If you have lost your job or are retiring and will be receiving a severance payment, you may be able to shelter some of your severance from income tax. To be able to do this, the payment must qualify as a retiring allowance and depending on your circumstances, some may be direct transferred to an RRSP. What Is A Retiring Allowance?…
The Income Tax Act has broad and general rules requiring most fringe benefits to be included in net employment income. The government wants to discourage employers from substituting tax-free fringe benefits for actual cash compensation to avoid income tax. In the end, the value of a benefit of any kind must be added to your employment income. Examples of Taxable…
Many employers offer a range of benefits to their employees. The value of fringe benefits are considered taxable benefits and are included as income on your paycheque. This begs the question: Are fringe benefits really a benefit? It is possible to get the same benefits yourself for less? You need to know your marginal tax rate, how much benefits will cost you and…
The 2007 tax year was a big win for seniors when the Government introduced pension income splitting which allows lowering income taxes between spouses. Prior to these new rules, only Canada Pension Plan could be split but the calculation was done by the Government and was not straight forward. How Pension Splitting Works In order to split your pension income,…
If you receive certain pension income, you may be able to claim the $2,000 pension income tax credit (also known as the pension amount) as well as split this pension income with your spouse or common law partner. But what pension income qualifies? If You Age 65 Or Older If you are over the age of 65, the following qualifies…
The Income Tax Act requires that the value of all benefits be included in employment income and taxed accordingly. However, there are some provisions of the Income Tax Act and some administrative practices that may allow for tax-free payments. Non-Cash Awards - If your employer provides you with on-cash gifts for say, birthdays, Christmas, or for a wedding, then the value…
