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  1. #1
    Euphoric !
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    New CRA tax laws to peruse and enjoy ;)

    A friend posted this on FB today. Better have a look as it affects providers in a big way. If you didn't already hate the Liberals, this might be your tipping point.

    "If you are self employed out of your home, the government is going to take a cut when you sell. New this year and retroactive. Just awesome. #thankaliberal"

    "8. What do I report when I actually sell my principal residence, if I used part of it as my principal residence and another part for my business or to earn rental income?
    If only a part of your home qualifies as your principal residence and you used the other part to earn or produce income, you may have to split the selling price and the adjusted cost base between the part you used for your principal residence and the part you used for other purposes (for example, rental or business). You can do this by using square metres or the number of rooms, as long as the split is reasonable.
    Instructions will be provided in the guide T4037, Capital Gains 2016, on how to report the sale of your principal residence in this situation."


    http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html

  2. #2
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    Politics aside... I don't think this is something any of us need to worry about. Firstly, what they are changing is that now you have to inform the CRA when you sell your principal residence. You didn't have to do that before and they are just trying to "improve compliance " with the law. Secondly, your daycare is part of your principal residence, not a separate part. If, for example, you use your basement for daycare only, it is still part of the main house. You may have the door closed and locked to the main floor and maybe there is a separate entrance, but do you have separate plumbing to the daycare? Separate wiring with a different hydro metre? Is there a separate furnace/thermostat? I would guess not. It is all one house.

    Consider the house in the show 6 Feet Under. They had a funeral business. The upstairs was the home and the main floor the parlours and the basement was the "prep" area. It's a ridiculous example, I know but that's the kind of business the CRA is talking about. They aren't going to start coming after small in-home daycare providers. That would not be "liberal" policy.

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  4. #3
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    My accountant looking into this. His first impression that this not affect me as all of my home is principle residence and daycare combined. I not have dedicated space for my daycare. He think it going to more affect those who have basement apartment they use for daycare or who run daycare from separate building on property.

  5. #4
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    Thank you for the update, I'll send this inf. To my accountant asap. But what happens if your renting? If their main goal is to collect more money through taxes; then it wouldn't be fair just to apply it to just homeowners. There are people making businesses in rented homes.

  6. #5
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    I brought this topic up a few weeks back...please post what anyone finds out!

  7. #6
    Outgoing kindertime's Avatar
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    Quote Originally Posted by Peacefulbird View Post
    Thank you for the update, I'll send this inf. To my accountant asap. But what happens if your renting? If their main goal is to collect more money through taxes; then it wouldn't be fair just to apply it to just homeowners. There are people making businesses in rented homes.
    YOU will not be selling the house. That is all there is to it. It is about homeowners who sell their homes. You rent, so you can move but you haven't sold the property so it doesn't apply to you.

  8. #7
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    I spoke to my accountant about it and posted a few weeks back. Yes we have to declare that we used the home for a business when we sell, but ultimately it is exempt as a primary residence, unless the following conditions apply:
    1) You have made structural changes to your house because of daycare(ie. finish basement/create new entrance/move walls/add new plumbing or bathroom/add a mini kitchen etc.
    2)You have previously claimed the house itself as depreciation expense on tax returns
    Also, your house must retain the original character it had when you moved in. Ie. it must look like a regular residence from the inside and out, not a preschool or licensed daycare.

    That's what I've been told so far, and for me it's a non-issue, as I use my extra living /dining area for the play area, with no structural changes to the house.

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  10. #8
    Euphoric !
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    Thanks for the more in depth explanation. I'm fairly useless when it comes to taxes and rely on others. They baffle me, completely.

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