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3 – DEEPAK SINGH: INVESTOR WITH STOCK PORTFOLIO & 2 RENTAL PROPERTIES

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Introduction to Deepak Singh — investor with stock portfolio & two rental properties 🧾🏘️📈

Welcome — this is your ultimate beginner-friendly knowledgebase for preparing a tax return for an investor like Deepak Singh: a self-employed incorporated owner who pays himself dividends, owns two rental condos (one long-term, one short-term/Airbnb), holds taxable investment accounts (T3/T5), has an investment loan, carries mutual fund management fees, made an RRSP contribution via a loan, and supports elderly parents (one with DTC eligibility). Below you’ll find clear, practical guidance, checklists, ProFile steps, tax traps to watch for, and short-cuts for quality review. Use this as a one-page reference every time you prepare a similar client file. ✅

Quick at-a-glance checklist 📋

  • Client type: Shareholder of a private corporation; compensation via dividends (no salary).
  • Business: Owner/operator of incorporation (Skylar Global Solutions Ltd) — corporation tax handled separately.
  • Investment income: T3 (trust), T5 (investment dividends/interest) slips and brokerage statements.
  • Investment loan: $250,000; interest paid — likely deductible as carrying charges if funds used to earn investment income.
  • Mutual fund management fees (MER) — note these are not directly deductible on T1; but some management fees for investment advice and administrative fees may be deductible as carrying charges (check slip details).
  • RRSP: $22,000 RRSP contribution from an RRSP loan; interest on RRSP loan $1,850 (usually not deductible; interest on RRSP loans is generally not deductible — only interest on money borrowed to buy investments that generate income is deductible).
  • Rentals: 2 condo properties — one long-term rental, one Airbnb (short-term). Client elects NOT to claim CCA. Use Form T776 to report each property’s income & expenses.
  • Dependants: Parents living with client. Mother has a Disability Tax Credit (DTC) certificate; father has a doctor’s note of infirmity. Client paid their medical expenses — these may be claimable.
  • Instalments: Tax instalments paid for personal tax owing; confirm amounts & dates.

Core tax concepts you must understand (simple, practical) 🧠

1. Rental income vs business income

  • Long-term condo → normally rental income (use T776) where you report gross rent and deductible expenses.
  • Short-term (Airbnb) → could be rental or business income depending on services, frequency, and organization (e.g., daily cleaning, concierge, hotel-like services → business). Classification affects which forms you use, whether GST/HST applies, and how expenses are treated. When in doubt, document the facts and use professional judgment.
  • Always prepare one T776 per property (or one T776 with separate property sub-sections), showing income and expenses per property. CRA T776 guidance is the authoritative resource. Canada+1

2. Capital Cost Allowance (CCA) — claim or not?

  • Claiming CCA reduces taxable rental income now but can trigger recapture (taxable) on sale if proceeds exceed undepreciated capital cost. Many investors choose not to claim CCA to avoid future recapture. If the client refuses CCA, record the asset cost and set CCA to $0 on the T776. (Document client’s instructions.) Canada

3. Investment loan interest and carrying charges

  • Interest on money borrowed to earn investment income (dividends/interest) is generally deductible as carrying charges/interest expenses, but not deductible if the only expected return is capital gains. Keep supporting statements showing the loan was used to earn income. CRA guidance on carrying charges explains where to claim them. Canada+1

4. Mutual fund MERs and management fees

  • The embedded MER in mutual funds is not a T1 deductible expense. However, specific management/advisory fees or separate invoices for investment advice may be deductible as carrying charges if they meet the test. Keep the breakdowns and brokerage confirmations.

5. RRSP contributions & RRSP loan interest

  • RRSP contributions reduce RRSP contribution room and can produce a deduction (if within limit). Interest on an RRSP loan is not typically deductible. Confirm RRSP contribution limit and enter the contribution to produce an RRSP Deduction Schedule. (Keep RRSP confirmation slips for proof.)

6. Medical expenses & supporting dependants

  • Medical expenses paid for dependants (including parents) may be claimed on the filer’s return (subject to 12-month timing and threshold rules) and could be more beneficial on the filer’s return than on the parent’s if the parent has low income. The CRA has precise rules and lists of eligible medical expenses and the 12-month window. If a parent is eligible for DTC, other transfer/credit rules may apply. Canada+1

7. Disability Tax Credit (DTC)

  • The DTC is a non-refundable tax credit requiring Form T2201 and supporting medical practitioner certification. If approved, unused portion can often be transferred to a supporting family member (e.g., the child who paid their medical costs), and it enables access to other programs. Retain the DTC approval letter. Canada+1

Documents you MUST collect and organize (download checklist) 🗂️

  • T5 slips (investment dividends/interest) and summaries from brokerage (TD Waterhouse, TD Wealth).
  • T3 slips (trust income, mutual fund distributions).
  • Detailed brokerage trade & fee reports (commissions, management fees, account fees).
  • Statements showing the $250,000 investment loan and interest paid.
  • RRSP contribution slip/confirmation and RRSP loan agreement showing interest paid.
  • Rental income records (rent rolls, Airbnb totals), all rental expense receipts (insurance, property taxes, condo fees, utilities, repairs, advertising, management fees).
  • Property purchase documents (original cost, improvements) — for CCA tracking even if client declines CCA.
  • Medical receipts for parents, doctor letters, and DTC/T2201 documentation.
  • Corporate dividend documentation (T5 from corporation to shareholder) and instalment payment notices/receipts.

Step-by-step: How to enter this client in Intuit ProFile (for absolute beginners) 🖥️🧭

Note: UI text might vary with ProFile version. Below are practical, reproducible steps. Always save the client file often.

1) Create the client file

  1. Open ProFile → File → New → Client.
  2. Enter client identification: Name, SIN, address, tax year. Save.

2) Enter personal / identification details

  • Client > Identification: enter marital status (single), dependants (parents) — enter their names and SINs (if available) or “No SIN” if not provided. Include relationship and whether they lived with client all year.

3) Enter Investment Income (T3/T5)

  • In ProFile sidebar: Income → Investment Income.
  • Choose T5 or T3 slip form. Click “Add new T5” → fill issuer, box numbers, amounts exactly as on slip. Repeat for each slip.
  • For broker summary totals, reconcile the sum of T5/T3 slips with year-end statements; attach electronic copies in client file.

4) Enter Carrying charges / Investment loan interest

  • In ProFile: Deductions → Carrying Charges & Interest (sometimes under “Other Deductions” or “Investment expenses”).
  • Enter the interest amount for the $250,000 investment loan and describe (e.g., “TD Wealth investment loan — used to purchase dividend paying stocks”). This will feed into the T1 line for carrying charges. Attach loan statement.

Pro tip: add a client note in ProFile (Notes tab) explaining purpose of loan and receipts location — helpful in audit.

