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Employee home purchase loans – If you expect interest rates in 2011 to rise, take out or replace an employee home purchase loan before January 1, 2011, to take advantage of the current prescribed rate (1% for the fourth quarter of 2010 and expected to remain 1% in the first quarter of 2011).

Stock option benefits of public companies

If you disposed of stock options after 4:00 pm EST on March 4, 2010, be aware that: only the employer or employee (not both) can claim a tax deduction for cashed-out stock options. Ask your employer to elect to forgo the tax deduction so that you may claim it; and you can no longer defer the benefit related to exercising these options (relief may be available for previously-filed elections).

Be aware that commencing 2011, the undue hardship exemption for withholdings on stock option benefits has been eliminated; withholdings are required on these benefits unless there are other reasons for exemption.

See our:

Tax Memos “August 27, 2010 Draft Legislation Implements 2010 Budget Proposals and Other Previously Announced Measures” and “Stock Options: 2010 Federal Budget Implications for Employers”; and

podcast “2010 Federal Budget: Proposed Changes to Stock Option Rules – Perspectives from Rick Schubert.”

Reduce income tax deductions at source – If you will have excess tax deductions or non-refundable tax credits in 2011, request reductions in your payroll income tax withholdings early in 2011 (Federal Form T1213; Quebec Form TP-1016-V).

Public transit pass tax credit – Claim this federal non-refundable tax credit for the cost of public transit passes (monthly or longer) and certain weekly and electronic payment cards. Yukon has a parallel credit. Retain passes or receipts to support claims.

Company car – Try to reduce or eliminate your operating cost benefit and/or your standby charge benefit if you have a company car. Regarding the operating cost benefit:

reimburse your employer for some or all of the personal use portion of the actual operating costs; and

reduce your personal driving (to under 50% of total driving, if possible).

To reduce or eliminate your standby charge benefit: reduce the number of days the car is available to you;

have your employer sell the automobile and repurchase it or lease it back;

do not use the automobile for personal driving; and choose a less expensive vehicle.

For more information, refer to our booklet, Car Expenses and Benefits – A Tax Guide (2010).

Tracking motor vehicle use – Keep an automobile logbook to support motor vehicle expense and taxable benefit calculations. Except for Quebec, which has more stringent rules, a logbook maintained for a sample period will be sufficient to support these calculations if:

you maintain a full logbook for a 12-month “base” period (starting in 2009 or later);

you complete a sample logbook for a continuous three- month period in each subsequent year;

business usage in the sample logbook is within 10% of the results for the same three-month period in the base year; and

business usage for the entire year as extrapolated from the subsequent sample log is within 10% of the base year result.

For a paper or electronic employee log, see our booklet, Car Expenses and Benefits – A Tax Guide (2010).


Money Purchase





Savings Plans

Pension Plans











Retirement savings plans and profit-sharing plans Take advantage of higher contribution limits:

2010 2011

If your taxable income is below the highest tax bracket, consider maximizing your RRSP contributions each year, but delay claiming the amount as a deduction until a future year when your taxable income is in a higher tax bracket.

Personal services business – Discuss with your PwC adviser the merits of incorporating a personal services business. Income from a personal services business may be distributed as eligible dividends.

GST/HST rebate – Determine whether you can claim a GST/HST rebate to recover GST/HST included in employment expenses you have deducted (e.g., home office expenses, supplies and automobile expenses).

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