Legal Fees (Assorted Topics)

Perhaps they may even issue a T5 for the interest on our four Month retro. So let's see two T5's from Manulife, and two T5's from my financial institutions, 2 + 2 = 4

4 x T5's for trooper, plus a handful of T4's, this will be my lifetime record for filling my taxes.

What is the word I'm looking for ( UNBELIEVABLE )

Now the way I feel tonight is that I just want to get my taxes done and over with, I may even write a note on my T1198 saying something like this, ( please send me my money that you owe me from this form, as you have gotten your share of taxes from my return )

I was in Halifax for the hearings and the point was made clear and reiterated numerous times by MC that the legal fees were tax deductible for the class ~ however, it was not explained to attendees or to Justice Barnes that the legal fees would only be deductiable at a 15% rate which is a fraction of the actual amount we paid. This calculation and the T5 implications are going to be a heartbreaking reality that many class members will not be aware of until it is too late.

Too true, Rex, today I just borrowed 64000 for a RRSP , using this I will still owe 3000 dollars at the end of the day , heart breaking

This is just another example of how the legal team failed us during negotiations. Surely they had to of known that their fees would not be taken off our income dollar for dollar, after all, they said they have tax experts on payroll. after all, it was this "deduction" and the almost non existent tax top up, that were touted as their reasoning for not seeking some sort of tax exemption as part of the settlement.

Yes and I believe this was sold to us as a dollar for dollar deduction . This oversite is going to cost us all a ton

Not sure if others are aware of this ~  the legal fees individual class members paid to MC although the total amount paid in legal fees is an "allowable claimed amount" they are not tax deductible dollar for dollar from our taxable income but rather a portion thereof as per the CRA Tax Return.

For example ~ Ontario resident
On the income tax return form 2013
Line 232 Other Deductions ~ Legal Fees
line 232 are a non refundable tax credit ~ you add up all your deductions then times it by 15 percent and you deduct that amount only.
For example: if someone paid $10,000  in legal fees 15 percent of this is $1,500 therefore that is the credit amount applied to your taxable income that reduces your taxes paid and not the total amount of legal fees as the amount deductible.

Thanks I fixed your link for ya

teentitan wrote:FYI line 104 to declare this you should have received a letter from Manulife that you paid $XXX amount into the SISIP plan.  It is on the CRA books that we get to deduct the amount we paid.  I did it back in 2000 and it took a few CRA agents to find the rule that CF/RCMP negotitated this agreement for their clients.

Thanks Teen, I added your points to the above list.

how would one go about getting all this info send links and necessary info with phone numbers and such thanks boys and girls

FYI line 104 to declare this you should have received a letter from Manulife that you paid $XXX amount into the SISIP plan. It is on the CRA books that we get to deduct the amount we paid. I did it back in 2000 and it took a few CRA agents to find the rule that CF/RCMP negotitated this agreement for their clients.

Some real good tips Sparrow.