5) Enter Mutual fund management fees (if separately invoiced)

  • If you have a separate invoice for management/fee for advice, enter under Deductions → Carrying Charges (describe it). If it’s only embedded MER, do not enter as deductible.

6) Enter RRSP contribution & RRSP loan interest

  • In ProFile: RRSP → RRSP Deduction Schedule: enter the $22,000 contribution; ProFile will compute allowable deduction based on contribution room.
  • For RRSP loan interest: do not enter as deductible unless you’ve confirmed CRA allows it (generally not). Document the loan interest in Notes for client record.

7) Enter Rental properties (T776) — one entry per property

  • In ProFile: Forms → T776 (Statement of Real Estate Rentals). Click “Add new property” (or “Insert T776”).
  • For Long-term rental:
    • Enter gross rents received (from rent rolls).
    • Enter deductible expenses (insurance, repairs, condo fees, property taxes, mortgage interest for property loan — interest on mortgage for rental is entered on T776, not on carrying charges).
    • For CCA: since client opts not to claim CCA, leave CCA lines blank/zero. Document client instruction in the notes field of the T776 form.
  • For Airbnb/Short-term: assess whether it’s rental or business. If rental: enter on second property in T776. If business: use Business/Form T2125 instead, and enter revenues & expenses as business income — consider GST/HST registration if supplies exceed small supplier threshold.
  • Save each T776 and attach backup spreadsheet (ProFile supports attachments).

Reference: CRA T776 guidance for completing rental form. Canada+1

8) Enter Medical expenses you paid for parents

  • In ProFile: Deductions → Medical Expenses. Choose the person (client is claiming for parents).
  • Enter total medical receipts (aggregate by 12-month period; ProFile will calculate the allowable credit after threshold rules). Attach receipt summary and indicate the 12-month period used. See CRA rules for eligible items and the 12-month window. Canada

9) Enter Disability Tax Credit (DTC) details

  • If parent has DTC approval: in ProFile, go to Deductions → Disability Amounts or Credits, indicate the DTC amount and whether it’s being transferred to the supporting family member (client). Attach T2201 approval letter. If T2201 is pending, document that application is filed and attach submission copy. Canada+1

10) Enter Installments paid and tax payments

  • In ProFile: Payments/Instalments section: enter the four instalment payments (amounts & dates). These will reduce tax owing.

11) Final review & validation

  • Run Validate (ProFile has a validation/diagnostics function). Fix errors/warnings.
  • Produce T1 Summary and review: rental net income, carrying charges, investment income totals, RRSP deduction, medical credit, DTC transfer, instalments applied. Save and generate PDF for client review.

Practical examples & mini-workflows (copy/paste into your workflow) ✂️

Recording investment loan interest in ProFile

  1. Deductions → Carrying Charges & Interest → Add new entry.
  2. Description: “TD Wealth investment margin loan — used to purchase income-producing securities.”
  3. Amount: $17,004.52 (enter exactly). Attach loan statement (PDF).

Reporting Airbnb as rental (if no hotel services)

  1. Forms → T776 → Add property “Condo – Airbnb”.
  2. Gross rental income: X. Expenses: cleaning (repair?), insurance, utilities, condo fees. If you provide substantial services (breakfast, daily cleaning included) consider T2125 business. Document reasoning.

Red flags, common errors & how to avoid them 🚩

  • Misclassifying Airbnb: Treat short-term rentals as business if services or frequency are high — this affects GST/HST and expense claims. Document your classification rationale.
  • Claiming interest incorrectly: Don’t mix up rental mortgage interest (rental expense on T776) with investment loan interest (carrying charges on T1). They go in different places. Canada+1
  • Trying to deduct RRSP loan interest: Usually not deductible — double-check before entering.
  • Missing receipts & 12-month rule for medicals: Medicals must be tracked across the chosen 12-month period and not claimed twice. Canada
  • Claiming CCA without note: If client later sells and CRA assesses recapture, you’ll need clear instructions; always get client to sign/confirm decision about CCA.

Professional-judgment moments — what you must document 📝

  • Why Airbnb was classified rental vs business (list of facts).
  • Client decision not to claim CCA (signed client instruction).
  • Source and use of investment loan funds (prove used to generate income).
  • DTC application status and transfer decisions.
  • Any positions that may attract CRA review (large carrying charges, high medical claims, rental losses).

Useful CRA references (read & save) 🔎

  • CRA Form T776 – Statement of Real Estate Rentals (how to complete T776). Canada+1
  • CRA guidance on carrying charges & interest (line for carrying charges). Canada
  • CRA pages on medical expenses (eligible items & 12-month period). Canada
  • CRA Disability Tax Credit (T2201) information and eligibility. Canada+1

Final checklist before you file (quick QA) ✅

  • All slips entered (T5, T3, brokerage)?
  • Investment loan interest entered under carrying charges with supporting docs?
  • Each rental property has a T776 (income & expenses) and CCA correctly set to zero if client declined?
  • Medical expenses aggregated within 12-month period and entered for the correct person?
  • DTC status recorded & appropriate transfers applied?
  • Instalments recorded?
  • ProFile validation run and all warnings resolved or noted with client-approved positions?

Short cheatsheet (copy into client file notes) ✍️

  • Investment loan interest → Carrying charges (T1 deduction; keep proof of use). Canada
  • Rental mortgage interest → Rental expense on T776. Canada
  • MER (embedded) → not deductible; separate advisory fees may be deductible if invoiced.
  • RRSP loan interest → generally not deductible.
  • Medicals for parents → use 12-month rule; claim where most beneficial. Canada

Notes & pro tips 💡

NOTE (client instruction required): Always record a signed instruction if client declines CCA or takes a tax position that may increase audit risk.
TIP: Keep a one-page “workpaper” that links each ProFile input (form + page) to the supporting PDF filename — it saves time during review and audit.
WARNING: Large carrying charges with minimal investment income can trigger CRA review — maintain strong documentation that borrowed funds generated income (dividends/interest). TurboTax Canada

Starting to enter investment income & deductions — Deepak Singh (Investor) 🧾📈🇨🇦

This is your complete beginner-friendly knowledgebase for entering an investor’s investment income and deductions into a Canadian personal tax return — written so someone with zero prior tax software experience (and practicing in Intuit ProFile) can follow, understand the “why”, and confidently prepare the return. Save this as a step-by-step reference when you work on clients who hold taxable investment accounts, foreign-currency slips, mutual funds, and investment loans. ✅

Quick summary — what we’ll cover

  • Required documents & what each slip means 📂
  • How to enter slips (T3 / T5) in ProFile — step-by-step 👩‍💻
  • Handling foreign currency (USD) slips & exchange rates 🔁
  • Entering Schedule 3 — capital gains / dispositions (summary vs line-by-line) ✂️
  • Carrying charges vs outlays & expenses vs commission treatment 🔍
  • Mutual fund MERs, RRSP loan interest, investment loan interest — tax treatment explained 💡
  • Validation checks, audit-proofing & workpaper tips 🔐

Documents & slips you must have before you start 📑

  • Brokerage year-end statements (TD Waterhouse, TD Wealth, etc.) — include realized gain/loss reports.
  • T5 slips (dividends, interest).
  • T3 slips (trust / mutual fund distributions).
  • Records of commissions, management invoices, and account fees.
  • Investment loan statement showing principal & interest paid.
  • RRSP contribution slips (and HBP repayment notices if applicable).
  • Any foreign (USD) slips or statements showing currency notation.

