This letter summarizes recent tax developments and tax planning opportunities; however, we recommend that you consult with an expert before embarking on any of the suggestions contained in this letter, which are appropriate to your own specific requirements.
Purchasers of new homes and condominiums sometimes sell their rights to the property before the closing.
This happens frequently with new homes or condos that take years to be built. It may happen because of a change in circumstances, or simply because the buyer wants to profit from an increase in market value of the property.
Are you required to pay quarterly instalments?
You must pay instalments if the difference between your tax payable for the year — federal and provincial tax plus Canada Pension Plan premiums (including Quebec Pension Plan if you live in Quebec) — and amounts withheld at source is more than $3,000 in both the current year and either of the two preceding years.
Instalment penalty and interest imposed due to sale late in the year.
In the recent Gagnon case, Mr. and Mrs. Gagnon paid quarterly income tax instalments during 2019 based on the income they expected to have that year (the First Method in the article above). They chose not to pay the higher amounts that the CRA suggested they pay under the Third Method, because they thought they knew how much tax they would owe for 2019.
Many wealthy families think of Life Insurance as a grudge purchase, much as they think of their car or house insurance. They don’t realize that Life Insurance is about much more than replacing income to support families left behind after a death − a financial challenge seldom faced by families with significant money. With proper planning, it’s a tremendous opportunity to support wealth-building and manage risks that include over-taxation and future taxation increases.