But "bumping into the next bracket" just means that one's excess income in the higher bracket will be taxed at the higher rate. The higher rate does not apply to all of the person's income. Myth 4: I should have refused that pay raise because it will bump me into a higher tax bracket.įederal tax brackets for the 2015 tax year:Ĭanadians face four federal tax brackets and up to six brackets provincially. The boss can also provide a tax-free party or social event worth up to $100 per employee. Your boss can also give an employee up to $500 in a non-cash gift once every five years to mark long service or an employment anniversary, with no tax consequences to the employee. Modest gifts from the boss do escape the tax collector's attention - but only within strict limits. Non-cash gifts worth a total of less than $500 a year aren't taxable if they're given to mark birthdays, holidays or similar special occasions. Myth 3: Gifts from your employer are never taxable. The tax agency generally has three years after the Notice of Assessment is sent to review your file. "It merely means that the CRA has not addressed the issue in any detail." "The fact that a particular claim is allowed at this point does not mean that the CRA … is 'letting' you claim it," notes KPMG in its annual tax-planning guide. Myth 2: The CRA completely agrees with the information you submitted in your return if it sends you back a Notice of Assessment that doesn't dispute what you submitted.Ī Notice of Assessment is just the result of a quick assessment that will have fixed mathematical mistakes you may have made. But it doesn't mean that the CRA has examined and OK'd everything you've submitted. It's a way of ensuring couples don't shift interest income from a higher-earning spouse to a lower-earning spouse. "Where more than one person contributed capital in their own right, then the income in the account must be allocated based on the capital provided by each contributor," she says. Not necessarily. Income earned in joint accounts must be reported by the person who earned the money, says tax expert Evelyn Jacks in her book Jacks on Tax. Myth 1: The person whose name or social insurance number is on the tax slip is the person who must report the interest in a joint account.
Here are some common myths - and the corresponding facts that could mean extra money in your pocket, or at least could prevent you from running afoul of the Canada Revenue Agency's rules.
File by April 30 or face potential penalties.But many of those age-old perceptions are no longer accurate. A certain amount of folklore has developed over the years around the income tax system and the filing of tax returns.