Car Allowances
Are there different types of car allowances allowable under the Income Tax Act for vehicles used to earn business or employment income?
One type of allowance is a regular, periodic amount that is paid everything month with the number of miles driven having no effect on the amount.
The second type is based on an amount given per business kilometre driven. This type of allowance is not taxable in the hands of the employee.
All of them involve the accurate and complete keeping of mileage logs for all business use of the vehicle.
Each allowance has its benefits and drawbacks and should be discussed with your tax professional.
Splitting of Pension Income
Can pension income may be split between both spouses, no matter who earned the pension?
Implemented in 2007, this new provision allows for tax savings for the spouse who is taxed at a higher rate. It will be very beneficial for the senior whose income exceeds the threshold for the Old Age Security limit, a sore point for many Canadians.
Collection of Canada Pension Plan
Can I start to collect my Canada Pension Plan at the age of 60 instead of age 65?
Yes, you can. But for every year under the age of 65 there is a reduction of six percent of the Canada Pension Plan amount that would be available at age 65. For example, someone collecting the CPP at age 60 will lose 30 percent of the pension expected (five years multiplied by six percent).
This lower value is the amount received for the rest of the person's life. It does not rise to the expected amount once the person attains the age of 65.
Power of Attorneys
Without a proper Power of Attorney, can a spouse who becomes mentally incapacitated have his/her share of assets placed under the watchful eye (and possibly control) of the Provincial Government, no matter if it is owned jointly with the other spouse?
Along with a current Will, a Power of Attorney is crucial to ensure that the wishes of a family are followed when someone becomes incapacitated and is not able to act on their own behalf.
Life Insurance
Is it true that life insurance is a very valuable succession-planning tool for almost all Canadians?
The proceeds from life insurance are not taxable to the estate or any subsequent beneficiary.
Life Insurance assists in the succession planning of a family business by providing funds to pay the tax liability that arises on the owner's death.
It also helps in personal estate planning of individuals by providing another method in equalizing the distribution of assets between different beneficiaries.