🔎 Why: The CRA expects amounts to reconcile back to issuer slips. Always attach electronic copies of slips and the broker’s realized gain/loss report to your working file.

Tax concept cheat sheet (short)

  • T5 / T3 → report income shown on those slips (don’t double-count items from broker reports).
  • Investment loan interest (if borrowed to earn income from investments) → deductible as carrying charges.
  • Commissions on trades → outlays & expenses for capital transactions (affect ACB & capital gain, not carrying charges).
  • Mutual fund MER (embedded) → not deductible on personal T1 (these are reflected in the T3).
  • RRSP loan interest → not deductible (interest on money borrowed to contribute to an RRSP is not deductible).
  • Foreign currency slips → convert using commonly accepted exchange rate (Bank of Canada average or software-selected rate) and note the rate used.

Step-by-step: entering slips and amounts in Intuit ProFile (for absolute beginners) 🖥️

Note: menu names may slightly differ by ProFile version — follow logically equivalent menu options if wording varies.

1. Create & open client file

  1. ProFile → File → Open (or New → Client) → enter client ID (name, SIN, tax year). Save.

2. Enter personal/dependent info (so credits compute correctly)

  • Client → Identification: enter dependents’ names, dates of birth, SINs and net incomes (do this first — credits rely on it).

3. Enter T5 (investment dividends / interest)

  1. In the left panel or Forms Explorer: go Income → Investment income → T5.
  2. Click Add or New T5.
  3. Fill all issuer fields exactly (issuer, box numbers, amounts). If slip indicates foreign currency (USD), check the box or field for foreign and choose exchange rate (see next section).
  4. Save and attach the scanned PDF/T5 in ProFile’s attachments.

4. Enter T3 (mutual fund / trust income)

  1. Forms Explorer → Income → T3.
  2. Add T3 slip, enter box amounts exactly. If slip indicates USD, mark as foreign and choose the exchange method. Attach T3 PDF.

5. How to handle foreign (USD) slips in ProFile

  • ProFile gives a choice to enter the slip in foreign currency and select an exchange rate (often: “US average” for calendar year).
  • Best practice: Use Bank of Canada annual average (or the rate provided on the slip). Document the exchange rate used in client notes.
  • Example: T5 shows USD 1,000 and software’s US average = 1.3013 → ProFile will multiply USD amount × 1.3013 = CAD equivalent and put CAD figure onto the return.
  • Tip: Put the exchange rate and source in ProFile Notes (e.g., “Used BoC annual average 1.3013”) — saves headaches on review.

6. Enter carrying charges & interest (investment loan interest)

  1. Forms Explorer → Deductions → Carrying charges & interest (line 22100).
  2. Add a new entry: description “TD Investment loan interest – $250,000 margin” and amount (e.g., $17,004.52).
  3. Attach loan statement proving interest paid and evidence funds were used to purchase income-producing securities.

7. Enter management fees (when deductible)

  • Only management/advisory fees for non-registered accounts may be deductible if invoiced separately.
  • Enter under Carrying charges with description and attach invoice.
  • Do not enter MERs embedded in mutual funds — these are not deductible.

8. Enter commissions & transaction outlays

  • Commissions paid to buy/sell securities are outlays & expenses that affect capital gain ACB calculation — they are not entered under carrying charges.
  • In ProFile: Schedule 3 → Dispositions → Add a disposition or use the dedicated fields for “outlays & expenses” associated with dispositions.
  • If you summarize trades from the broker’s realized gain/loss report, show how commissions were allocated in your workpaper.

9. Enter Schedule 3 — Capital gains & losses

  • Two main approaches:
    1. Line-by-line: enter each disposition (date acquired, date sold, proceeds, ACB, commission) — precise but time consuming.
    2. Summary per account (common practice): enter totals from the broker’s realized gain/loss report for each account and attach the supporting report. This is acceptable if detailed backup is retained and available on CRA request.
  • ProFile: Forms → Schedule 3 → choose appropriate section (Canadian securities, foreign securities, etc.) → enter proceeds and ACB totals (remember to include/allocate commissions as outlays if not already netted).
  • For USD securities, enter CAD equivalents (use same exchange rate used for slips, or convert per disposition if you track that way).

✅ Practical rule: use the broker’s realized gains report for totals. Keep the transactional report attached as backup. CRA can ask for details — provide them then.

10. RRSP contribution & RRSP loan interest

  • RRSP contribution: Forms → RRSP Deduction → enter $22,000. ProFile will calculate allowable deduction using contribution room. Attach RRSP receipt.
  • RRSP loan interest: normally not deductible — do not enter as carrying charges. Note it in client file if the client asks.

11. Validate & reconcile

  • Run ProFile Validate / Diagnostics. Fix errors. Reconcile total investment income to slip totals and to brokerage statements. Confirm Schedule 3 net capital gain matches broker summary (or detailed entries).

Common mistakes & red flags (avoid these!) 🚩

  • Entering mutual fund MER as a deductible personal expense (not allowed).
  • Claiming RRSP loan interest as deductible.
  • Forgetting to convert USD slips to CAD or using inconsistent exchange rates across slips & dispositions.
  • Putting trade commissions under carrying charges instead of outlays — this misstates capital gains.
  • Not attaching broker realized gain/loss reports when summarizing dispositions — always attach backup.

Workpaper & audit-proof checklist (copy into client file) 📎

  • Attach all T3/T5/T5008 slips (PDF).
  • Attach broker realized gain/loss report and mark which Schedule 3 lines it supports.
  • Attach investment loan statement showing interest paid and loan purpose.
  • Note exchange rates used and the source (Bank of Canada or slip-provided).
  • Note any client instructions (e.g., “Client declines to claim CCA” or “Client requests summary entry of dispositions”).
  • Save ProFile validation report and include it in the working papers.

💡 Pro tip: create a one-page “Investment Summary” in the workfile showing T5 total, T3 total, carrying charges total, investment loan interest, and Schedule 3 totals. Put it at front of the file.

