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This is the third module of the Personal Tax Handbook covering tax issues related to principal residences and the Principal Residence Exemption (PRE). This is the second of two modules where we examine the state of taxation in real estate in Canada by looking at the last remaining lucrative tax haven for Canadians, the PRE and their principal residences. Module 2 in this series covers the other area real estate dealing with rental income and deductions. Both of these areas are heavily scrutinized and audited by the Canada Revenue Agency (CRA)
Each course takes an in-depth deep dive into the most frequently encountered situations and frequently asked questions in personal tax preparation. Thee course methodology follows a two-stage teaching approach meant to give practitioners the tools required to file tax returns and advise clients on critical tax reporting and compliance matters . These two stages are:
1. Preparation Tips, Tricks & Traps – Best practices, overviews and methodologies on reporting and completing the tax return covering areas that are often overlooked or misunderstood by many practitioners
2. Tax Advisory & Problem Solving – How to deal with common and tricky situations that do not have easy answers or solutions. CRA guidelines and a number of Court Cases are analyzed and presented to help you formulate a filing position that can be defended at the highest level on any tax return you prepare.
This seminar will cover a number of topics, including the following:
- An overview of the existing tax landscape and recent changes in the reporting of the sale of principal residences. See how one small reporting requirement is making a huge impact on the reporting and planning behind the application of the Principal Residence Exemption
- Are you applying the Principal Residence Exemption properly? Are you getting the most bang for your client's buck? In this segment we look at filling out and filing the T2091 accurately and ensuring your client is making full use of all the elements of the PRE formula
- What qualifies as a principal residence? In this module we look at some details and intricacies with respect to properties that can, and cannot qualify as a principal residence. Also examined are the tax implications of selling a cottage property and the importance of keeping track of the adjusted cost base of all properties to minimize future tax
- Understanding the challenges and audit issues a taxpayer may encounter when disposing of a property or a number of properties in a short period of time. CRA's auditors are out in full force and reassessing many real estate transactions as business income where the PRE was originally claimed by the taxpayer. This can result in huge reassessments, penalties and headaches for you and your client
Also provided is a unit on practicing safe real estate tax for your practice. Here we will apply all the concepts outlined in this course to provide you with a number of best practices and practical approaches that you can implement in your practice today to deal with both clients and the Canada Revenue Agency. Given the increasing complexity of tax legislation in Canada, coupled with the aggressive nature of CRA auditors, it is extremely important that we formalize procedures and best practices in our businesses to deal with these situations and protect ourselves by lowering tax practice risk.
This seminar is updated frequently with changes in legislation, CRA documents and guidelines and relevant court cases. This seminar series is developed with the tax practitioner in mind and will be a valuable resource in your personal tax preparation practice. With the growing complexity in the Canadian tax landscape, it is more important than ever to understand how the CRA is assessing and applying existing tax laws.
Join us for this in-depth seminar and master the area of rental income and deductions when preparing T1 tax returns for your clients.
Ian DINovo is a professional accountant and Director of the Canadian Tax Academy. He has been practicing accounting and offering independent financial and business advice for over 20 years.
He is the creator of a number of courses dealing with business, tax and investment matters that are designed to make difficult topics easy to understand for everyone.
Start3.1.01 - The recent change in reporting of the Principal Residence Exemption and how it changed everything (5:13)
Start3.1.02 - How the PRE reporting was similar to the Wild West before the CRA made changes (8:50)
Start3.1.03 - Examining the most lucrative tax loophole in Canadian tax and what may be on the horizon (5:33)
Start3.1.04 - Tracking the ACB of all properties and the importance of tracking renovations (5:05)
Start3.1.05 - Sometimes people do not make the most financially sound decision - follow the cash flow (6:05)
Start3.2.01 - Dispositions of a principal residence and the principal residence exemption formula (8:17)
Start3.2.02 - How the disposition of a principal residence is disclosed on the tax return (6:25)
Start3.2.03 - Example of a PRE allocation and decision process before the 2016 reporting requirements (4:36)
Start3.2.04 - Example of the more relevant PRE analysis and calculation to shield more of the gain (6:44)
Start3.2.05 - Preparing the tax return for this example and an overview of the filing requirements (6:19)
Start3.2.06 - How do we report the capital gain and form disclosures for spouses? (4:35)
Start3.2.07 - Recent budget highlights and areas to look out for in real estate tax landscape (2:34)
Start3.2.08 - Federal Budget 2022 - Legislation on holding property for less than 12 months (3:16)
Start3.2.09 - Provisions related to the 2 year ban on the purchase of residential real estate by non-residents (3:19)
Start3.2.10 - CRA letter campaign - CRA reviewing claims for the Principal Residence Exemption (5:51)