Line 101 Employment income
Office in the home
Automobile expenses
Salaries paid to an assistant (your partner or child perhaps)
Supplies used to earn employment income
If you already are claiming the above expenses, don't forget to see if you qualify to claim the GST rebate for the GST you paid on deductible expenses.
If you are a waiter don't forget to report your tips!
If you work on the railroad, don't forget to claim your away from home expenses.
If you paid legal fees to collect salaries or wages you may be entitled to a deduction.
Line 104 Other employment income
If you received a taxable disability payment this year, you may be able to deduct all the premiums you paid into the plan since you started contributing to the plan. You may also elect to pay CPP premiums on other employment income not otherwise pensionable. Teentitan pointed out as well that line 104 to declare  the premiums  you should have received a letter from Manulife that you paid $XXX amount into the SISIP plan. It is on the CRA books that we get to deduct the amount we paid. I did it back in 2000 and it took a few CRA agents to find the rule that CF/RCMP negotiated this agreement for their clients ~ thanks Teen.
Line 113 Old Age Security
Claim the Age personal tax credit if you are over 65.
Check your T4AOAS slip to see if any tax has already been withheld.
Line 114 Canada and Quebec Pension Plan
Averaging the tax on lump sum CPP benefits received.
Reporting a death benefit on a separate trust return and pay less tax than on your personal return.
Line 119 Employment insurance benefits
Deduct any amounts repaid to EI during the year!
Line 120 Dividends from Canadian Corporation
Income splitting with your partner and children.
Investing the child tax benefit payments in your children's names.
Issuing shares to your partner or children in a family owned business.
Line 121 Interest and other investment income
Investing the child tax benefit payments in your children's names.
Deducting interest expense on money borrowed to purchase investments or invest in a family business.
Deducting the interest paid to purchase Canada Savings Bonds on the payroll plan at work.
Deducting your safe deposit box fees.
Deducting accounting fees paid to calculate the investment income reported on your tax return.
Deducting the interest paid on your margin account.
Review in detail the charges on your brokerage accounts for any possible interest or other fees paid that may be deductible. Look for accrued interest charges on bonds and similar investments purchased.
Line 126 Rental income
Claim all expenses incurred to earn rental income such as taxes, insurance, minor repairs and maintenance, interest expense and accounting fees paid to have the rental statement on your tax return prepared. Do not expense the cost of major repairs or additions to your property. Claim capital cost allowance to reduce your rental profit to zero.
Rental income is based on the accrual method and therefor any expenses incurred but not paid such as property taxes may non the less be claimed in the year to which they apply.
Consider purchasing rental property that will generate a profit in the name of the family member with the lowest net income, or consider income splitting with another family member.
Line 127 Taxable capital gains
Reduce any capital gains by any capital losses incurred in the year.
If you still have a capital gain at this point, claim any capital losses from previous years not otherwise deducted.
If you have an overall capital loss for the year, consider deducting these losses from any capital gains reported on your prior 3 year's income tax return or carry them forward until used..
Line 128 Support payments received
Some child support payments are not taxable
There are joint elections that can be filed to make certain support payments not taxable.
Deduct any legal fees paid to enforce the payment of taxable support payments.
If you are single or unmarried you may be entitled to claim the equivalent to married exemption for on of your children.
Line 129 Registered retirement savings plans
Cash in RRSP's in amounts less that $5,000 at any one time to reduce the withholding tax to 10%. Of course the balance of the tax has to be paid when the tax return for the year is filed. Spousal RRSP's are a means of shifting the tax burden from one spouse to the other.
Line 130 Other income
The first $3,000 of certain scholarships and bursaries are not taxable.
You may be able to deduct expenses against a research grant you received this year.
Line 135 to 143 Self employed income
Self employed individuals are entitled to claim a host of expenses as long as they are reasonable and incurred to earn income. The most common are goods purchased for resale, office supplies, consulting fees, salaries and benefits, travel, insurance, equipment rental, bank charges and repairs and maintenance.
Often missed are the entertainment expense incurred to earn income such as meals, coffee, drinks in the bar and gifts.
If you home is your main place of employment you may also be entitled to claim a portion of your occupancy expenses such as rent, mortgage interest, property taxes, insurance, utilities, telephone and minor repairs and maintenance. The portion you claim varies based upon the amount of space and time the space is used for business.
If you use your car, you my be entitled to claim a reasonable portion of gas, repairs, lease, insurance, driver's license, interest on car loans, motor league, parking, washes and 30% per year on the cost of the vehicle used.
If you partner or other family members participate in the business a reasonable salary paid may be deducted.
This may be a great tax savings strategy depending upon your circumstances. You might also consider making another family member the owner or partner in the business in order to split income.
Its also important to know when its time to incorporate and what family members to include as shareholders. There are many tax saving strategies associated with incorporating a family business and its important to get proper professional advice.
Sometimes its possible to combine a family vacation with a business trip and expense a portion of the expenses.
Line 208 Registered retirement savings plan
Consider making your RRSP contributions now, but save claiming the deduction for when you are in a higher tax bracket.
Consider making spousal RRSP contributions.
Make an excess contribution of $2,000, but remember you may never have more than a $2,000 excess contribution at any time.
Make your RRSP contribution early in the year to take advantage of the tax free accumulation of earnings.
File income tax returns no matter how low your earned income is or how young you are to start accumulating contribution room.
If you are short on cash, consider transferring certain existing asset to your RRSP in order to obtain an RRSP deduction.
If your income will be nil or significantly less next year, buy an RRSP before March 1st., and cash it in one day later.
The contribution will be deductible this year at your marginal tax rate and taxable next year at your new marginal tax rate
Line 212 Annual union and professional dues
