TurboTax Canada Blog » Caroline’s Answers

Q: I’m having trouble submitting my return via NetFile to Revenu Québec. I can’t seem to find the .mrq file that needs to be sent. When I called technical support they wanted my QuickTax file to be able to help me; I do not want to send my personal information to you.

Caroline at TurboTax — Thu, 22 Apr 2010 17:31:39 +0000

A: I’m sorry to hear about the problem you’ve had electronically filing your MRQ return. I asked our support team to respond to your note, and have included their response below.

Of note, many customers do send us their files as we help them through an issue. We have a secure data transfer process and we’re bound by a strict confidentiality agreement.

Here’s the note from our support team. (Much of this information is also available on our site and in product.)

The NetFile Québec process is different than the Federal NETFILE process.

The CRA requires that the user go to their site to submit the return, where Revenu Québec allows us to use a Web service. The secure web service doesn’t go through a Web page, rather it is a secure direct communication between QuickTax and Revenu Québec’s server.

Contrast this with the Canada Revenue Agency (federal) NETFILE that requires the user to save the .tax file and then open the CRA Web page to allow the .tax file to be submitted. QuickTax does walk the user through this process and it’s quite straightforward.

For the NetFile Québec Web service, QuickTax asks the user for their Québec access code and submits the required file (.mrq) that is generated in the back end. Note that the user never gets to save or see this file. This is explained to the user when they reach the NetFile Québec Transmission page. This is called out in a dialog box that pops up on the screen.

Occasionally a customer will call because they’re having trouble with the NetFile Québec process. This usually happens if they have a firewall or anti-virus software that’s blocking the Web service communication. There is a straightforward work-around that involves saving a copy of the .mrq file to their computer and filing directly on the Revenu Québec site . However, because this is a manual process, people sometimes attach the wrong file (for example, they attach .mrq file from last year for example).

We can normally help a customer through any NetFile error messages they get from Revenu Québec, but we frequently need to see the file to help, which is why we offer the secure client file transfer.

Q: I received additional income in 2010 as I am Power of attorney for an estate. I intend to withold 30% for tax. Must I remit as soon as I receive the income or can I invest that 30% in a 1 year GIC and file the remittane when I do my tax next year?

Caroline at TurboTax — Wed, 17 Mar 2010 18:38:09 +0000

A: If CRA hasn’t asked you to make instalment payments than you don’t need to remit the income tax right away. However, if you owe more than $3000 on your tax return, CRA may ask that you make instalment payments the following year. You may have to contact them at that time to tell them this was a one-time payment and you won’t owe the same amount of income tax the following year.

Here’s the link to CRA’s information on instalment payments:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/menu-eng.html

Q: My husband and I are building a house and are paying for the house out of our own pockets. Can we claim this on our taxes for 2009?

Caroline at TurboTax — Thu, 04 Mar 2010 23:48:25 +0000

A: You can’t deduct the actual construction costs but you may be eligible to claim the Home buyers’ amount. There are a few rules to this credit such as you must have acquired the home after January 27, 2009 and have not lived in another home owned by you or your spouse in the year of acquisition or in any of the four preceding years. The $5000 tax credit is claimed on line 369 of Schedule 1. Here’s the link to the CRA website that includes all of the details for this credit http://www.cra-arc.gc.ca/nwsrm/fctshts/2010/m01/fs100121-eng.html

Q: I am retired and living on my pensions. I am claiming the pension income deduction. My wife has no income so does not file a return. If we file a joint return would that allow us to add her pension income deduction to mine? She doesn’t receive a pension but lives off mine.

Caroline at TurboTax — Thu, 04 Mar 2010 23:30:32 +0000

A: If your wife doesn’t receive pension income of her own, than the pension income deduction is lost. However, you may be able to split your pension income with her to get the most amount back.

Your situation sounds like splitting your pension income would be ideal. How this works is that you enter all of your pension income on your return and then complete a T1032 form and can transfer up to half of your pension income to your spouse. If you use QuickTax, use the Pension Income Splitting Optimizer to calculate what pension income should go to your spouse for the best combined lowest tax payable possible. QuickTax will tell you how much of your pension is available for splitting because not all pensions can be split and then go through all the combinations and give you the result. Pensions that cannot be split are things such as Canada Pension Plan and Old Age Security benefits. For more information on pension income splitting; visit CRA’s website http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/pnsn-splt/menu-eng.html?=slnk

Q: I have turned my personal-use cottage into a rental building. I believe I have to deem it as being sold at FMV and pay Capital Gains. Is this correct?

