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You should hang on to any record that could be used to determine your taxes payable for a period of six years from the date of your Notice of Assessment. Additionally, you are required to keep these documents in your home unless you have special permission from the Canada Revenue Agency to store them elsewhere.

There are a few exceptions to the six-year rule — documents that you should keep indefinitely. Examples of these include purchase and sale agreements related to the purchase of a property. You will need these if you eventually sell the property.

 

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This post, as in all Ask and Accountant posts, is provided by Mindy Abramowitz.  My new years resolution is to give her my tax return stuff in a more organized fashion this year … ahead of time!  (you saw it here, first)

Your bonus counts as taxable income. It will be included on your T4 slip for the year and you ultimately will have to pay tax on it either immediately or at some time in the future.The best you can do is defer paying tax on your bonus by rolling it into an RRSP. That way you will not pay tax until you withdraw it (at which point you might be in a lower tax bracket). Or you can reduce the amount of tax you will have to pay by donating some of your bonus to a registered charity.

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No, self-employed individuals are not eligible for employment insurance benefits.

If you were an employee at some point during the 52 weeks prior to having your child and managed to accumulate 600 hours on the job, you might be entitled to benefits from your previous employer. If you start your maternity benefits early, soon after your last day of employment, you will have more insurable hours in the 52-week period on which your benefits will be based than if you wait. To make sure you qualify, I recommend that you contact a branch of the Human Resources and Social Development (HRSDC). Also, please bear in mind that HRSDC will claw back payments in proportion to the self-employment income you earn while you receive Employment Insurance benefits.

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Passive income is more or less what it sounds like: income generated without the active involvement of the recipient. The term usually refers to income from rental property, but it can also include income from royalties, residuals, patents and licensing agreements. Proceeds from a vending machine are passive income; so is the rent from a basement suite.

It usually involves an initial outlay of time or money and continues to generate a return without further investment. However, passive income excludes interest, dividends and capital gains, all of which are considered portfolio income. For tax purposes, losses from passive income cannot be offset against other types of income.

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If you are resident in Canada and receive an inheritance, you do not have to include it in your taxable income for the year. Canada has not had an inheritance tax since Mulroney’s government. The rationale behind this exclusion is that tax was paid on the income in the hands of the deceased.

Be aware, though, that the disposition of a deceased person’s assets can give rise to tax consequences for the estate. Death triggers a deemed disposition of all assets at market value (i.e. they are treated as if they have been sold), which is then subject to capital gains tax.

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This accounting nugget brought to you by Mindy Abramowitz.  She’s very smart about all accounting matters, and other stuff too, plus, she’s terrific to work with  (trust me.  I’m a money coach.  You think I’m an easy client for her??)  If you want her contact info, ask me!

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