Contributors who earn more than $50,100 in 2012 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2012 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2012 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2012 will be $2,306.70, and the maximum self-employed contribution will be $4,613.40. The maximums in 2011 were $2,217.60 and $4,435.20.

For January to March 2012, the maximum combined payment from OAS plus GIS is $1,272.48 ($540.12 OAS + $732.36 GIS) per month, for a single person.  This maximum is reached if there is no income other than OAS and GIS.

For more information visit the Tax Tips website

• The final stage of the tax reduction plan introduced by the Harper Government in 2007 comes into force on January 1, 2012, when the federal general corporate income tax rate is reduced to 15 per cent. This type of broad-based tax reduction plays a well-recognized role in improving productivity and economic growth rates, thereby creating more and better-paying jobs for Canadians and raising their standard of living. As other nations face the prospect of tax increases due to unsustainable budget deficits and spending commitments, Canadians are benefiting from permanent tax relief that is broad-based and structurally sound.
• Effective January 1, 2012, the Family Caregiver Tax Credit will provide new tax support for caregivers of infirm dependent family members. Announced in Budget 2011, this new 15-per-cent non-refundable tax credit on an amount of $2,000 will provide tax relief for caregivers of all types of infirm dependent relatives, including, for the first time, spouses, common-law partners and minor children.
• The temporary 50-per-cent straight-line accelerated capital cost allowance rate for investments in manufacturing or processing machinery and equipment was extended to include investments undertaken in 2012 and 2013. This extension was announced in Budget 2011 to help businesses in manufacturing and processing industries restructure and retool to position themselves for long-term success.

“TFSAs will continue to enable Canadians to more easily meet their savings goals by allowing them to earn investment income absolutely tax-free,” said Minister Flaherty. “Savings contribute to economic growth by increasing the funds available for economic investment, which leads to a higher capacity to produce goods and services and improves the standard of living of Canadians.”

Each year, an individual’s annual TFSA contribution room is made up of three components:

• the annual TFSA dollar limit of $5,000;
• any unused contribution room from the previous year; and
• the total amount of withdrawals from the individual’s TFSA made in the previous year.

For more information visit the Department of Finance website.

Automobile operating expense benefit

If your employee ordinarily worked in, or the location to which he or she ordinarily reported to, is located in a p a r t i c i p a t i n g province (British C o l u m b i a , New Brunswick, Newfoundland and Labrador, Nova Scotia, or Ontario), you are considered to have collected an amount equal to a percentage of the value of the benefit for GST/HST purposes, based on one of the following rates:

• 5% for British Columbia;
• 11% for Nova Scotia;
• 9% for New Brunswick, Newfoundland and Labrador;
• 9% for Ontario, or 6% if the registrant is a large business for the purpose of the recapture of input tax credits for the provincial part of the HST.

If your employee ordinarily worked in, or he or she ordinarily reported to, a location in a non-participating province or territory (the rest of Canada), you are considered to have collected 3% of the value of the benefit for GST/HST purposes as calculated above.

Other Than Automobile Operating Expense Benefits

If the last establishment where your employee ordinarily worked, or to which he or she ordinarily reported in the year, is located in a participating province (British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia, or Ontario), you are considered to have collected the GST/HST as a percentage of the value of the benefit as follows:

• 11/111 for British Columbia;
• 14/114 for Nova Scotia;
• 12/112 for Ontario, or 4/104 for benefits relating to a motor vehicle that is subject to the recapture of the input tax credits for the provincial part of the HST, if the registrant is a large business;
• 12/112 for all other participating provinces.

If the last establishment where your employee ordinarily worked or to which he or she ordinarily reported in the year is located in a non-participating province or territory (the rest of Canada), you are considered to have collected 4/104 of the value of the benefit for GST/HST purposes as calculated above.

The Canada Revenue Agency will be conducting its letter campaign for the third year in a row to give Canadians the information they need to understand their tax obligations. The Audit Division in each tax services office will begin the campaign in early 2012.

Two types of letters will be sent to Canadians across the country. Some taxpayers will receive a letter explaining the eligibility criteria for certain deductions they have claimed on their recent income tax returns. Others will receive a letter with the same information, but it will also inform them that their income tax returns may be selected for audit.

The goal of the campaign is to educate taxpayers about certain claims they have made in the past and to promote compliance with the Income Tax Act. The CRA is  asking individuals to review their income and expense claims related to rental and/or business activities and employment expenses, and to review the calculation of capital gains or losses arising from dispositions of publicly-traded shares or mutual fund units.

They also want to allow taxpayers to amend their income tax returns by completing an adjustment request in cases where they may have claimed deductions in error or provided inaccurate information.

Canada Revenue Agency will be conducting its letter campaign for the third year in a row to give Canadians the information they need to understand their tax obligations. The Audit Division in each tax services office will begin the campaign in early 2012.

Important facts for employers

Starting January 1, 2012, you must deduct CPP contributions for all employees aged 60 to 65-even if the employee is receiving a CPP or Quebec Pension Plan (QPP) retirement pension and did not contribute previously.

You must also deduct CPP contributions for all employees who are 65 to 70 years of age unless they elect not to contribute to the CPP by giving you a signed and completed copy of Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election. They must also send the original to the Canada Revenue Agency (CRA).

Your employees cannot contribute to the CPP after the month in which they turn 70 years of age.

The report notes:

• The market value of Canada’s official international reserves increased to US$60.6 billion as of March 31, 2011 from $56.7 billion as of March 31, 2010. This increase reflects the launch of the Government’s new liquidity plan, in which liquid foreign exchange reserves will increase by US$10 billion by the end of 2011–12.
• The EFA continued to earn positive returns for the Government in 2010–11 as the foreign currency assets held in the account earned an average positive spread of 49 basis points over the foreign liabilities used to fund the assets, up from 42 basis points in the previous year.
• The EFA’s investment exposure was managed prudently within acceptable limits specified in the Statement of Investment Policy.

For any new client, who engages our service and has a payroll started before December 15th, we are offering to prepare your 2011 T4’s for free!

PayTrak offers a complete payroll service that is easy to use, flexible and gives you the option of paying your employees by cheque or direct deposit. And a Customer Service Representative is assigned to your account so you always deal with the same person.

For more information, contact your Padgett Business Services representative, call us at 1-877-316- 2999 or visit us at www.paytrak.ca