H&R Block Insight

If you were planning to do any renovations on your home or condo, there are less than 60 days before the January 31, 2010 deadline. The credit allows Canadian home and condo owners to get up to $1,350 back on lasting or integral renovations. If you are going to do it yourself, make sure you buy your materials before the deadline. If you hire a contractor be sure the work is completed and paid for before the deadline.

The markets did gain some ground in 2009 but many people are still facing capital losses on their investments. It is a smart strategy to review your portfolio before the year end to see if you can find a tax advantage in taking a loss or cashing in a gain. Capital losses can be carried back three years or carried forward indefinitely.

Stats Canada estimates more than 800,000 Canadians collected EI this year. If you are collecting EI, you may want to review your tax obligations before the end of the year. In most cases, EI only withholds 10 percent back for tax purposes which is less than the lowest tax bracket. If the taxpayer collecting EI earned any other income in 2009, they could be facing a tax bill when they prepare their tax return next year.

If you have an expensive trip to the dentist coming up, you may want to consult a calendar. Medical expenses can be claimed in any 12-month period ending in 2009 so it could be beneficial to try to fit known medical expenses into the same 12-month period in order to maximize your claim. You don't actually have to go to the dentist but if you have an outstanding amount, try to pay the bill by the end of the year. Remember, medical expenses are reduced by a percentage of your income. So the greater their dollar value, the likelier it will be that you can make a claim.

If you want to claim a charitable donation on your 2009 tax return, you have to make it before December 31. If you have already made more than $200 in donations in 2009 it will also be worth a 29 percent federal credit instead of the 15 percent for donations under $200. The good news is that now you can donate publicly-listed securities to registered charities or private foundations without being subject to capital gain taxes.

There are more than 2.6 million self-employed Canadians. With the exception of Quebec, self-employed individuals do not qualify for any kind of employment insurance (EI) so they have to fund their own maternity or parental leaves and have no safety net if they become ill or need to care for a family member. If they don't work, they don't earn.

New legislation introduced by the Federal Government in early November will change EI to offer self-employed Canadians some of the same benefits as employees. The special EI benefits will include maternity, paternity, sickness and compassionate care but not regular unemployment benefits. This program will apply not only to sole proprietors but also incorporated businesses where one person owns more than 40 per cent of the voting shares.

The legislation still has to be passed but the current proposal would allow taxpayers to opt into the EI program though they would have to wait a year before being able to access the benefits. They would also need to earn a minimum of $6,000 from their business in the previous calendar year.

The premiums would be the same for self-employed and employees. Unlike Canada Pension Plan (CPP) premiums, self-employed people would not be required to pay the employer portion of EI contributions. The lesser contribution recognizes that business owners are not able to claim EI if their company fails.

However once in the program, self-employed would only be able to opt out if they don't claim any benefits. If they claim benefits, they are required to contribute on self-employed earnings for as long as they are self-employed.

Many of the details of the plan are still being decided such as how the EI installments will be paid, but the bill is expected to pass in time to start on January 1, 2010. Though self-employed individuals will need to wait a year before claiming any of the EI benefits, it does mean they receive some relief when it comes to having a baby, becoming sick or taking care of a sick family member.