The Oakville Chess Club in partnership with with GMS Chartered Professional Accountants LLP invites you to join us for our annual Christmas Chess Classics in support of Charity. This year, all donations raised from this event will be donated to the Compassion Ministry at Hope Bible Church. This ministry provides food and day-to-day supplies to families in need in our communities. Learn more about how you can support this initiative in this issue. I also share some key insights on taxes. Enjoy this issue and please remember to share this with everyone in your network:

1. Support Our Annual CHRISTMAS CHESS CLASSICS for CHARITY

We are excited to host another food drive chess event coming up in exactly two weeks. On Saturday, December 13th, we will host our annual Christmas Chess Classics in support of Charity in partnership with the Oakville Chess Club. This year, all donations raised from this event will be donated to the Compassion Ministry at Hope Bible Church. This ministry provides food and day-to-day supplies to families in need in our communities. There are a number of ways you can support this charity initiative:

• You can donate cash directly to help offset the costs of running the event. We will volunteer our time and expertise to run a professional chess event. You can donate any amount by sending an email money transfer to info@oakvillechessclub.ca.
• You can participate as a player by registering to play for FREE here. We ask that you consider bringing non-perishable food items for donation to Harvest Market.
• You can simply come to cheer on participants. Again, feel free to bring non-perishable food items and cash to support the cause.
• You can share this information with others to help spread the word.

To learn more and to consider other ways you can support, click here.

2. The Power of Pooling Charitable Donations

The Canada Revenue Agency (CRA) allows you to claim eligible charitable donations made in the current tax year or in any of the five preceding years. This flexibility is a powerful tool you should use to maximize your tax refund. As you may already know, the Canadian charitable tax credit is designed to give you a significantly higher credit rate on donations over $200. For the first $200 there is 15% tax credit rate and over $200 there is 29% tax credit rate (plus your provincial amount). For example, donating $200 per year over 5years at 15% overall credit would be $150, as compared to claiming all the donation at the end of five years which would give a credit of $262. As such, by pooling your small, annual donations into one large claim, you ensure that the maximum amount of your giving moves out of the low 15% bracket and into the high 29% bracket (or higher). In addition, if you run your own business and have the ability to control your annual income, you can save in taxes by strategically pooling your donations to align with when you want to declare higher amount of income.

Key Action Steps:

1. Gather Your Receipts: Locate all official donation receipts from the last five years that you have not yet claimed.
2. Combine Spousal Amounts: The CRA allows you and your spouse or common-law partner to combine all eligible donation receipts and claim the total amount on one tax return (typically the higher-income earner).
3. Claim the Total: On your 2024 tax return (Line 34900), enter the single, cumulative amount you wish to claim, which includes the current year’s donations plus the pool of carry-forward donations from the previous five years.

Remember: You can only claim any given receipt once. Keep your receipts filed away, as the CRA may ask to see them if they audit your claim.

3. CRA Clarifies Withholding Rules for Non-Resident Employees

A recent CRA Technical Interpretation issued on March 19, 2025 (2024-1043781E5, Pierre Girard) provides important clarification for Canadian employers with internationally based staff. According to the interpretation, a Canadian employer is not required to withhold source deductions on remuneration paid to an employee who meets all of the following conditions under Regulations subsection 104(2):

• The employee is a non-resident of Canada;
• The employee does not perform any employment duties in Canada; and
• The employee is subject to income tax in a foreign country. (This last condition does not apply if the individual has never been a Canadian resident, or if their role involves selling property or negotiating contracts, as outlined in Subparagraph 115(2)(e)(i).)

Despite the lack of withholding requirements, the CRA confirmed that employers must still prepare and file a T4 slip for such employees, as required under Regulations subsection 200(1). In contrast, Canadian residents who work abroad remain fully subject to Canadian source deductions, even if their foreign employment income is also taxed in another country (see VTN 529(8387)). This interpretation reinforces the importance of correctly determining an employee’s residency and work location to ensure accurate payroll compliance.

4. Is Interest on Home Equity Line of Credit (HELOC) Deductible?

HELOC is a powerful financial tool, but the interest you pay on it is not automatically tax-deductible in Canada. The rule is, it must be used for income, not for Living. The Canada Revenue Agency (CRA) follows a "Use of Funds" test. To deduct the interest, you pay on your HELOC, the borrowed funds must be used for the purpose of earning income (from a business or property). “Purpose” is critical, you must show that the borrowed funds were used currently (or indirectly) to generate income.

Deductible Interest (Claim on Line 22100)

• Borrowing to buy non-registered investments (stocks, mutual funds, GICs) that generate interest or dividends.
• Borrowing to acquire or improve a rental property.
• Borrowing to fund a business (as a business expense).

Non-Deductible Interest

• Borrowing for personal use (renovations, vacations, paying off credit cards, buying a car).
• Borrowing to contribute to a Registered Account (RRSP, TFSA, RESP).
• Borrowing to pay for your primary residence mortgage.

It is advised to keep a Clean Paper Trail, if you use a portion of your HELOC for personal expenses and another portion for investments, the CRA requires you to meticulously track the usage, as only the portion used for investment is deductible.

The type of investment also matters, the investment must reasonably produce taxable income (interest, dividends, rental income). If you’re borrowing just for capital gains, CRA is more cautious, capital gains alone are not considered income for this deduction purpose. Lastly the interest amount must be “reasonable” in the CRA’s view. If you’re paying an exorbitant rate, they may challenge the deduction.

Best Practice: Open a separate sub-account within your HELOC, dedicated only to income-generating investments. This "clean account" ensures every dollar of interest paid on that portion is clearly traceable and tax-deductible. Mixing personal and investment funds in one account makes the deduction extremely difficult to prove and claim.

5. Proposed New Filing Requirements for Not-for-Profit Organizations (NPOs)

Every organization meeting the definition of an NPO—regardless of size or formality—could soon be subject to annual filing requirements. Organizations should monitor developments closely and prepare for potential compliance obligations starting in 2026.

The 2024 Fall Economic Statement introduced significant changes to the reporting obligations for non-profit organizations (NPOs), set to take effect for 2026 and later years. The proposal would require basic annual filings from smaller NPOs that currently have no filing obligations. It also introduced a new requirement for regular filings by entities with more than $50,000 in gross revenues—a threshold that draft legislation released on August 15, 2025 has since broadened to “receipts,” expanding its scope.