Caroline at TurboTax — Tue, 02 Mar 2010 01:12:28 +0000

A: You are correct. If you have a home and the cottage then chances are your principle residence is considered your home. In this case, find out what the fair market value for the cottage is and report the capital gain on schedule 3 under section 4: Real estate, depreciable property, and other properties. If you’re using QuickTax you’ll be asked about the sale of Real estate.

A piece of advice now that you’re renting out the cottage. If you think the value of the cottage will increase before you sell it or convert it to personal-use again; you might want to not claim depreciation or Capital Cost Allowance as an expense on your rental statement. The reason for this is even though capital cost allowance is an expense on the current year’s tax return; if the value of the property increases and you sell the property, all of that expense that you claimed gets added back as income on your return at the time of the sale. It’s your choice but wanted you to be aware of the implications.

Q: I am a dayhome provider for 1 child other than my own. I am claiming childcare income, do I have to be registered or have a certain number of children that I look after to claim expenses?

Caroline at TurboTax — Wed, 24 Feb 2010 22:51:06 +0000

A: No, you don’t need to be registered or have a certain number of children to claim expenses for your day home. Generally you can deduct any reasonable expense that you incur to earn income when you operate a day home. Ensure that you don’t include any of your personal expenses. When completing your tax return you’ll be completing form T2125 – Statement of Business activities to report your income and any expenses.

A great information source for people who run day homes is found on the Canada Revenue Agency website at: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/dycr/menu-eng.html

Q: If my home office takes up 15% of the space in my house, what home costs are eligible for me to claim as expenses and is there a maximum % I can deduct of the eligible expenses?

Caroline at TurboTax — Fri, 19 Feb 2010 22:07:49 +0000

A: The rules are a little different depending on what type of income you’re earning.

If you receive employment income (you have an employer); then you should be receiving a signed T2200 form, Declaration of conditions of employment, completed by your employer. As for your home expenses, if your office is solely used for employment purposes than you can deduct 15% of your home expenses including: electricity, heat, water, and any maintenance for that space. The maximum that you can deduct in this case is 15% of these expenses or your employment income, whichever is less. The excess can be carried forward to next year.

If you’re considered self-employed, the same rules apply about ensuring that the office is solely used to earn self-employment income. You could be eligible to claim: heat, electricity, maintenance, insurance, mortgage interest, and property taxes. Again these are limited to 15% (the percentage you mentioned in your question) of your total costs or your net income (self-employment gross income minus other direct expenses incurred to earn self-employment income), whichever is less. The excess can be carried forward to next year.

Q: I’ve sold some US stocks for the first time. I know that the gains need to be claimed as capital gains, but how does the US dollar exchange rate fit into the equation? Do all my gains needs to be reported in Canadian dollars. Furthermore, what if I have kept some of those proceeds in a US account, how do I calculate my gains then?

Caroline at TurboTax — Fri, 19 Feb 2010 02:16:14 +0000

A: Yes, all of your capital gains need to be reported in Canadian dollars. The best way to do this is to keep track of what the exchange rate was when you bought and sold your shares. If you purchase shares throughout the year, use the average exchange rate for the year. Historical exchange rate information can be found on the Bank of Canada website located at http://www.bankofcanada.ca/en/rates/exchange_avg_pdf.html.

Q: Someone was telling me that you can get a SIN for a baby? Is that true ? I thought you could only get one when you start working. Why would a baby need a SIN number ?

Caroline at TurboTax — Thu, 18 Feb 2010 17:47:02 +0000

A: Social insurance numbers are now used for more things that just simply gaining employment. If you decide to start an RESP for your child, the application forms request a SIN. Many parents choose to apply for social insurance numbers as soon as their child is born so that they have it when they want to start investments for that child. Here is a great information source for new parents: http://www.servicecanada.gc.ca/eng/lifeevents/baby.shtml

Q: Can you claim 2010 donations to the Haiti Earthquake relief on your 2009 tax return?

Caroline at TurboTax — Wed, 17 Feb 2010 23:46:58 +0000

A: No, Haiti donations made in 2010 cannot be claimed on your 2009 federal tax return.

Only Québec residents who made contributions to Haiti between January 12 and February 28, 2010 can claim these donations on their Québec income tax return. However, Québec residents should remember that these donations will not be claimed on their 2009 Federal tax return and to claim them on their 2010 return. There is a special field for Haiti donations for Québec residents in QuickTax.