PRESCRIBED INTEREST RATES
CRA has announced the prescribed rates for the fourth quarter, October 1 to December 31, 2012. The following rates apply:
• Interest charged on overdue taxes – 5%
• Interest paid on overpaid corporate tax – 1%
• Interest paid on overpaid personal tax – 3%
• Interest calculated on taxable benefits for shareholders and employees – 1%
 

ONTARIO HEALTHY HOMES RENOVATION TAX CREDIT
This tax credit is 15% of eligible expenses to a maximum credit of $1,500 for the costs of renovating a home to accommodate a senior citizen. The credit is available to an individual 65 or over owning or renting a home or a family member living with a senior.
The credit is an annual credit to be claimed every year but married couples and common-law spouses cannot double-up the credit unless they are living separately because of a medical necessity or relationship breakdown.
Eligible expenditures include renovations to provide a first-floor suite, disability assistive additions such as grab bars, accessible tubs and toilets, handrails, wheelchair ramps, elevators etc.
Items eligible as medical expenses may also qualify for this credit.
For 2012, expenditures from October 1, 2012 to December 31, 2012 qualify. Subsequent year credits will be based on the calendar year.

IN THE COURTS – FAMILY LAW – WHEN A MATRIMONIAL HOME IS NOT A MATRIMONIAL HOME

In a recent Ontario decision, Spencer v. Riesberry the Court ruled that the family home, which was owned by a family trust, was not a matrimonial home under the Family Law Act and, therefore, not a protected property. The result of this decision is that the value of the home is included in the pre-marital value and the value at separation is included in net family property. While the family home is usually not included in the former but is included in the latter it will, in this circumstance, provide a deduction for the beneficiary spouse in calculating the equalization.

Placing a family home does not affect the principal residence rules for tax purposes but it does affect all beneficiaries as the trust must designate the principal residence to all of the beneficiaries.
 

IN THE COURTS – RRSP WITHDRAWAL FOR NEW HOME OK
In the case of Lipczak v The Queen CRA argued that the withdrawal of funds from did not qualify under the Home Buyers Plan rules because she withdrew the funds in 2005 and did not take possession until 2008. The taxpayer’s argument that she entered into an agreement in 2005 that qualified her to take vacant possession at a future date. Since she took possession within one year of the date that she acquired the property and she did not acquire it until it was available for vacant possession the taxpayer was not only found to be in the right but the Court allowed her costs.