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December 2008 Drache Newsletter

   Happy Holidays
   T’is the Season
   Non Taxable Gifts to Employees
   Professional Corporations for doctors & dentists - Ontario still can't get it right.
   Tax Free Savings Plans: Resisting Temptation

Happy Holidays - Charles Rotenberg
Another year is drawing to a close, and, economically, the year ahead is looking like a scary place. But history tells us that it can also be a time of great opportunities. There are some things that should be considered from a tax point of view as the year winds down. Although most people think of March and April as "tax season", the fact is that if steps are not taken in December, the accountants can't report on them in April. We have set out some things to consider in this newsletter
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T’is the Season - Charles Rotenberg
December is always a time for reviewing your tax situation and, except for RRSP contributions, is the last chance for minimizing your current year’s taxes.
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Non Taxable Gifts to Employees - Charles Rotenberg
The holiday season is right around the corner, and for many taxpayers that means they can expect some form of a Christmas bonus from their employers. But how is a Christmas bonus treated for tax purposes? There is a difference in treatment between cash and non-cash gifts and/or awards. It is a well established practice of the CRA not to require taxpayers to include as taxable income certain “small gifts” given to them by their employers. Currently “small gifts” are considered to be 2 non-cash awards and 2 non-cash gifts per year. This allows an employer to give any non-cash gift for special occasions such as holidays, birthdays or marriages. Non-cash awards would be given for some form of employment related accomplishment.
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Professional Corporations for doctors & dentists - Ontario still can't get it right. - Charles Rotenberg
We have written numerous times in our Newsletters, about the use of professional corporations by doctors and dentists. Effective January 1, 2006, doctors and dentists, but not other professionals, can include family members as non-voting shareholders in their professional corporations. But the Ontario revisions have created significant inequities. Lawyers and accountants not included in the new regulations. Neither are other medical professionals covered by the Regulated Health Professions Act, such as chiropractors, chiropodists and optometrists. More problematic is the manner in which the Ministry of Health interprets the rules and then imposes its interpretation on the College of Physicians and the Dental College. And, make no mistake, the fault is merely, but directly, faulty interpretation by the Ministry of Health. The Ministry is denying doctors and dentists many of the tax and estate planning benefits available to all business owners.
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Tax Free Savings Plans: Resisting Temptation - Arthur Drache
January 1 will bring into being the legislation which creates the Tax Free Savings Plan, the centrepiece of the 2008 federal budget. As all readers are likely well aware, this plan allows anybody 18 and over to contribute up to $5,000 a year into the plan. Contributions are not deductible but the income received from the plans is not taxable. An additional $5,000 may be contributed in each succeeding year. There is no income attribution applicable so one spouse can found the other spouse’s plan without tax consequences. Because withdrawals are tax free the income has no impact on income based entitlements.
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