If your employer is registered for GST and you pay GST on your union dues, you can get this GST back by completing form GST 370 and making a claim on line 457.
Check your T4 to see how much you paid in union dues or refer to separate receipts issued by your union.
Line 214 Child care expenses
Lunch programs and after school programs qualify as day care expenses.
Certain sports schools and camps also qualify as day care.
Line 217 Business investment loss
Unpaid funds loaned to a family corporation my qualify as business investment loss.
You may not even know that you have an existing "shareholder's loan" unless you have completed your corporations final set of financial statements and corporation income tax return. If so, take a look at the balance sheet and give us a call
Line 219 Moving expenses
This expense can really add up fast...especially when you may be able to claim real estate fees and legal fees on the sale and purchase of a home.
Amounts not claimed in one year may be carried forward one year.
Students may also be able to claim moving expenses.
Line 221 Carrying charges and interest expense
See tips under line 120 and 121
Line 229 Other employment expenses
See tips under line 101
Line 252 Non capital losses of other years
Contact the Canada Customs and Revenue Agency and ask for a printout of your carry forward items. You might have a loss from a prior year that you forgot to claim.
Line 255 Northern Residents Deduction
Don't miss out on the following tax savings ideas: If you live in a prescribed northern zone, see if you qualify to claim this deduction.
Also if there is a taxable benefit on your T4 for travel in a prescribed zone, you may be entitled to deduct all or a part of this from your income. This includes travel for you and your family for 2 trips and all other trips taken for medical purposes.
Line 301 Age amount
You maybe able to transfer any unused amount to you spouse.
Line 305 Equivalent to spouse
You may qualify for this deduction if you were single, divorced, separated or widowed "at any time" in the year and you supported a dependent.
Dependents include your children, your parents or any other relative.
Adopted children need not be legally adopted.
Line 308
Canada Pension Plan contributions through employment
Often you have over contributed to the plan and if so you are entitled to get the overpayment refunded.
Line 312 Employment Insurance premiums
Like CPP you may have over contributed to this plan. Claim the overpayment on your income tax return.
Line 314 Pension income amount
If you do not need this deduction transfer the unused amount to your spouse.
Basically the first $1,000 of periodic pension plan is tax free for you and your spouse
Line 315 Caregiver amount
This credit is new and you may not know you qualify. If you are the caregiver of a relative who lived with you and who is over 18 and dependent on you because of an infirmity. Their income must be less than a qualifying amount.
Line 316 Disability amount
This deduction is transferable to your spouse if you don't need it to reduce your net income to zero.
Canada Customs and Revenue Agency is a stickler on this one, so be sure your form T2201 is filled out correctly by your physician.
Check this deduction out if you or your spouse are "markedly restricted" in your daily living activities such as walking, talking, seeing, or mental function.
Line 318
Disability amount transferred from other dependant
Unused disability amounts from a dependant may be transferred to you under certain circumstances.
Line 319 Interest on student loans
It may be beneficial to save this deduction for a future year when you are taxable or in a higher tax bracket. Maximum carry forward is 5 years.
Your dependant or spouse may also transfer this amount to you if not needed by them.
Don't forget about transferring tuition fees and education amounts as well.
Line 323 Tuition and education
Unused tuition fees may either be carried forward or transferred to a parent or spouse.
The education amount may also be transferred or carried forward.
Both full time and part time students may claim the education deduction.
To make this claim you must have an official receipt.
Universities outside Canada also qualify.
Students can claim moving expenses under certain conditions.
Line 324 Tuition & Education amounts from child
Often your children do not need their tuition fees or education amount. If so they may be able to transfer to you... check it out.
It may also be more advantageous for the student to carry these amounts forward to a future year.
Line 326 Amounts transferred from your spouse
Several deduction may be transferred to you from your spouse if these deductions are not needed by them. They include age, pension disability, tuition and education amounts.
Line 330 Medical expenses
Combining medical expenses for the entire family and claiming them on one return may be more advantageous.
Medical may be claimed for any 12 month period ending in the year. It may be more advantageous for example to go from June to May when totaling your medical expenses.
Medical expenses include premiums paid at work for health and dental plans (but not insurance and disability).
Blue Cross and other health plans are also medical expenses.
Don't forget to include travel health insurance.
Under certain circumstances you may also be able to claim travel expenses as part of your medical expenses.
Don't forget about the refundable medical expense supplement on line 452.
Line 349 Charitable donations
Claiming your donations every 2nd 3rd 4th or 5th year may be more advantageous to you. When your total donations are more that $200, the credit is much higher, approximately 50% depending on your province of residence.
Combining your donations with your spouse may also be more advantageous than each claiming donations separately

Navrat, you are correct in what you have stated, just keep in mind that everyone will have to claim the full amount of retro for 2013, along with other taxable income you have for that year. Calculating going back will be done, after we have completed our taxes, and send in the T1198 form. Those that received large amounts from their retro, could be in for quite a hit, from the initial filing of their taxes. I know from doing a rough estimate on mine, it does not look good for me, although I will be prepared to take the hit, I will be counting on the T1198 form for some relief, but it is not guaranteed that it will prove to work out in my favor. So the way I look at it is twofold, make sure you have enough to cover the possible hit when filing your tax return, and send in the T1198 to see if it will give you some relief.
One other way of looking at this whole retro tax issue, no matter which method works out to benefit you, we would have had to pay taxes anyway, as SISIP income is taxable.

Interesting thanks for that Navrat.

Does everyone know that the total amount of interest paid on your retro has to be declared in 2013 tax year, it can't be spread out back , only the principal minus legal fees can be spread back thru those years. Legal fees can't because they are deductible for 2013 only. So only the principal amount of your retro minus legal fees can be spread back. So total gross amount minus interest minus legal fees.