Example quick walkthrough (numbers)

  • T5 (TD Wealth): USD 2,000 box 10 (eligible dividends) → ProFile convert with US average 1.3013 → CAD $2,602.60. Enter T5 with foreign currency checked and chosen rate.
  • Investment loan interest: $17,004.52 → Deductions → Carrying charges → Enter and attach loan statement.
  • Broker realized gains (Canadian account): Proceeds $50,000; ACB $30,000; commissions $500 → Schedule 3: Proceeds $50,000; ACB $30,500 (if you add commissions to ACB) → capital gain $19,500 (50% taxable). Attach broker report.

Final reminder before you file ✅

  • Make sure nothing is double-counted (e.g., amounts on Schedule 3 that are also shown on T3/T5).
  • Maintain clear backup for summaries — CRA expects you can substantiate any summarized amounts.
  • Document exchange rates and rationale for summarizing dispositions.
  • Run ProFile validation and resolve warnings (or document reasons to keep a non-error item).

Do you still have work after entering slips? — Yes — watch for Form T1135 & other disclosures 🛑🌍💼

Entering all T3/T5 slips and carrying charges is necessary — but it’s not always sufficient. If the client owned specified foreign property with a cost amount over CAD $100,000 at any time during the year, you must complete Form T1135 (Foreign Income Verification Statement). Missing it can trigger daily penalties. Below is the practical, beginner-friendly guide every new tax preparer needs — with ProFile steps, examples, checklists, and audit-safe workpaper tips. ✅

TL;DR (quick SEO-friendly bullets) 📌

  • If the total cost of specified foreign property (all accounts combined) exceeded CAD $100,000 at any point in the year → file T1135. Canada
  • If total cost was > $100,000 but < $250,000 you may use the Simplified reporting (Part A); otherwise you must use the detailed schedule (Part B). Canada
  • Failure to file can draw a penalty of $25/day up to $2,500 (minimum $100) — larger penalties apply for gross negligence. Don’t skip it. Canada
  • Mutual funds: foreign assets inside a mutual fund/trust are usually not treated as your specified foreign property (the fund/trust reports instead) — still confirm with the issuer’s report. CIBC+1
  • T1135 can be filed electronically (EFILE/NETFILE) and many tax packages let you e-submit the T1135 separately or with the return — keep the electronic confirmation number. Canada+1

What is “specified foreign property”? (in plain English) 🌎

Specified foreign property includes things like:

  • Funds or securities held outside Canada (e.g., U.S. stocks in a non-registered account),
  • Funds held in foreign bank accounts,
  • Shares of non-resident corporations, interests in foreign trusts, certain debt owed by non-residents, and some foreign real estate (other than personal-use).

Important: property held inside registered accounts (RRSP, TFSA) often does not trigger T1135 for the taxpayer — check each report and slip. Always confirm with the institution’s specified-foreign-property report. CIBC

How to decide if you must file T1135 — step-by-step ✅

  1. Gather monthly or year-end specified-foreign-property reports from every broker or institution (these usually show “cost amount” or “high cost” values by month).
  2. Aggregate across all accounts: add up the cost amounts for all specified foreign property owned by the taxpayer (non-registered accounts and other reportable categories). Don’t look at accounts separately — the rule is combined total. Canada
  3. Check if the combined cost exceeded CAD $100,000 at any time during the tax year (not only at Dec 31). If yes → T1135 required. Example: two accounts with monthly highs can sum to >$100k in June even if Dec 31 totals are below $100k. (Common trap.) Canada

💡 Note box (must-read): CRA expects you to consider any time during the year. Using only the Dec 31 balance can cause a missed T1135 and penalties.

Which reporting method? Part A (simplified) vs Part B (detailed) 🔄

  • Part A (Simplified): available if total cost amount of all specified foreign property was more than $100,000 but less than $250,000 throughout the year — you check boxes for property types and list up to three countries by maximum cost. Simpler to complete. Canada
  • Part B (Detailed): required when the cost amount is $250,000 or more (or if you prefer to file detailed information). Part B asks for per-property details, monthly balances, income, gains/losses, etc. Canada

What numbers go on the T1135? (how to compute & what to report) 🧾

  • Maximum cost amount: use the highest cost during the year for each property/account (broker reports often include monthly high-cost values). For Part A you typically report the highest cost by country (or totals by category).
  • Income from specified foreign property: report foreign-source income and realized gains/losses tied to specified foreign property (the broker’s specified-foreign-property report usually gives these totals). Use CAD amounts and note the exchange rate/method used. Canada+1

Common traps & practical examples 🚩

  • Trap: Two accounts each under $100k at Dec 31 but combined exceeded $100k mid-year → T1135 required. Example from practice: monthly highs combined were >$100k in June/July → file T1135. Canada
  • Trap: Counting mutual-fund underlying foreign holdings as your specified foreign property. If foreign exposure is inside a mutual fund (trust), the fund/trust usually files; you report the T3/T5 and not the underlying holdings as specified foreign property — confirm with the investment report. CIBC+1

Penalties — why you must take this seriously ⚖️

  • Late filing penalty: $25/day up to $2,500 (minimum $100). Penalties for gross negligence or repeated failures are much larger (monthly higher penalties and possible percentage surcharges). If the CRA discovers an omission, penalties and interest quickly multiply. Document your workpapers and attach proofs. Canada+1

How to complete T1135 in Intuit ProFile — step-by-step for beginners 🖥️ (copy-paste workflow)

These steps use typical ProFile UI labels — your version might have slight wording differences. Save often.

  1. Collect the broker’s specified foreign property report (monthly highs, gross income, gains/losses). Save it as a PDF to attach.
  2. Open client in ProFile.
  3. Forms → Filing menu → T1135 (Foreign Income Verification Statement) (or search “T1135” in the forms list).
  4. Choose taxpayer type: Select Individual and the correct individual code (e.g., code 2 for individuals who are not self-employed — this affects filing due date). Canada
  5. Select reporting method: Part A (Simplified) if aggregated cost > $100k but < $250k; otherwise Part B. (Pro tip: if you’re borderline, Part A simplifies data entry.) Canada
  6. Enter countries and the maximum cost amounts for each country (or per property if in Part B). Use the broker’s monthly “high cost” or “cost amount” values. Enter gross income and realized gains/losses as indicated on the institution report.
  7. Attach supporting report(s) inside ProFile (use the Attachments tab). Label filenames clearly (e.g., “TDW_specified_foreign_report_June2024.pdf”).
  8. Validate the T1135 input against your workpaper totals and the broker’s report. Keep a one-line reconciliation showing totals used and exchange rates.
  9. E-file: ProFile and other certified packages can transmit the T1135 electronically (EFILE/NETFILE). You can normally submit the T1135 as a standalone e-document if needed — keep the CRA confirmation number and add it to your working paper. Canada+1

🔔 Important ProFile note: some software workflows let you transmit the T1135 separately from the T1 (useful to avoid late T1135 penalties if the T1 timeline is borderline). Use the EFILE → Submit e-Documents or T1135 e-submission flow in your software. QuickBooks+1

Practical workpaper & audit-proof checklist (copy into the client file) 🗂️

  • Save the broker’s specified foreign property monthly high-cost report (PDF).
  • Create a one-line reconciliation worksheet: monthly max values added by account → monthly totals → show month(s) where combined total exceeded $100k.
  • Document the exchange rate used to convert USD to CAD (and source e.g., Bank of Canada or broker).
  • Indicate whether you used Part A (simplified) or Part B (detailed) and why.
  • Attach T3/T5 slips, brokerage realized gain/loss report, and specified foreign property report.
  • Save CRA e-file confirmation number for T1135 transmission.
  • Get client sign-off or written instruction if you summarized transactional details rather than entering each disposition. (Good audit defense.)

