Some Basics For Reporting Income And Tax Deductions | FBC, Canada's Farm & Small Business Tax Specialist

Some Basics For Reporting Income And Tax Deductions

Income

All residents of Canada must report income they have received from anywhere in the world. This means that foreign income must be converted to Canadian dollars and recorded on your tax return.

There are six basic income groups considered for tax purposes. They are:

  1. Employment
  2. Pension
  3. Reportable but non-taxable income (social assistance, workers' compensation, federal supplement)
  4. Investment (such as interest and dividends)
  5. Self-employed
  6. Other (such as scholarships or tips)

While income is usually considered the receipt of money, it may also be the receipt of items with commercial value such as grain, company shares, or services. These types of income may present a valuation problem since the taxpayer's valuation may be different than CRA's. The onus of proof, however, is on the taxpayer to demonstrate their valuation is accurate.

Non-taxable receipts

The cardinal rule in paying tax is don't report receipts that are not taxable. Some examples of tax-exempt receipts are:

  • military disability payments
  • a gift or inheritance
  • income from sweepstakes, lotteries, gambling and other games of chance
  • life insurance-policy proceeds on the death of the insured
  • income received from a personal injury award.

Tax Deductions

Tax deductions, if not claimed, are not lost forever. If you discover something that you may have overlooked in previous years, you may claim an adjustment back to 10 years. If you think you have overlooked something, be sure to contact us at FBC to see if you are still eligible to claim this particular deduction.

Moving expenses

Moving expenses incurred during the year are tax deductible if the move was made to earn salary, wages or self-employed income in the new location. Your new residence must be 25 miles or 40 kilometres closer to the new work place, and not in the same metropolitan area as the old residence. The allowed expenses include:

  • Cost of selling the former residence, including real estate commissions and legal fees
  • Temporary living expenses for meals and lodging for up to 15 days at the new location
  • All removal and storage expenses for the move, as well as the cost of meals and transportation for the family.
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