Advice to Individuals

Taxable benefits for the use of a vehicle provided by the employer

If your employer provides you with a vehicle, you will receive a taxable benefit for the portion of your personal use. So it's important to keep an accurate account of the distances you drive for business and personal purposes.

The benefit for the standy charge is reduced if the vehicle is used more than 50% of the time for business purposes and mileage does not exceed 20,000 kilometers.^[1]

Regarding the operating cost benefit, it may be advantageous to use the optional method if all the conditions are met. Under the optional method, the operating cost benefit corresponds to 50% of the standby charge before deduction of reimbursements, instead of the flat rate of $0.33/ kilometer for personal use.^[2]

In addition, any reimbursement made to the employer on December 31 of the year or 45 days following the end of the year by the taxpayer or the taxpayer's related person will reduce the value of the benefit.

Contribute to your Registered Retirement Savings Plan (RRSP)

RRSP contributions made by March 3, 2025, are deductible in 2024. However, individuals turning 71 in 2024 have until December 31, 2024, to contribute to their RRSP. The amount of your RRSP contribution must take into account your RRSP deduction limit.

It's possible to defer the deduction of your RRSP contribution if you expect your tax rate to rise in the near future. In fact, you can make the maximum contribution each year, but only claim the deduction in the year when your taxable income is higher.

You should also note that the RRSPs of individuals aged 71 on December 31, 2024, mature on that date. Therefore, these individuals must either purchase an annuity with their RRSP balance, or transfer this balance to a RRIF (Registered Retirement Income Fund), or a combination of both, before the maturity date.

RRSPs also offer a number of other significant advantages, whether you're going back to school, buying a home or splitting your income.

• An individual (or spouse) returning to full-time studies may make tax-free withdrawals of up to $10,000 annually ($20,000 jointly), to be used at the taxpayer's discretion.
• An individual can also contribute to his or her spouse's RRSP for income-splitting purposes, without the income-splitting tax measures applying. This strategy may limit the repayment of all or part of the Old Age Security benefit.
• An individual aged 71 or over, who earns qualifying income or has unused deductions, can contribute to his or her spouse's RRSP until the latter reaches age 71, which allows for longer contributions if the spouse is younger. The amount invested in the spousal RRSP reduces the taxpayer's RRSP contribution room.
• You can also make a gift of $2,000 to your child or grandchild over age 18 to contribute to his or her RRSP. This contribution can be deducted when he or she has qualifying earned income.

Consider your Tax-Free Savings Account (TFSA)

The TFSA is a plan designed to enable all individuals aged 18 or over to save. An individual resident in Canada, 18 years of age or older, can make a maximum annual contribution of $7,000 to a TFSA for 2024. Those who have never contributed to a TFSA in previous years can contribute a maximum of $95,000.

Income generated in a TFSA is not taxable. If you need to use funds for personal purposes, consider withdrawing them from your TFSA. No tax will apply, and you'll be able to put the money back into the plan as of January 1 of the year following the withdrawal.

Don't hesitate to consult us to determine whether it would be more advantageous to contribute to your TFSA rather than your RRSP.

Think of your children's future with the Registered Education Savings Plan (RESP)

The RESP is a plan designed to make it easier to save for your children's future post-secondary education. It's a great way to shelter income from tax. Contributions are not tax-deductible, but income accumulating in the plan is not subject to tax until withdrawn from the account.

Each beneficiary of this plan can receive up to the age of 17 a Canada Education Savings Grant of $1,000 in his or her RESP (maximum $7,200). An eligible beneficiary from a middle- or low-income family may receive a supplement.

Good planning will enable you to maximize your entitlement to subsidies and achieve a better return on withdrawals, all with the aim of optimizing the benefits offered by this plan.

Unrealized capital losses

Taxpayers who have accumulated losses on their stock market investments may consider selling these investments before year-end to realize capital losses.

These capital losses could reduce capital gains for the year, thereby reducing your tax liability. These capital losses may also be applied against capital gains realized in any of the three preceding years, allowing you to recapture a portion of the taxes paid in those years. However, you'll need to pay close attention to the rules relating to apparent losses which provide that a capital loss is deemed to be nil.

A strategy can be put in place to accelerate the utilization of capital losses for a spouse who has realized a capital gain. CRA confirms that it is possible to transfer latent capital losses to your spouse. This can be useful if the individual has not realized any capital gains in the current year or in the three preceding years, but his or her tax spouse is in such a situation.

Payments before the end of the year

To be entitled to certain deductions or tax credits in 2024, an individual must make the relevant payments by December 31, 2024.

This is particularly the case for:

• charitable donations,
• alimony payments,
• childcare expenses,
• medical expenses,
• interest on a loan for investment purposes,
• professional dues,
• RRSP contributions if you reach age 71 in 2024,
• registered education savings plan contributions, and
• purchases of cooperative investment plan units and Capital régional et coopératif Desjardins shares.

In most cases, it's important to keep your receipts in order to claim your credit or deduction amounts.

Tax Instalments

If you have to pay your tax by instalments, please note that your last instalment must be paid by December 15, 2024.

If you're behind in your payments for the year, it's possible to reduce or make up interest and penalties on arrears or underpayments by making an additional or advance payment before December 15. Increasing the amount of source deductions on your RRSP/RRIF bonuses and withdrawals is also a good trick if you're behind in your payments.

Advice on your Home

Are you planning to buy or have you already bought a new home?

If you're planning to buy your first home, and you're a Canadian resident aged 18 or over, the first home saving account (FHSA) is a tax-free savings account that lets you save for the purchase of a first home in Canada.

This account will allow you to contribute or transfer a total of $8,000, plus the previous year's amount if you have not made any contributions in 2023 (i.e., $16,000 in contributions for 2024). The lifetime contribution limit is $40 000. FHSA contributions are deductible in calculating taxable income, and income earned in this account will not be subject to tax. In addition, at the time of withdrawal, no amount will be taxable if all conditions are met.

You can also take advantage of the Home Buyers' Plan (HBP) if you qualify as a "first-time buyer". The HBP allows you and your spouse to withdraw up to $35,000 ($70,000 for a couple) from your respective RRSPs. This HBP withdrawal limit increases to $60,000 according to the 2024 budget. Any amount withdrawn under this plan must be repaid annually over a maximum period of 18 years if the withdrawal is made before December 31, 2025. If a payment is missed in any year, the anticipated amount of the payment becomes taxable.

Please note that it is possible to combine the HBP and the FHSA when purchasing a first home. Don't hesitate to contact us if you'd like to find out more about your eligibility to these plans.

First-time homebuyer tax credit

The purchase of your first home by you or your spouse entitles you to a federal non-refundable tax credit of 15%, calculated on $10,000. This means that you or your spouse can obtain a non-refundable credit of $1,500 for the purchase of a first main residence. In Québec, a similar credit is available for a maximum amount of $1,400, or 14% calculated on the $10,000.

This means you can benefit from a total tax reduction of $2,900, combining federal and provincial credits. Remember to claim this credit when you file your annual tax return.

Credit for work on your sanitary installations

This credit is available to taxpayers who have upgraded residential wastewater treatment facilities. This credit applies for the years 2017 to 2027 only. You can claim a 20% credit on the portion of eligible expenses exceeding $2,500, up to a maximum of $30,000.

The maximum credit is $5,500 for expenses paid by you or your spouse before January 1, 2028.

[1] T4130 Employers' Guide "Taxable Benefits and Allowances", P.11

[2] Article 7305.1 of the income tax regulations per kilometer.