OWING $1,800 IN TAXES CAN LEAD TO INSTALMENT PAYMENTS
The possible tax implications of income from a second job and taxation of an imported vehicle were among the topics raised in the latest batch of reader questions. Here’s what they wanted to know.
Q “I make about $60,000 a year from a salaried job but also expect to generate another $5-10,000 in additional revenue this year from private contract work. Do I have to make instalment tax payments on the extra income, since no taxes are being withheld, or do I simply pay the taxes when I file my return? Is there an amount that triggers instalment obligations? Will I owe CPP/QPP and parental-leave dues on this money?”
A You won’t have to make instalment payments this year or next, but you may in the year after that. Quebecers who owe $1,800 or more a year in net provincial tax on income where no tax was withheld can expect a directive from Revenue Quebec to start paying instalment amounts if it happens in two tax years out of three. The income in question includes money from selfemployment, some pension payments, income from more than one job and rental or investment income. Net tax means total provincial tax owed, less any taxes deducted at source and refundable tax credits. The threshold for residents of other provinces is net tax of $3,000. At your current income level, you’d be looking at a provincial tax rate of about 20 per cent on the additional revenue so you might actually end up owing $1,800 or more if you get to the top end of your revenue projection. Normally, you’d also owe QPP and parental-leave contributions on any extra employment income, until you reach the annual limits. At $60,000 of income from your salaried job, you’ve already surpassed the QPP contribution threshold of $54,900, but you won’t reach the cutoff point for parental-leave dues until you hit $71,500.
Q “I bought a Volkswagen Touareg diesel in Missouri when the dollar was close to par and paid all applicable taxes when I brought the car back to Canada. Because it’s a U.S. vehicle, I have to go through the U.S. to get whatever remediation was offered by Volkswagen for the diesel emissions misrepresentations. The U.S. remediation is close to being settled and is quite generous. For less than $10,000, I’ll be able to trade back my Touareg with 200,000 kilometres on it and get a new one. Will I be taxed in Canada on the full value of the vehicle or just on the amount I paid?”
A Unfortunately, it appears your tax deal won’t be quite as generous as the remediation. When a new vehicle is imported into Canada, GST, duty and provincial sales tax are calculated using the actual value of the imported good as determined by the Canada Border Services Agency, and without consideration of the value of any trade-in. As the agency explains in a memorandum, “a value attributed to the ‘trade-in’ or exchange is simply a notional value ascribed to it by the vendor and may be more or less than what is claimed . ... Since a value cannot be determined for ‘tradeins’ or exchanges, the transaction value cannot be used.”