Red flags to flag to the client (explain simply) 📣

  • Large mid-year swings in the cost amount — may trigger T1135.
  • Multiple foreign accounts held with different institutions — must aggregate across institutions.
  • If client says “I only had mutual funds” — confirm whether funds are Canadian-trust funds (usually not reportable by the investor) or non-Canadian funds (may be reportable). CIBC

Quick sample mini-case (copy this into your blog as an example)

  • Account A highest cost in the year (US stocks): CAD $88,002.16
  • Account B highest cost (managed wealth account): CAD $12,500.00
  • Combined high cost during June = $100,502.16 → T1135 required. Use Part A if total remained below $250,000 for the year. Attach the monthly cost report and enter country = USA, income/gains per report.

Final call-to-action & SEO-friendly closers 🧭✨

  • Always run a T1135 check after entering slips: export a quick spreadsheet of monthly high-cost values and sum across accounts — this simple step prevents costly penalties.
  • When in doubt, collect the specified-foreign-property reports from each broker and document the math. Good documentation is your best audit defence.
  • Want a ready-to-print T1135 workpaper template (Excel) + a ProFile mini-checklist you can drop into your client folder? I can generate both now — choose A: Excel T1135 workpaper, B: ProFile T1135 checklist, or C: both and I’ll create them for download. 📥

References (official CRA reads — save these)

  • CRA: Questions & answers about Form T1135 — why and when to file. Canada
  • CRA: Foreign Income Verification Statement — Part A / Part B simplified reporting details. Canada
  • CRA: Penalties for failing to file T1135. Canada
  • CRA: Guidance on filing electronically (EFILE/NETFILE) for T1135. Canada+1

Review & Decision-Making for Rental Properties — The Ultimate Beginner’s Knowledgebase for Tax Preparers 🏠💼

Welcome — this is your complete, beginner-friendly reference for reviewing rental properties and making defensible tax decisions. Use it as a checklist and how-to guide while preparing rental returns (T776 style) — and as step-by-step help when you’re entering everything in ProFile (Intuit ProFile). 🚀

Quick summary (TL;DR)

  • Use separate T776 statements per rental if you want clearer comparisons year-to-year — CRA only cares that the correct net is reported, not the number of forms. ✅
  • Only interest on loans is deductible; principal repayments are not. ❌
  • Imputed time (owner’s hours) is not deductible. ❌
  • Vehicle & travel must be supported by logs and reasonably apportioned. 🧾
  • Personal use days reduce deductible expenses by (personal days ÷ 365). 📆
  • CCA (depreciation) is optional; weigh future sale/recapture risk before claiming. ⚖️

Why structure matters: 1 form vs multiple forms

  • One T776 for each property = easier year-to-year comparisons, clearer audit trail, quicker property-level profitability checks. ✅
  • Single combined T776 = acceptable to CRA, but can make analysis harder.
    Best practice: prepare property-level T776s in your working papers and optionally file separate T776s in ProFile for clarity.

📌 Note (Audit friendliness): Separate statements show you tracked each property carefully — useful if CRA asks questions.

Deductible vs Non-deductible — cheat sheet

Deductible (common):

  • Mortgage interest and bank charges on the rental loan.
  • Repairs & maintenance (not capital in nature).
  • Property management fees, advertising, utilities (if paid by owner), insurance, strata/condo fees.
  • Advertising, professional fees, cleaning fees (Airbnb), supplies.
  • Reasonable vehicle/travel used for the rental (supported by logbook).
  • Capital Cost Allowance (CCA) — optional.

Non-deductible (common pitfalls):

  • Principal portion of mortgage payments. ❌
  • Imputed wages or “owner time” (hours you spent managing/cleaning). ❌
  • Personal items or expenses that are clearly personal use. ❌

❗ Pro tip: When in doubt, document. If you allow an expense that could be borderline, keep receipts, logs, screenshots and a short memo explaining the business purpose.

Personal use & availability adjustments

If owner used the property personally (e.g., stayed 27 days), reduce deductible expenses proportionally:

Personal-use % = personal days ÷ 365

Non-deductible amount = total expenses × personal-use %

Record the personal-use % on the property T776 under the “personal portion” column.

Vehicle & travel rules — how to be safe

  • Keep a detailed logbook: date, purpose, start/end odometer, business km, total km.
  • Apportion expenses by business km % (e.g., 25%). If only one property exists, CRA could question high travel claims — ensure trips were necessary (tools/materials/inspections).
  • For short, mixed-use travel, collect supporting proof (photos, booking, invoices).

Office equipment / iPad / phone — allocation & CCA

  • If an item (e.g., iPad) is only partly used for the rental business, apportion it: percentage used for rental vs personal. Claim that portion as expense or CCA.
  • Typical approach: claim a reasonable portion (e.g., 30–50%) only if you can justify it. Otherwise, conservative preparers may exclude it to avoid scrutiny.
  • CCA class note: computers/tablets commonly fall into a computer equipment class (e.g., Class 50) — entry done via capital assets/CCA schedules.

CCA (depreciation) — to claim or not?

  • Claiming CCA reduces current tax but creates recapture risk when you sell (if proceeds exceed undepreciated capital cost).
  • If client plans to sell soon or expects large capital gains, consider not claiming CCA (or claim minimally).
  • Document the client’s decision (signed note or client email) explaining rationale.

Documentation & professional judgement: audit-proofing

Keep:

  • Receipts and invoices for all claimed expenses.
  • Loan statements showing interest vs principal portions.
  • Vehicle logbook and travel receipts.
  • A short justification memo for any subjective apportionments (iPad %, vehicle %, owner-use %).
  • Notes that client declined to claim CCA (if that was chosen).

