If you are not sure, ask the caller to identify themselves and to send you a letter in writing stating the facts and what they are requesting. Generally, unless you have signed up to receive Online mail from the CRA, the CRA would not e-mail you. They generally would initiate contact with you via a letter through the mail.
Note that the CRA is aware of fraudulent phone calls and e-mail scams that are and have been underway. Please see a link to their warning on this here. The CRA also has a page with other fraud warnings and examples of fraudulent telephone messages, e-mails and letters. See link to that page here.
If you are still unsure, you should bring any correspondence received to your accountant for their input and advice._
I recently attended a seminar hosted by CPA Ontario, on Cloud Computing....and it turned out to be very interesting.
Cloud computing is currently one of the biggest changes we have seen in how we use our computers and access and store our data in at least a decade. Although we may not realize it, most of us are already using the "cloud" in our daily lives.. Whether this means using internet banking, posting our pictures on Facebook, streaming music through iTunes or watching movies on Netflix. The presenter of the seminar related this change to computing reverting back to how things were done at the advent of computing back in the '70's. People would work on a terminal to access data which was saved on a large mainframe computer in a different room or different office. Similar to this we are now moving away from storing our data on our desktop, to having it stored in a large data centre somewhere else in the world and accessing it over our internet connection to our computer, laptop, tablet or smartphone.
As with most other programs, applications or "apps", accounting and bookkeeping has now also migrated to the cloud. The current popular bookkeeping programs, QuickBooks and Sage50 (Simply Accounting) now also have cloud versions.
QuickBooks Online allows easy migration of your current Quickbooks data to the cloud. One of the benefits is being able to access the data from any device, anywhere. Not just on your office desktop. It also allows easy sharing of data if there is more than one person who wants to access the books, for instance, the treasurer and executive director of a non profit organization. Not to mention the easy sharing of data with your accountant who can then make adjustments needed directly to your books . Password security allows this to be secure and you no longer need to worry about backups.
As far as thing being secure, supposedly the CIA is using Amazon's large data centers to store and manage their top secret data, so I'm betting the security at the data centres being used by most major retailers is a bit better then you locking the door to your office as you currently do to keep your desktop or laptop from being stolen.
One of the downturns of migrating to the cloud however, is that although they make it easy to upload all your data to their system, like in the case of QuickBooks, it does not look like it is a simple task if you want to move that data back to your desktop accounting system with certain cloud based apps. Hopefully this is something that will be improved.
Sage offers a cloud version called Sage One, which can be used on any device. As an example, this would allow you to invoice customers on the spot for service calls using your smartphone and e-mailing the invoice to them. Sage One is a bit different from QuickBooks Online as it integrates with your existing Sage 50 data that you keep on your desktop or laptop. The data from the cloud at the end of the day, or end of the week, can be downloaded back to your computer and to your full set of books you keep on Sage 50.
There are also other cloud based bookkeeping alternatives out there, including Freshbooks and Wave Accounting. Wave differentiates itself from the other accounting packages in that it is free and still offers a full double entry accounting system.
Most of these online cloud versions allow you to download your bank transactions directly from your internet banking right into your accounting program to save you time of manually entering every item. Some programs also provide the ability to be able to take pictures of your receipts with your smartphone, being able to store those as your tax support, and also, using optical imaging technology to upload these receipts to your accounting program, picking out the payee name and the amount you paid and have this automatically entered in your books.
Wow - technology!