Taxation- Personal & Corporate University of Winnipeg Investment Group

Taxation In this world nothing can be said to be certain, except death and taxes- “Benjamin Franklin” The only difference between death and taxes is that death doesn’t get worse every time congress meets- “Will Rogers” Apart from death and taxes, the one thing that’s certain in this life is that I’ll never be a fashion icon-”Bruce Dickinson”

Tax Terminology CRA: Canada Revenue Agency IRS: Internal Revenue Service Tax Credit: Straight up money in your pocket on your tax return Tax Deduction: Equal to the amount of income you don’t have to pay tax on Non-Refundable: Can only be used to bring net income to zero, cannot exceed Refundable: Can be used to bring net income below zero, which results in a refund balance

Personal Basic Personal Amount: The considered poverty line in Canada: You don’t pay tax on income up to this amount Federal: $11,327 Provincial: $9,134 Tuition Deduction: The total amount you pay for tuition less UWSA, and University fees Can be used in each year you’re going to school or carried forward for future years

Personal Education allowance: An allowance given as a tax deduction for each month you’re in school Full time: $400 a month for each month you’re in school for a given year Part time: $120 a month for each month you’re in school for a given year Textbook allowance: A flat allowance given as a tax deduction for each month you’re in school Full time: $65 a month for each month you’re in school for a given year Part time: $20 a month for each month you’re in school for a given year

Manitoba Tuition Fee Tax Rebate Eligible to claim 60% of your life time tuition costs $5000 x4-5 x 60% years=$12,000-$15,000 Can be used in as little as 7 or maximum of 20 Must stay and work in Manitoba

Tax Rates-Marginal 15% on the first $45,282 of taxable income, + 20.5% on the next $45,281 of taxable income (on the portion of taxable income over $45,282 up to $90,563), + 26% on the next $49,825 of taxable income (on the portion of taxable income over $90,563 up to $140,388), + 29% on the next $59,612 of taxable income (on the portion of taxable income over $140,388 up to $200,000), + 33% of taxable income over $200,000

Other Personal Fitness Tax Credit Public Transit Tax Credit Medical expenses deduction Dentist expenses deduction Donation-20% as a non-refundable Employment Insurance Canada Pension Plan Union dues

Investment Registered Retirement Savings Plan(RRSP) Tax deduction: Every dollar you put in an RRSP is considered a tax deduction Group Savings Plans/Defined Contribution Plans: Every dollar you put in a group savings plan is considered a tax deduction Total amount of these two cannot exceed 18% of your income up to a maximum of $24,930 Dividend Tax Credit: Gross up(Total) tax rate of 38%-Manitoba offers an 11% rebate so (38-11)=27% effective rate TFSA: Non-taxable at every level

Investment Capital Gains: Taxed at one half of your marginal tax rate Strategy: Use registered accounts, create homemade dividends through capital gains Home made dividends: Dividends through sale of shares, so capital gains Why? Dividends: 27% tax rate or for someone earning $45,000: 7% capital gains

Free Money Manitoba Personal Tax Credit: $195 $113 for each spouse or dependant GST/HST Tax Credit: $100 every 3 months Additional for each spouse/dependant Education Property Tax Credit:20% of total rent minus 250 up to a maximum of $750

Example-Student making $20,000 Personal amount: $11,000 Education allowance: $400x8=$3200 Tuition amount: $5,000 Textbook: $65 x 8= $520 Total: $19,720 Taxable Income: $280 Tax Paid: $3000 Rent Deduction:$750 Tax owed: $42 Total Tax Refund: $3708

Student making no income Personal Tax Credit: $195 Rent Deduction: $750 Total Tax Refund: $945 Total Tuition Carry forward room after 4 years: $46,880 Total Tuition Carry forward room after 5 years: $58,600 Estimated Tax refund in the future: $11,720 or $14,650

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