🗂️ Checklist box

  • Mortgage statements (interest) ✔️
  • Repair invoices ✔️
  • Management/cleaning receipts ✔️
  • Vehicle logbook ✔️
  • Proof of personal days ✔️
  • Client directive on CCA ✔️

Step-by-step: Entering rental properties in Intuit ProFile (for absolute beginners)

Below are practical steps that mirror how ProFile typically structures forms and workflow. Treat this as a tutorial you can follow while sitting at the software.

1) Start the client file & open the Form Explorer

  1. Open the client in ProFile → go to Form Explorer (often a left-hand panel).
  2. Select Income tab (or search) → locate T776 – Statement of Real Estate Rentals.
  1. With the first T776 open, fill property identification (address, unit).
  2. To add another property, go to Form → New Form and choose T776 again — this creates T776 #2. (You can also duplicate the form if similar.)
  3. Fill each T776 with the property-specific details.

3) Populate Part 3 (expenses & income)

  • Income: enter total rental income for the property (including Airbnb gross receipts).
  • Expenses: enter line-by-line:
    • Mortgage interest → enter exact interest paid (do not include principal).
    • Repairs & maintenance → total with supporting receipts.
    • Management fees, utilities, insurance, condo fees, advertising, bank charges.
    • Travel and vehicle → enter vehicle expenses in the vehicle/travel section and enter the percentage used for business (or the specific amounts). ProFile commonly has fields for “motor vehicle expenses” plus a separate field for “business %” — ensure both are filled.
  • Blue vs Red fields: ProFile will usually compute totals; ensure manual entries go to the correct labeled fields.

4) Handling principal payments

  • Do not enter principal repayments as rental expenses in the T776. If you want to record them for cashflow analysis, keep them in your working papers or in a client memo — not on the T776 expense lines.

5) Enter personal-use days & apportionment

  • On the T776 there is a personal portion or availability column (Part 3 or a dedicated area). Enter the number of personal days and ProFile will compute the percentage (personal days ÷ 365) and the non-deductible portion.
  • Example: 27 days → 27/365 = 7.4% → enter 7.4% in the personal portion column

6) iPad / Computer — Capital cost & CCA

  • In ProFile go to Capital Properties / CCA area for the client → add the iPad under the appropriate CCA class (e.g., computer equipment).
  • Enter cost, date placed in service, and business % (apportion). ProFile will calculate CCA available for the year.
  • If client chooses not to claim CCA, leave it in the worksheet but do not flow the CCA into the T776.

7) Vehicle expenses in ProFile

  • Find the motor vehicle or travel section under the T776 or in an expenses tab.
  • Enter totals for: fuel, insurance, maintenance, lease payments, capital cost, etc., then enter the business use %. ProFile will compute the deductible portion.
  • Attach or reference a vehicle log in your file for support.

8) Summary page & cross-check

  • Use ProFile’s Summary (or Review) page to see property-level net income/loss. It should automatically roll up to the T776 totals and to the client’s T1 return.
  • Cross-check: Interest (entered) + other expenses = total expenses; ensure principal not included; confirm personal-use reduction applied.

9) Flagging / notes for review

  • Use ProFile notes or the workpaper area to record judgments: e.g., “25% vehicle use accepted based on client log; client declined CCA on property to avoid recapture.”
  • Keep a signed client instruction for important choices (no CCA, apportionment decisions).

Practical calculations — small examples

  1. Personal-use adjustment:
    • Personal days = 27 → 27 ÷ 365 = 0.0740 (7.4%)
    • If total mortgage interest + utilities + condo fees = $22,500 → non-deductible portion = 22,500 × 7.4% = $1,665.
  2. Vehicle claim:
    • Total vehicle expenses = $11,582; business km% claimed = 25% → deductible = 11,582 × 0.25 = $2,895.50.
    • Keep logbook proving 25% business use.

Professional judgment & audit risk — what to document

  • Why a % was chosen (e.g., 25% vehicle use): store client log + brief memo.
  • Why you accepted or rejected iPad claim: store a client memo and show business-use calculation.
  • Why client declined CCA: signed client instruction noting future sale concerns.

⚖️ Decision box (How to choose)

  • High chance of sale in near future → consider not claiming CCA.
  • Long-term hold and want current tax relief → consider claiming CCA, but keep note on recapture risk.

Ready-to-use review checklist (printable)

  • Is mortgage interest entered separately from principal?
  • Are repairs vs capital expenditures classified correctly?
  • Are personal days accounted for and % applied?
  • Is vehicle business use supported with a logbook?
  • Has client decision on CCA been documented?
  • Are receipts & bank statements saved in the workpapers?
  • Are separate T776s created per property (recommended)?
  • Are ProFile notes/workpapers updated with professional judgments?

FAQs (short)

Q: Can I deduct my own time spent managing a rental?
A: No — imputed wages or owner time are not deductible. If you paid someone else, that payment may be deductible.

Q: Can I claim the whole iPad cost as an expense?
A: Only the business portion. If it’s clearly used for personal reasons too, apportion or avoid the claim.

Q: Should I split properties into separate T776s?
A: Yes — for clarity and easier analysis. CRA accepts either method.

Final tips for new tax preparers 🧠✨

  • Be conservative and document everything — documentation is your best defense.
  • Use ProFile’s notes/workpapers liberally; they’re part of your audit trail.
  • Explain CCA implications to clients in plain language (current tax savings vs future recapture).
  • Always get client confirmation for subjective choices (signed or emailed instruction).

Overview of tax credits for Deepak and his parents — what to claim, how to document it, and exactly what to enter in ProFile 🧾👨‍👩‍👦

This is a practical, beginner-friendly guide you can use as your one-stop reference when preparing credits for a client who supports elderly parents. It covers the Disability Tax Credit (DTC), the Canada Caregiver Amount, claiming medical expenses for dependants, transferring unused credits, and clear Intuit ProFile steps so someone who’s never used tax software can follow along.

Quick snapshot — why this matters (TL;DR) 🚦

  • If a parent has an approved DTC (Form T2201), the family can claim the disability amount or transfer unused portions to a supporting person. The T2201 must be submitted and approved by CRA to claim the DTC. Canada+1
  • The Canada Caregiver Amount can be claimed for an infirm dependant 18+ and the amount is income-tested (enter dependant net income to get the correct figure). (See line 30450 guidance.) Canada
  • Medical expenses paid for parents are claimed on line 33199 (not the taxpayer’s self line 33099). Use the 12-month period that gives the largest claim and document everything. Canada+1

1) Disability Tax Credit (DTC) — what it is & what you need 🔵

  • What it does: Non-refundable credit for persons with severe and prolonged impairment. If the dependant isn’t using all their DTC, the unused portion can be transferred to a supporting family member. Canada
  • What you must collect: Completed Form T2201 signed by an authorized medical practitioner, plus any CRA approval letter once available. Do not claim a DTC transfer until the T2201 has been approved (or at least submitted with reasonable evidence and documented). Canada+1
  • ProFile entry (simple):
    1. Forms Explorer → Credits / Disability section.
    2. If DTC approved: tick the DTC box for the dependant, attach T2201 and CRA approval.
    3. If pending: attach the signed T2201 and a note “DTC pending — T2201 submitted” in client notes.

📎 Note: keep the original signed T2201 and any CRA correspondence in the client file.

2) Canada Caregiver Amount (Line 30450) — who qualifies & how it’s reduced 📉

  • Who: You can claim for an infirm dependant 18+ (parents, grandparents, etc.) if they are dependent on the taxpayer because of impairment. The amount is reduced by the dependant’s net income. See CRA guidance for the detailed eligibility and calculation. Canada
  • Why net income matters: If you don’t enter the dependant’s net income, the software will assume the maximum caregiver amount and your client may be reassessed later — always collect the dependant’s line 23600 (net income) or NOA. Canada
  • ProFile entry (simple):
    1. Add dependant in Dependants worksheet (name, DOB, relationship, net income).
    2. ProFile auto-populates Schedule 5 → review line 30450 entries and confirm the caregiver amounts shown for each dependant.
    3. Attach a short workpaper that lists the dependant incomes used and source documents.

3) Medical expenses — where to enter parents’ expenses (lines 33099 / 33199) 💊

  • Two different lines:
    • Line 33099 — medical expenses for the taxpayer, spouse, and children under 18.
    • Line 33199 — medical expenses for other dependants (parents, grandparents, adult children). Always put parent medicals on 33199. Canada+1
  • 12-month rule: Choose the 12-month period that produces the largest claim — document the period and keep receipts. Canada
  • Threshold: The claim equals eligible medical expenses minus 3% of the claimant’s net income (or the yearly maximum threshold if that applies) — for dependant medicals, use the dependant’s net income when calculating the portion relevant to them. Canada
  • ProFile entry (simple):
    1. Forms Explorer → Medical expenses worksheet.
    2. Enter Deepak’s own medicals under line 33099.
    3. Enter each parent’s medicals under line 33199, with dates & totals and the dependant’s net income. Attach full receipts.

🔍 Tip: keep a separate “Medical Receipts Summary” (PDF or Excel) showing each receipt, the date, the payee, amount, and which person it’s for — saves time on CRA requests.

4) Disability amount transferred from a dependant (Line 31800) — how transfers work ↩️

  • If a dependant qualifies for the DTC but does not need the full credit, the unused portion may be transferred to a supporting person — entered on line 31800 of the supporting person’s return. Ensure the dependant’s return reflects the DTC claim first. Canada+1
  • ProFile entry (simple): once the dependant’s DTC is recorded, ProFile shows the available transferable amount and provides the field to enter the transferred amount on the supporter’s return. Attach evidence of the dependant’s DTC claim/approval and a note indicating the transfer amount.

5) Practical documentation & audit-proof workpapers — what to save 🗂️

Always attach and save in the client file:

  • Signed T2201 and CRA approval (or proof of submission). Canada
  • Doctor’s letters for infirmity (if DTC pending).
  • Dependants’ Notice(s) of Assessment or last filed return (to prove net income).
  • Receipts and proofs of payment for all medical expenses (bank/credit card statements). Canada
  • A short “Dependants & Medical Workpaper” showing: dependant name, DOB, net income used, medical totals, DTC status, caregiver claim amount, supporting attachment filenames.

6) Common mistakes to avoid (and how to fix them) ⚠️

  • Mistake: Entering parents’ medicals on the taxpayer’s line (33099).
    Fix: Use 33199 for other dependants. Canada
  • Mistake: Not entering dependant net income → software assumes maximum caregiver amount and client gets reassessed.
    Fix: Obtain and enter the dependant’s 23600/net income (or NOA). Canada
  • Mistake: Claiming DTC transfer without a filed/signed T2201.
    Fix: Attach the signed T2201 and indicate CRA approval status; wait for approval if feasible. Canada+1

7) Short ProFile checklist — copy into the client notes ✅

  • Dependants added with SIN/DOB/relationship and net income.
  • T2201 attached (if applicable) and DTC status noted.
  • Schedule 5 reviewed (lines 30425 / 30450 / 31800).
  • Medical receipt summary attached; parental medicals entered on 33199.
  • Transfers (DTC) entered on line 31800 with dependant support docs.
  • Client sign-off (email or signed worksheet) saved.

Final quick examples (so you can see it in practice) ✍️

  • Grace: approved DTC, low income → Deepak claims caregiver amount and most of her unused DTC transfer. (Attach T2201 and NOA.) Canada+1
  • Suresh: doctor letter for infirmity but DTC pending → Deepak claims caregiver amount now (supported by doctor letter) and will claim DTC transfer only after T2201 approval. Document the letter and the pending T2201 submission. Canada

Reviewing the Finished Return — flow of information & final checks for an investor with rentals 📄🔁🏦

This is your ultimate beginner-friendly reference for reviewing a completed personal tax return for an investor who has: a private corporation that pays dividends, taxable investment accounts (T3/T5/T5008), realized capital gains/losses, and two rental properties. It shows where each dollar came from, how numbers flow through the return, what to verify in Intuit ProFile, and a final pre-transmit checklist so you won’t miss anything. Use this as your go-to closing procedure whenever you finish a return.

Why a structured review matters ✅

Small input mistakes (wrong slip amounts, missing instalments, incorrect conversions, or mis-classified rental items) often become audit triggers or reassessments. A methodical review saves the client money and your time later.

High-level flow of information — understand where things originate 🔎

  • T-slips (T5, T3, T5008) → feed Investment income lines (interest, eligible & ineligible dividends, mutual fund distributions, foreign investment income).
    • T5 → dividends/interest (box mapping).
    • T3 → trust / mutual fund distributions (flows to schedule 4 / investment income).
    • T5008 and broker reports → dispositions used to build Schedule 3 (capital gains/losses).
  • Broker realized gain/loss reports → used to compile Schedule 3 totals (proceeds, ACB, commissions, taxable capital gains).
  • Investment loan statements & fee invoices → supporting docs for carrying charges (Line 22100) and allowable management fees.
  • T776 (per rental property) → gross rents/Airbnb revenue and itemized rental expenses; net of personal-use adjustments → totals roll to T1 rental income (net combined).
  • RRSP receipts & T-slip confirmations → RRSP deduction schedule → Line for RRSP deduction; HBP repayments entered if applicable.
  • Dependants worksheet & medical worksheet → feed Schedule 5 and medical claim lines (33099 / 33199).
  • T1135 (if needed) → separate disclosure built from broker specified-foreign-property reports (monthly highs / highest cost during year).
  • Instalments / tax payments → entered into Payments section to reduce balance owing.

Typical lines on the tax summary & their sources (easy map) 🗺️

  • Taxable dividends (line 12000 / 12010) ← T5s (eligible/ineligible).
  • Interest and other investment income (line 12100) ← T5 interest boxes.
  • Taxable capital gains (Schedule 3 → net gain × 50%) ← broker realized gain/loss reports + T5008 summary.
  • Rental income (line 16000) ← sum of net amounts from all T776 forms (or combined T776).
  • RRSP deduction (line 20800) ← RRSP receipts minus required HBP repayments; RRSP limit verified from NOA.
  • Carrying charges & interest (line 22100) ← investment loan interest + eligible advisory fees (non-registered accounts).
  • Foreign tax credit (Form T2209) ← foreign withholding reported on slips; software computes credit/deduction options.
  • Non-refundable credits (Schedule 1 & Schedule 5) ← basic personal amount, caregiver amounts, DTC transfers, medical expense credit calculations.
  • Balance owing / refund ← total tax computed minus instalments & remittances.

Key reconciliation steps you must do before filing (do these every time) 🔁

  1. Slips → Software
    • Verify each T5/T3/T5008 amount exactly matches the PDF slips. Check issuer name and box numbers.
    • For foreign slips, confirm the exchange rate used (document source: Bank of Canada annual average or slip-provided rate).
  2. Schedule 3 (capital gains)
    • Reconcile Schedule 3 totals to the broker’s realized gain/loss summary. Ensure commissions/outlays are treated consistently (reduce proceeds or increase ACB as appropriate).
    • For US securities, use consistent CAD conversions (note rate used).
  3. T776 (rentals)
    • Confirm each rental’s gross receipts match bank deposits / platform statements.
    • Interest: only interest deductible; principal excluded. Ensure principal payments were not entered.
    • Personal-use days: confirm days claimed and the calculated non-deductible portion.
    • If client declined CCA, confirm a signed instruction is saved.
  4. Carrying charges & management fees
    • Only include advisory/management fees for non-registered accounts if invoiced separately. MERs (embedded mutual fund fees) are not deductible.
  5. RRSPs & HBP
    • RRSP contribution receipts entered and RRSP deduction does not exceed room. HBP repayments recorded and reconciled to notices.
  6. Dependants, DTC & medicals
    • Dependants’ net incomes entered (line 23600) — required for accurate caregiver amounts and medical thresholds.
    • Attach T2201 (if DTC) or doctor’s letters if DTC pending; enter transfers only when supported.
  7. T1135 check
    • Sum the highest cost of ALL specified foreign property across institutions for each month (or use monthly highs from reports). If > $100,000 at any time → prepare T1135.
  8. Payments & instalments
    • Verify all instalments & prepayments show in the Payments section, with correct dates/amounts.
  9. Tax credits & calculations
    • Review Schedule 1, Schedule 5, and non-refundable credits summary. Ensure caregiver / DTC transfers look sensible relative to dependants’ incomes.
  10. Final mailbox check
    • Make sure all supporting PDFs are attached to the client file and filenames cross-reference your workpaper list.

Intuit ProFile finalization — step-by-step for beginners 🖥️

  1. Run Validate (F8) — fix all errors (red). Document warnings you intentionally accept.
  2. Open T1 Summary → visually scan major lines: total income, deductions, taxable income, tax payable, total credits, balance owing. Click into any line to jump to source forms.
  3. Check Forms Explorer:
    • Income → T5/T3/T5008: click each slip and open attachments to confirm.
    • Income → Schedule 3: open dispositions and reconcile to broker report.
    • Income → T776: open each T776 and review personal-use %, interest, and major expense lines.
  4. Payments → ensure instalments are entered correctly (dates match CRA instalment dates).
  5. Attachments → use ProFile’s Attachments pane to attach PDFs; ensure all are visible in client file.
  6. Workpapers → add a “Return Flow Reconciliation” one-page PDF that shows source → line mappings (example below). Attach this as the front page.
  7. E-File → set up EFILE credentials, generate the transmission package preview, and save the pre-transmit report. Do not transmit until client approval obtained.
  8. Client Package PDF → produce a single combined PDF of T1 + key schedules + attachments summary for client review.

Example: Return Flow Reconciliation (one-page you can copy into the file) ✂️

  • T5 (Skylar Global Solutions Ltd) — ineligible dividends → Line 12010 (enter exact box 10)
  • T5 (Broker) — interest USD converted using BoC avg 1.3013 → Line 12100
  • T5008 / Broker realized gains → Schedule 3: Proceeds $X / ACB $Y → taxable capital gain = (Proceeds − ACB − commissions) × 50% → Line 12700
  • T776 (Condo A) → Gross rent $A, Expenses $B → Net rental income $C → combined rental net → Line 16000
  • Carrying charges (investment loan interest) $17,004.52 → Line 22100
  • RRSP contribution $22,000 − HBP repayment $1,275 → RRSP deduction line 20800 = $20,725

(Attach the table with filenames for each supporting doc.)

Pre-Transmit final QA checklist — copy this into your file & tick off ✔️

Identification

  • Name, SIN, DOB, address, province correct
  • Direct deposit info entered (if requested)

Slips & Income

  • All T5/T3/T5008 slips entered & attached
  • Foreign slip conversions documented (rate + source)

Investments

  • Schedule 3 reconciled to broker realized gains report
  • Carrying charges correctly entered & supported

Rentals

  • T776 completed for each property (or single T776 with justification)
  • Personal-use days & vehicle allocations documented
  • Interest only (principal excluded)
  • CCA election documented (client-signed if declining)

Credits & Dependants

  • Dependants entered with net incomes (line 23600)
  • T2201 attached or pending note added
  • Medical receipts summarized & attached (line 33099 / 33199 correct)
  • Caregiver & DTC transfers reflected correctly on Schedule 5

Other

  • RRSP/HBP entries correct & reconciled to receipts / NOA
  • T1135 assessed and completed if required; attachments included
  • Instalment payments entered and reconciled

Software & Filing

  • ProFile validation passed (or exceptions documented)
  • All attachments saved, filenames cross-referenced in workpapers
  • One-page flow reconciliation attached to the client file
  • Client sign-off (email or signed PDF) saved

Final professional tips (to level up) 🌟

  • Always create a one-page “source → line” map for each return — it’s the fastest way to explain the return to a reviewer or the client.
  • Document professional-judgment positions (e.g., vehicle %, no CCA) with client confirmation — this protects you if CRA questions the position.
  • Keep broker raw reports (monthly statements, realized gains exports) for 7 years — CRA may request detailed transactional backup.
  • When in doubt, ask for receipts or evidence rather than guessing. Conservative, well-documented positions win in reviews.

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